The Ambitious Bookkeeper Podcast

Conversations with an ex-IRS Auditor, Andrew Campbell

September 01, 2021 Serena Shoup, CPA Season 1 Episode 12
The Ambitious Bookkeeper Podcast
Conversations with an ex-IRS Auditor, Andrew Campbell
Show Notes Transcript

In this interview episode, I talk with a former IRS Auditor turned Tax Practice Owner, Andrew Campbell. You definitely want to listen if you’ve ever had the question: “how do I ensure my clients have audit-proof books” or if you have questions about what an IRS audit generally entails.  

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12 - Conversations with an ex-IRS Auditor, Andrew Campbell

[00:00:00] Andrew Campbell: I worked the phones for nine months, uh, before I became a revenue agent, uh, which is, which is where our story really picks up. Um, and I was, uh, I was a revenue agent for about five and a half years. I was in the small business self-employed division. Um, I audited probably about a hundred companies. Um, And, uh, yeah, I learned a lot.

It was quite an experience. 

Welcome back to the ambitious bookkeeper podcast you are in for a treat today. I have Mr. Andrew Campbell of Campbell tax and consulting here today to talk to us about how to ensure your clients have audit proof books, the best and worst systems to use when it comes to an audit and your chances of audit.

[00:00:47] Serena Shoup: There's so many good golden nuggets in this episode, I'm actually going to have my clients listen to it. And I think you should too. So if you're ready, let's jump in.

 [00:01:00] thank you for coming on. I've introduced you already in the intro, but I would love to have you introduce yourself and give everyone here a little bit of background on, um, on you, like where you got your start in accounting and where you ended up, where you're at right now. 

[00:01:18] Andrew Campbell: Yeah. Um, so actually I, well, I, uh, I lived down in Washington, DC.

Well, technically I lived in Alexandria, Virginia, um, and I went to grad school. My undergraduate degree is actually in history. Um, and at some point I realized I wasn't really interested in history anymore. Uh, and so I looked at switching to business or accounting or whatever. I was so far along in my degree that it was simpler to just finish in history and go get a master's degree in business.

So that's what I ended up doing. I got a master's in accounting, um, out of the George Washington university out in DC. [00:02:00] Um, I'm in Seattle now. So I keep saying out in DC, so you have a side of the world for me. Um, but anyhow, um, while I was there, in fact before I had even started before I had even finished my first accounting class, um, I put a resume in with Accountemps.

Um, I believe originally just to get access to like, You know, some PDF that they were dangling. Um, and I, I put it in at about four in the morning, cause I was goofing around on the internet because I was a young graduate student back in those days. Um, and at nine or excuse me at 8:00 AM, they contacted me and said, we have a position for you.

We'd like you to, you know, come in. And anyway, um, so that's where I got my first bookkeeping position. Um, having basically no experience or education, uh, in the [00:03:00] field, but, uh, but I got to keep some QuickBooks for a not-for-profit for a couple of years and that was fun and pretty interesting, uh, and went to graduate school there and I interned with, and then was hired by, um, PWC, I guess it was Pricewaterhouse Coopers back in those days, but now it's just PWC.

Um, and, uh, that did not last very long. Uh, interning was interesting. I interned out in Virginia, uh, but when I got hired I wanted to come home. And so I came home to Seattle, uh, and that turned out to be a bit of a bait and switch, uh, that I brought on myself. Uh, cause the Seattle office was very different.

So I was there for like nine months before I watched out. Um, and then I, I bummed around a little bit. I did some temping. I worked a one season for a small public accounting firm. And then when the story gets really interesting is I answered a [00:04:00] cattle call for, um, telephone representatives at the IRS.

This was. 2008. Uh, and the job market in Seattle is always really tough cause it's such a beautiful place where people want to live. Um, but in 2008 it was a really bad. Um, and so. Getting a little desperate for anything. And so anyway, um, I got a job working the phones at the IRS, um, which I figured I could parlay into, uh, a more substantial, uh, career there at the IRS, which I did.

I worked the phones for nine months, uh, before I became a revenue agent, uh, which is, which is where our story really picks up. Um, and I was, uh, I was a revenue agent for about five and a half years. I was in the small business self-employed division. Um, I audited probably about a hundred companies. Um, And, uh, yeah, [00:05:00] I learned a lot.

It was quite an experience. Um, and I do, I, I do enjoy that. I have that little extra, a little extra bonus of having been on the phones for the first several months. So there's a little, a little extra perspective that I have there. Yeah. 

[00:05:15] Serena Shoup: Cause you were, I'm guessing fielding calls from taxpayers like business or was it individual or everything?

[00:05:24] Andrew Campbell: Um, it was kind of everything. It was mostly individuals. Um, yeah, I gathered, they don't do this anymore now. I think if they hire you for the phones, like they don't give you the complete training. But when I went in, like we did three months of, you know, 40 hours a week in the classroom of just training to learn how to be.

People who answer the phone at the IRS? Um, I don't know that they still do it that way, but that's how they did it when I was there. And it was really. [00:06:00] It was really interesting to get to learn that much about the, kind of the inner workings of how the, the IRS keeps track of you and thinks of you and, and whatnot.

They run the incredibly old computer systems. So that sometimes that explains a lot. When you think, how could it possibly work this way? And you say, well, it's because that's how it worked in 1968 when they set this system up. 

[00:06:26] Serena Shoup: Yeah. It's, it's crazy. So, um, I know a lot of bookkeepers and accountants want to be able to.

Really serve their clients. If you're listening to this podcast, I hope that's you. Um, because I'm all about serving our clients to the highest potential. And one of those ways is to be able to offer them insight on like what they should be avoiding pitfalls that they could avoid with the IRS. Even though you're a bookkeeper, you're the first line of defense for helping these clients stay in [00:07:00] compliance.

And I know there's a lot of talk in our industry about like getting away from a compliance work and all that kind of stuff, but I don't think it's ever gonna go away. And, uh, so I wanted to obviously bring you on to talk about like, if any insights that you can offer, like, if, if you, um, had like five bullet points or whatever, it ends up being that you can offer a bookkeeper that, you know, like if they could do these five things, then it would keep your clients out of trouble, um, would be super valuable or any kind of insight of like the things that you've seen, the systems that you've seen that were the worst and, um, things that we can do differently so that our clients stay in good standing.

[00:07:45] Andrew Campbell: Yeah, for sure. So, um, well, Uh, I will talk first about the system that is the best, um, which will, uh, astonished most [00:08:00] people, I think. Uh, and this is the best in terms of who sails through an IRS audit and who doesn't, um, who sales through an IRS audit. Some of the shortest cases I ever worked were people who they had a Manila envelope that had the name of the schedule C category.

So there was an envelope called supplies and there was an envelope called office expenses and there was an envelope, gold insurance or whatever. Um, all those schedule C categories. And when they had an expense, they would get the receipt and they would put the receipt in the envelope and they would write the amount on the front of the envelope.

And then at the end of the year, they would total up the totals that were written on the front of the envelope. And then they would transfer that number onto their schedule C and then they would file their [00:09:00] taxes. Uh, and the, the thing about that system is it's very easy for even a small business owner who has no accounting training to comprehend.

And as a result, they basically never screw it up. Um, it's, you know, it's just this lockstep progression from source documents to tax return. And that's, I think the most important thing for. Bookkeepers to know, which is the, sort of the basic logic of an audit. If you've never done any auditing, um, you know, you probably don't think about it because certainly clients don't think about it and vendors don't think about it.

And it just something that seems like the whole industry doesn't talk about. Um, and I used to have to like break this down for taxpayers all the time, right. Is I would say, okay, so you have these numbers that you have listed on your [00:10:00] tax return. Now, what I'm interested to know is where did these numbers come from right now?

Presumably they are related to your profit and loss statement. However, I can't tie them to your profit and loss statement because you didn't lock your year.

This is like eight out of 10 cases, nine out of 10 cases. Right? So that you can map the accounts to the, you know, to the line items on the tax return. But if they've been changed since the tax return was filed, guess what? We're going to throw your books out and we're going to start over because that's all we can do.

Right. 

[00:10:54] Serena Shoup: That's a really important point, point important point to make is that like, once [00:11:00] you, once the auditor discovers that the numbers are not reliable, you've been opened a can of worms, correct? 

[00:11:07] Andrew Campbell: Absolutely. And this actually I learned this lesson in my very first bookkeeping job, uh, uh, when I was still in graduate school where I thought that I would.

Kicking butt. Right. I went into the QuickBooks. I found this error that had been made like three years ago and I was like, oh my gosh, I can fix this. I know what this is supposed to be now. Yes. I see you cringing. 

[00:11:35] Serena Shoup: I know there was this isn't going to be on video, but we have a video. 

[00:11:41] Andrew Campbell: Yes. Very pained expression.

That's right. But you know, what, what could I do? I was 24 years old or something. I didn't know what I was doing. I thought I was doing a good thing as I think a lot of business owners and even a lot of bookkeepers think they are doing is they, they find some error from last year and they think, Ooh, I can [00:12:00] fix this.

But what you don't realize is that you're actually wrecking the integrity of the books. Yeah. 

[00:12:07] Serena Shoup: Even though they weren't correct. That is what was on the tax return. And this is a really common issue. Um, we come up with a lot, we get a new client, they haven't filed, um, their current year taxes, but they filed last year.

Uh, but their bank hasn't been reconciled in three years. So then you're like, well, where do I start the cleanup? And that's when it requires a conversation with the client, right. About what they're willing to, you know, what they're willing to do. Are they willing to amend prior years? Because that's going to have to happen.

If we go back further than the year, you filed taxes, but that needs to happen to be able to reconcile current years. So you have to, it's always up to the client. You can't make that decision for them, but they need to understand the ramifications of either decision, right? 

[00:12:54] Andrew Campbell: Yes, absolutely. And that actually does make me just, I didn't think I was going to [00:13:00] bring this up, but now that you mention it, um, I think a lot of people don't realize that there is no duty to amend.

Um, and I don't think that's AI CPA approved. Like I think the AICP policy is that you should amend your returns if you know they're wrong. But from the IRS has perspective, you're not required to do that. Right. If when you signed the return, when you originally filed it, if you thought it was correct, if you signed it in good faith, that's all you're required to do.

If you subsequently found out that it was wrong, you can either amend it, 

[00:13:34] Serena Shoup: personal ethics 

[00:13:36] Andrew Campbell: that's right. Well, your personal ethics and, and just sort of, yeah. How much risk you can tolerate. Um, you know, for some people they will not sleep. If they know that there's, you know, $25,000 adjustment that the IRS could find, um, and then slap a 20% penalty on that and then start calculating interest from the time the return was due.

[00:14:00] Uh, like there are people who just, they will not sleep, unless that is fair. Um, and you know, anyway, other times it's, it is worth the risk for folks. I mean, sometimes it costs more to pay your accountant than to, than to, to, you know, the, the tax due is less than what it would cost to pay your accountant.

But anyway, um, I just think that's a, that's a little known fact. I find people assume there is a duty to Amanda and there isn't. Yeah, 

[00:14:29] Serena Shoup: that's good to know. I mean, I always leave it up to the client. Like it's really up to them. Like you said, like, here's, here's what could happen if you get audited for that year and we didn't amend it, then you might end up with penalties and interest, but, or we, you know, and you have to pay for the cleanup.

Right. Um, and help, you know, through the audit and all that kind of stuff. So there's a huge financial risk there in all areas. But, um, or we can [00:15:00] just start with a clean slate and know that from this point forward, your books are going to be correct because you're working with me. 

[00:15:06] Andrew Campbell: That's the, that's the side I tend to air on.

Um, Let's just put a stake in the ground and we'll just do it correctly from here. Um, but anyway, it depends on the client. Like I say, some of them can't can't handle that. Can't stand it. 

[00:15:24] Serena Shoup: Yeah. So back to what sales you through the IRS audit. So 

[00:15:31] Andrew Campbell: back to well, and so I just wanted to touch again on working through the logic of the audit and that's the first sort of stumbling block is when you can't tie the return to the books.

And that is because you didn't lock the dates. Um, you didn't lock the end of the year. Um, so bookkeepers, if you're listening for crying out loud, please, please, please lock the end of the year. I [00:16:00] lock 

[00:16:00] Serena Shoup: every month because I don't want, I don't want it. That's part of our month end process. Once we deliver those financial reports to the client, we lock them.

I mean, if there's changes that need to be made, that we discover later, at least we get an alert and we have to physically like go unlock the period and be very intentional about that adjustment. 

[00:16:21] Andrew Campbell: Absolutely. That that is absolutely the way to do it. Um, cause that's sort of the danger of computerized bookkeeping, right?

Is that by default, you know, it sort of doesn't, it doesn't leave a trail, uh, in the way that. You know, when I, uh, so after I left the IRS, I split time between running my practice and teaching college. Um, and so as I used to tell my accounting students, like you should do your accounting in pen because I don't want to see any erase marks.

That's not how we do it. Right. If you make a mistake, you can either cross it out. If it hasn't posted, [00:17:00] or if it has posted, you got to put in a journal entry to fix it. Yeah. Well, don't do the transactions. Yeah. That sort of thing. And don't get me started on that. And you made an important point earlier, um, Kind of, even though it's incorrect.

And even though, you know, it's incorrect, you have to leave it incorrect so that it will match the schedule C and I mean, if you want to do sort of one of the options that I lay out for my clients where, you know, we sort of know that they have an adjustment or whatever is if they get an audit letter, like we'll have that ready to go.

Because one of the best things, when you're getting audited, the goal is for it to be as short as possible. And so one of the ways that you can make that happen is when the [00:18:00] auditor gets there. Uh, one of the things I think they're required to ask you is, are you aware of any errors on your return? And you can say, wow.

Yes I am. And as a matter of fact, here's a $10,000 adjustment, uh, that you can go ahead and have for absolutely no work, uh, to which the auditor says, oh, terrific. I found a $10,000 adjustment and I'm going to close this case in 60 days and my manager is going to be thrilled. Um, so, um, that's, that's sort of one strategy you could pursue, right?

It's it's have those adjustments ready to go. If you know about them, you may or may not want to correct them yourself. But, um, so you tie the, you tie the return, uh, you try to return to the books, right. Then this is the part that most people are able to cope with, right? Is that those numbers on your P and L we've gotten from the return to the P and L at this point, [00:19:00] and now those numbers on the P and L are summary numbers, right.

And those summary numbers on the P and L. Are the summary of a list of transactions that have happened in the relevant general ledger account. And so I need to be able to go back through that ledger, right? If I'm auditing well meals and entertainment, because that's the one that always gets audited, right.

Auditing 

[00:19:28] Serena Shoup: notes, everyone. I hope you're taking notes. 

[00:19:31] Andrew Campbell: Yeah. Any of those ones that, you know, seem fun. Yeah, exactly. Exactly. Nobody ever gets their rent audited unless they're renting to themselves or, you know, those sorts of things. Um, but yeah, so we're, you know, we're looking through the meals and entertainment and what we should be able to do is look at all the items on that list.

Add them up and get the total that's on the end. That part of it, software is really [00:20:00] good at cause it's just math. Um, so that part usually goes pretty smoothly. And then the, the last step, which is the step that I would say, if we're rounding 10 out of 10 taxpayers had a terrible problem with, uh, which is for each of those line items, there should be a source document in the case of meals and entertainment, it should be a, you know, a receipt.

And, uh, if we're, if we're talking realistically, uh, on the back of that receipt should be the name of the client that you were with, what you talked about at that meeting, right? The business purpose. And, um, cause essentially what you have to do is you have to tie it to revenue. And let me tell ya. I audited a place.

Um, when I was at the IRS, they had, I think [00:21:00] $66,000 worth of meals and entertainment expenses. And I just thought, what was their revenue? Well, their revenue was like $4 million or something. Geez. And the point is, is that they, I don't think I found an adjustment there at all. I may have found one, cause I think maybe there was a clerical error somewhere, but I just thought, oh, they're going to get killed.

There's no way they can, they can substantiate all of this, but they knew what they were doing and they could, um, and they, you know, they very specifically said, you know, okay. So I spent. You know, $2,500 wining and dining this client, but that client does a quarter of a million dollars a year with a business with us.

And I have the documentation that shows that. And so, okay, fine. I guess I have to allow it then. 

[00:21:57] Serena Shoup: So what you're saying is you would pull [00:22:00] in the meals and entertainment situation, you would pull one of those receipts and see, okay. They said, they'd taught, they took out this client. Now I'm going to go look at the sales transactions and see their customer lists and make sure that clients on there.

[00:22:13] Andrew Campbell: Yeah. Is that a real client? Does that client really produce revenue? Uh, because you know, as an IRS agent, sometimes you'll see things like, oh, I remember one time I, I was auditing someone's, uh, uh, meals and entertainment expense, uh, and I saw this huge. Line item way bigger than the typical, uh, item that was on their list.

You know, most of the Starbucks coffees or whatever, and then there's like a $500 dinner at a fancy restaurant or whatever. And I was like, this was a client meal. And they were like, oh yes, definitely. And because of course I had these records, I was like, was your wife pissed that you took a client out on her birthday?[00:23:00] 

Oh, she, she got over anyway. Um, it was like, nice try buddy.

[00:23:15] Serena Shoup: Oh, that's good. 

[00:23:16] Andrew Campbell: Yeah. Don't try to get cute with me or yeah, you would see people anyway. I got, I got lots of, so do 

[00:23:24] Serena Shoup: you think that most, yeah. Do you think, is that part of your training at the IRS is to be super set skeptical and to be able to make those connections? Because. That takes a certain level of problem solving or just like awareness of like, oh, I'm going to look at this line item and then, oh, I have their personal tax return right here.

I know this is the same day as his wife birthday. Like how did you make that connection? And is that part of your training? 

[00:23:52] Andrew Campbell: Uh, it, it isn't as part of the culture as well as one of the reasons I really wanted to leave that job. Um, as soon as my federal [00:24:00] pension vested, I was looking for the door, um, is because it makes you really paranoid 

[00:24:07] Serena Shoup: it more so than just a regular accounting job, because we all have, 

[00:24:12] Andrew Campbell: well, yes, as I used to say, when I was an IRS agent, I was like, so basically my job is I get lied to for a living because nobody feels bad about, you know, BS in their IRS agent.

The IRS agent is out to get them, right. So if you tell them less than the whole truth, You can do so without a guilty conscience. Uh, but yeah, so absolutely we're, we're trained to look for those sorts of things and, and, and it just, it's just very much in the air. Um, the IRS that you just assume that everyone is lying to you about everything, 

[00:24:50] Serena Shoup: I guess that's pretty much, yeah.

That's the audit audit culture. Really? 

[00:24:55] Andrew Campbell: Yes, exactly. That's one of my catchphrases when I was there, uh, was, [00:25:00] uh, and I believe you, but I'm going to, if you need to go ahead and see that document, like I can't get it in my case file that I believed him. Right. My manager is not going to go for that. Uh, I'm going to need you to produce the paperwork because people used to put a lot of energy into.

Telling me their story and trying to make it believable. And you know, 

[00:25:29] Serena Shoup: you're like, hold up before you waste your breath. Like, I don't care if I believe you or not. Doesn't lie. 

[00:25:37] Andrew Campbell: Exactly. So I would just say, and I believe you, but yeah, so there was one time a guy left me a voicemail and he was just like so strong out about, oh my God, I'm going to, I'm going to take a ferry and I'm gonna come.

And I'm gonna, I'm going to deliver these documents to you personally. It was a delinquent return that he was giving me and I called him back and I [00:26:00] was like, Hey man, don't worry about it. The penalty is the same, whether you're a day late or you're a month late. So, you know, as long as you get them into me this month, that's really, but you know, people think you're emotionally invested in that, in it, because they are, like I told you, it was due yesterday.

Whether you, you don't have to get it to me today. Don't take a ferry, just put it in the mail. Yeah. 

[00:26:24] Serena Shoup: Yeah. So those three things you've got to tie it to the return and then you have to tire each general ledger transaction. So should summarize to that summary on the return. And then the third one is each line item should have a source document, which is a receipt or an invoice, the clear business purpose.

[00:26:44] Andrew Campbell: Yes. And, and of course the, the, the more. Sort of susceptible to abuse. That line item is, um, the more careful you have to be about having those documents. And this is a place where [00:27:00] I sort of don't know what the answer is, um, because the sort of it's the least sexy, most just admin horrible work of managing source documents of organizing them.

And it is just the absolutely critical foundation to having a set of books that the IRS is not going to make you reconstruct. Um, and, and I just, there, I have not found a good solution for it, um, of a really efficient way to manage source documents. So for bookkeepers, I think the best thing that you can do is just educate your clients about.

Um, and about how this sort of, one of the things I'm really tuned into in the industry is how incredibly vague the term bookkeeping [00:28:00] is. And so people think, well, I have a bookkeeper, so I have everything there is to have. Yeah. Yeah. Um, and so being real clear about, so I'm your bookkeeper and I'm gonna, you know, record these transactions and I'm going to, you know, produce your financial statements every month and send you the report and I'm going to do what I do.

But if the IRS comes to the door, they're only going to care about that. If it is backed up by source documents, and I'm not going to do that for you, because it's really not efficient for me to do that. You know, if you have them, that's enough. I don't need to have them that just adds a transaction that doesn't need to really occur.

Um, but just communicating to them how essential that is. Yeah. 

[00:28:53] Serena Shoup: Yeah. That's a conversation we can, we have with our clients almost every month and this is where a lot of [00:29:00] bookkeepers get hung up of like, well, am I supposed to be gathering all that stuff or do I need to? And the answer is yes and no. It depends with everything in accounting.

It really depends on what you're willing to do and how often you want to be bothering your clients. For me, I give my clients an option and I say, okay, we can go one of two ways. Like if you need the accountability and you want to have audit proof books, I will bug you every month for all of your missing receipts.

We put everything in hub dock, whatever you have, you put in there, and then whatever's missing. We don't reconcile your bank account until it's in there and I will bug you until I get it. The other option is I just enter everything and I go on your word and you're responsible for managing your papers.

So those are the, the options we give our clients. Most of them get 98% of their documents to us. Um, I say like, I don't care about the recurring subscription fee. That is the same [00:30:00] every month. As long as you have at least one email with a confirmation in there. Um, if it's easy enough for you, like if in an audit, you ha you could log in and pull the history of that account.

Whatever that's cool, but anything that's a different price every month or a meal or a fuel or any of that. Like I need the documentation. So one thing that came up with one of my clients recently is, um, she had a meal expense and it was probably like $45, but it was either during traveling or with a client or something, but she lost the receipt and have it anymore.

So I did as, this is what I suggested. And I don't even know if this is right, because this is what we did in corporate for our, uh, with our sales reps were required to submit all their receipts for all of their, you know, their meals. And if they didn't have the receipt, they had to fill out like a missing receipt form, basically that gave all the information and as much detail as possible.

And so I [00:31:00] did the same thing with the client. I said, just put on a piece of paper, the amount, the date, what it was for, where it was at, and. We'll see, like we'll put it in there, but I'm still not guaranteeing it, but at least you can, you know, 

[00:31:15] Andrew Campbell: effort contemporaneous documentation. That's, that's the key, right.

Is, and you know, it's sort of one of the crazy things about being an IRS agent is how much authority and how much discretion you have. And so, I mean, obviously I can't speak for every IRS agent, but I think the, sort of the, the forces that are upon you when you're an IRS agent, you're under a lot of pressure to close your cases efficiently, quickly.

And so I remember when I was in training, um, I did, like I was trained to in public accounting [00:32:00] and I sampled and I, you know, I was tying things out tonight. You know, I had this just like gorgeous set of work papers that I had produced over the quarter three days that I was out at the client site. And I, and I like reviewed it with my manager.

And my manager said, when did you know that this case was a note? And it was like, oh, halfway through the first day, obviously there, their stuff was all in order. Uh, you know, and that's why I was able to conduct this proper audit of it. Uh, and he said, yeah. So when you know, it's a note change, it's time to shut it down.

Um, and so, uh, one thing this, I don't know how, how, I guess this would be at least relevant. If you're supporting somebody who's actually going through an audit is. Nobody ever directly Bluffs the IRS. Um, there's a lot of lying about things that can't be verified. [00:33:00] Um, but as I used to say, when I was an agent, the more you provide me, the less I look at.

Yeah. And so when you can show me, uh, you know, uh, a folder full of receipts that are matchable to all these, you know, and they have a note on them about who you were with and what you talked about. If some of the receipts in there are not original receipts, but are contemporaneously prepared, you know, just sheets of paper that say on this date, I went with this client and I spent this much money and I can tie that amount to your credit card statement.

Sure. Yeah. Obviously this is all in order. Um, you know, you don't, you don't kinda negotiate at the line item level cause w where you're really looking for is when you say, so, you know, I'm going to audit your meals and entertainment and [00:34:00] they hand you their credit card statement and say, American express has already categorized it for me.

[00:34:08] Serena Shoup: That's a fight I always have to have, I don't care about the fucking save it. Yeah.

[00:34:16] Andrew Campbell: I'd have to explain to people. I was like, so in order to deduct something on your return, you have to prove two things, proof of payment, which you have done and proof of deductibility, which you have not done. Right. And so that's the kind of, that's the thing to tune into, right? Is, is this the sort of thing.

A person might spend money on, right? So I remember one person, they didn't have their receipts or whatever, or they couldn't find them or something. And they were a appliance sales place and they had a $40,000 line item for like money that they had spent [00:35:00] at stoves world or something. And I was like, okay, I'm not going to audit that because a person wouldn't spend $40,000 at stoves world.

But then if that same person, you know, hands you a credit card statement that says $300 Costco, right. Or Fred Meyer or whatever. I've spent $300 at Costco before on things that weren't for business. So if you want to deduct it for business purposes, you better be able to show me what you bought at Costco.

Um, and, and, and again, you're looking for things systemic there, right? The easiest thing to audit is when you say, and where are your receipts? And they say, oh, I had to have receipts. I didn't know about that. Um, maybe you can just go off my credit card statement and you say, well, no, unfortunately I can't.

Yeah. 

[00:35:55] Serena Shoup: Yeah. That was, that was always an argument, um, in corporate. And it's [00:36:00] still, it's not like an argument with clients. It's definitely an educational point though, is like Amex doesn't know why you went to a restaurant. Amex doesn't have any details. I know they have the flight information, but that doesn't give you the actual details of why you took that flight.

[00:36:20] Andrew Campbell: Absolutely. Yeah. Yeah. I mean, and, and I'd see people who did a really good job is a, you know, swipe a brochure from that conference that you were at and just stick it in the file. Right. I mean, because if you, if you drop. Couple of thousand dollars going to a multi-day, you know, CPE event, uh, some kind of conference.

That's deductible, as long as you can prove that it was a legitimate business expense. And so one way to do that is, you know, I was really there. Here's the swag or here's the, here's the brochure for the thing. [00:37:00] And again, of course you could have gotten that from your friend or whatever, but people don't tend to bluff like that when it's the IRS, you don't want to get caught lying to the IRS.

And so, um, there's this sort of, there's a strategy there, right? Around producing a lot of documentation, um, because the IRS sort of can assume that it's probably not fraudulent. 

[00:37:25] Serena Shoup: Yeah. Too much information is, is better than not enough. Like, um, like for instance, with the conference example, like, well, you should have a conference ticket or an agenda or something, even a confirmation email with that same date range of when you took the flight.

So just like keep all of it, you know? So, um, yeah. What about if somebody takes a, like, I'm curious of what their strategy for auditing this situation is like, what if there is a legitimate, like conference that you take, but [00:38:00] you travel in two days early and leave two days after it, like, is that something that you guys would be aware of and be like, well, that was vacation days.

[00:38:11] Andrew Campbell: Yeah. And I'm, I'm trying to remember the exact. Tax law doctrine there. Um, cause I think there is a, there is an official way to like a portion that, um, specifically for the flight. Yeah. 

[00:38:25] Serena Shoup: Um, and maybe hotels or something like obviously like you can't really, 

[00:38:30] Andrew Campbell: because you can just do it by what nights were you there for the conference and what nights were you there?

And so that's one of those things that, um, it's really useful. If you can give your, your, you know, your, your auditor indications, that you're the kind of person who keeps fastidious records. Um, and so that's where something like. Okay. So here's my, and here's a little work paper that I cooked up that shows that even [00:39:00] though it's just this one line item, I backed out the cost of my wife's plane ticket.

And then I allocated the, uh, hotel, you know, to the three days I was at the conference. And then the two days that we spent sightseeing, I backed those out of my, my books because those aren't business expenses. Yeah. Um, and so I used to say there was sort of two types of taxpayers, you know, there was two types of books that I would see, uh, and it was the people who were way on the ball like that, who were, you know, working really hard to get it.

Right. And then there were the people who were just sort of like, nah, well, I have my credit card statements. Um, and you want to be classed with the first group. Yeah. And so there's, there's certain indicators like, you know, where you handle the, that kind of a transaction or a good mileage log, if you claim mileage, [00:40:00] um, having a good mileage log is that was a big one, at least back in my day.

Um, I don't know, with the, with the new automated apps, I don't know if that's still such a good indicator. Um, 

[00:40:12] Serena Shoup: but yeah, I think it is for certain industries, like truckers and stuff. 

[00:40:18] Andrew Campbell: That's a real estate agents are the ones who get audited constantly. So, yeah. 

[00:40:22] Serena Shoup: Yeah. So this is really helpful for sure. And I think hopefully by less, like I'm, I'm actually going to have my clients listen to this episode too, like as part of their onboarding, like, I think it's a great idea.

So if anyone wants to do that as well, so that they can hear firsthand, like. What does an IRS auditor look like if you're, especially if you're having trouble with your clients, like keeping paperwork or getting on board with your paperwork policy or the tools that you've provided them. So like, if you provide them access to Hubdoc and they're not using it, send them to this episode, like, let them listen to this and see why it's so important.

Um, [00:41:00] but, and also in figuring out like what types of clients you want to be working with, like, do you, do you want the liability and not necessarily that it would fall back on the bookkeeper, but it would certainly be a headache to have a client that wouldn't comply with these types of things, and then come back to you and act like you never tried to help.

Right. 

[00:41:21] Andrew Campbell: Yes, yes, absolutely. Um, yeah, I would, yeah, I would want to make it real clear if you're not going to enforce it for them. If they're not interested in having that enforcement, I would make sure and get it real clear in your engagement letter. Um, that that is not a service you provide, you were providing them.

And that it is a very important function that they are responsible for, you know, not just that you're not going to do it, but that you have advised them that they need to do it. 

[00:41:56] Serena Shoup: Yeah. Yeah. Which is why like the AI [00:42:00] CPA engagement letters are very thorough about what is the responsibility of the client and what is the responsibility of the accountant?

So take some pointers from that. 

[00:42:13] Andrew Campbell: Yes. I will share this one little thing. Um, their website is really terrible about making this clear and, you know, because I'm an old IRS agent, like I want to be able to site. You know, chapter and verse, this is where this says that this is allowed or whatever. And I went on, I think actually at your recommendation, I went on the AIC VA website to try to sign up and they have a category for non CPAs.

Cause I'm not a CPA, uh, to like be a non CPA associate member or whatever, whatever it's called. Um, but it is very difficult to get a precise definition of like who qualifies and who doesn't qualify. Um, but it turns out that the, and the only reason I was actually able to sign up is because [00:43:00] I got halfway through it online and then I couldn't find a citation.

And so I gave up and they called me the next day and said, Hey, I saw you're trying to sign up. Yeah. And so anyway, um, but yes, it really is a wealth of resources and you don't have to be a CPA to join the AI CPA. Um, so I don't know if people know that, but, 

[00:43:20] Serena Shoup: um, yeah, I know that you can definitely join if you're getting an accounting degree or on your path to get a CPA license.

So did you ever figure out what the other options are? 

[00:43:33] Andrew Campbell: Yeah. I can't remember the there's like a, it's like you work in the industry, but you're otherwise not qualified. I think, cause what they don't want people to do is like to be a CPA and try to get this cheaper membership or whatever. Like 

[00:43:50] Serena Shoup: if you're a CPA, it's like $500 a year, 

[00:43:55] Andrew Campbell: that's real pricey.

Um, and it's not super cheap, but uh, [00:44:00] you know, even for the. Whatever non CPA associate membership I have. But, but, um, but you do get access to the wealth resources and I do tax. So they have a lot of fantastic, uh, resources in the tax section as well. Yes. Yeah. They 

[00:44:15] Serena Shoup: haven't been specific. Oh, you have it. They have specific tax, um, engagement letters for each type of tax return and, um, tax organizers.

So all the checklists that you need to send your clients that nobody ever actually looks at, you end up filling it out for your client, but, you know, um, yeah, so. This has been awesome. Is there any other, so, okay, so we talked about how to sail through an audit. What was the best system? So it's an envelope system with physical receipts and my headphones just died.

So hopefully this is not like, oh no, it was just one. Okay, cool. Um, so 

[00:44:58] Andrew Campbell: it's the best [00:45:00] system. It's just that, that is a Bulletproof system. If you want to abandon that system, you want to have a system like you, you need to know that you're beating that system, right. You don't want to abandon what works about that system.

[00:45:16] Serena Shoup: Right. So what worked about that system as being able to tick and tie everything. So if you can come up with a digital alternative for your clients, if you're working on the cloud, or if you work with local clients and you used to hate that shoe box that they brought in, but at least everything was there.

Maybe just work on like setting up the envelopes for them or the file folders for them. So that when the shoe box comes, they're all sorted. 

[00:45:43] Andrew Campbell: Yes. Yeah, absolutely. Well, and with digitization now you can kinda, you can, you could kind of sort that shoe box for them. 

[00:45:52] Serena Shoup: Yeah. So what is, what, what are the alternative like the worst situations you've [00:46:00] seen where people have failed the audit miserably?

Do we want to mention software names? 

[00:46:07] Andrew Campbell: I mean, I was just ranting about this on Reddit the other day, um, about how, and to some extent, I can't blame them because of that, like that's in their DNA. Right? So once upon a time there was Quicken and Quicken was for people who wanted to keep a really icy grip on their personal finances.

Uh, and so it was for people who were pretty fastidious and detail oriented and then quickly. Spawned QuickBooks. Um, which I guess at the time was a good thing for, I think they were catering to that same clientele. People who are really fastidious, but needed something just a little bit more powerful, but then what happened is double entry.

Accounting. Yeah, exactly. Double entry. But what happened then [00:47:00] is the QuickBooks became the only game in town. It got incredibly sophisticated and they forgot to send out a memo that QuickBooks is now so powerful and so create, you know, so, so comprehensive that under no circumstances should an amateur attempt to use it.

Yeah. Well, because 

[00:47:22] Serena Shoup: I don't think they forgot to send that memo. I think 

[00:47:25] Andrew Campbell: they, that memo happened internally and they forgot to, yeah, that's not very good marketing. Right. They want 

[00:47:32] Serena Shoup: it marketing. The department was like, no, we won't make our sales if we send that memo out. 

[00:47:38] Andrew Campbell: That's right. That's exactly right.

And, and so the, the whole kind of ethos, uh, behind QuickBooks and, you know, to a lesser extent, the entire small business software industry, um, you know, as it has been dominated by QuickBooks for so long, it is all built on the [00:48:00] principle of, I want to build your confidence that you can do this. And therefore I will.

No, I don't want to say never, but I will minimize the number of times that I kick back at you and say, what you're about to do is insane. What you're about to do is a very bad idea and will mess up your books. Right. Instead, I 

[00:48:22] Serena Shoup: would love a pop-up box that said that honestly, what you're about to do is insane.

Yeah. 

[00:48:28] Andrew Campbell: Right. I mean, it's what it's what's needed. Right. If you're going to have DIY soccer about to fail an audit, that's right. That's right. You're about to wreck your books. Um, and, and so what happens is whatever you try to give QuickBooks, QuickBooks will gratefully accept, and then they'll just figure it out on the balance sheet.

They'll just pop something on the balance sheet. That makes that sort of technically allowable technically makes sense. And then at the end of the year, or whenever [00:49:00] your accountant will come in and they will find a dumpster fire on your balance sheet of just chaos and nonsense and things that shouldn't be allowed to happen in an accounting system ever, but here they are, and then you'll have to pay your accountant to fix it.

And it's just, it's this whole sort of like abusive cycle of bad data going in. And then accountants are sort of trying to fix it. But as we probably all know if we've ever worked with QuickBooks, like you're putting a bandaid on it, like you're trying to plug the holes, but it, you know, it's really anyway.

And this rant that I went on the other day, uh, on Reddit, where I was talking about, like, if I was going to build software, what I would assume is the thing that QuickBooks assumes is that you know exactly what you are doing and that. Controls and procedures in place. So you would never do anything foolish.

Right? That's what [00:50:00] they're assuming. And that's what it's set 

[00:50:01] Serena Shoup: up for. Yeah. So many. Yeah. There's so many ways to mess it up. Sorry, go ahead. Yeah. Oh, I agree. That's how, um, that's how great Plains operates. It assumes people are idiots. Like you cannot delete a transaction. Everything has to be voided. So it's still there.

So if you make a huge import of a bunch of transactions that were wrong, they will always be there. Just voided. So it, it looks messy when you dig into the details, but at least. Everything else is correct. You know what I mean? 

[00:50:41] Andrew Campbell: But it is possible to audit. Yes. And that's the thing, that's the thing that happens is that things get deleted and things get changed and there's no record of it.

And it looks tidy from a certain perspective, but it's not testable. It's, can't be [00:51:00] audited or, I mean, I guess there's ways you can go in through the audit log, but oh, what a 

[00:51:05] Serena Shoup: nightmare? No, it doesn't give the full details because when something's deleted, you can't, then it just says that transaction was deleted, but you don't know what the amount was originally.

[00:51:16] Andrew Campbell: Yeah, yeah. Yeah. I mean, it just, at every turn, it gives me the impression this was not designed by an accountant. 

[00:51:27] Serena Shoup: No, definitely not. 

[00:51:29] Andrew Campbell: Yeah. I was giving the example the other day of like, If I were to develop my own bookkeeping software for that, you know, market, like if you wanted to create an, uh, a vendor, it would require you to upload a w nine.

Right. And if you put in an override code, right, would you would have to put in an override code to say, oh no, no, no, I don't have a w nine for this. It would flag that. And it would go on a report so that when your gave it to your accountant, they could run [00:52:00] one report that says the following vendors do not have w nines.

Right. And you can say, well, that's amazon.com. So I, as the accountant, I'm going to sign off on that. Uh, you're allowed to pay, you know, pay my w nine. 

[00:52:14] Serena Shoup: So it's funny. Cause like I, when I worked in corporate, I kind of hated the system. But now that like I'm seeing like where things can go wrong, it was actually designed very well.

Microsoft it's now Microsoft dynamics, but it used to be called great Plains, but. When we created a vendor, if it was missing the EIN number in that field, it would pop up on report at your end. And it would not generate the 10 99. Yeah. Right. Yeah. I mean, it was definitely, at least had input from accounting.

[00:52:49] Andrew Campbell: Yeah. So it's, uh, it's rough out there and it's an, I always feel like a crazy person because I try to complain about this to the vendors. [00:53:00] Uh, and they're just like, nah, I don't worry about that. It's all about advisory these days, you know? And I was just like, well, that's great. But you, if your books are just like full of holes from an auditor's perspective 

[00:53:14] Serena Shoup: and it's just are they to be able to offer advice on anyways.

So there's that, that side of things too. Um, 

[00:53:21] Andrew Campbell: but maybe they're actually. Maybe they're not, there's no way to know until you get 

[00:53:28] Serena Shoup: audited. Yeah. Um, I was gonna say something about, oh yeah. About compliance, like going away, like this is what proves that there will always be some sort of compliance whether the clients want to pay for it or not.

It still needs to be done. So, um, like the alternative is hefty IRS fees, audit fees, having to pay me to come back to help you through an audit that you're going to fail anyways. [00:54:00] So yeah. I would not worry about that. Like yeah, no software is going to request a w nine for you. 

[00:54:11] Andrew Campbell: Right? Cause it's all about ease of use.

Yes. 

[00:54:14] Serena Shoup: So you still 

[00:54:16] Andrew Campbell: have not, that is not a core virtue of accounting software.

[00:54:25] Serena Shoup: Yeah. Yeah, absolutely. I mean, there's, there's systems that have made it easier, but it still requires that knowledge that, that we hold that we know that that document is required. So like for instance, relay bank, they have their bill pay feature. If you go and try to ACH somebody or send them a check, it, it gives you the option to send them an email and have them fill in their information and check the box that you've received a w nine.

[00:54:53] Andrew Campbell: I, I tell him, shout out to relay bank. They are terrific. And I have given them so [00:55:00] much feedback. I just have so appreciate how much they listen, uh, to the, to the accountants. Because again, it feels like the software world is more interested in the consumer because there's more of them, which. But, um, it's so wonderful to see a vendor that's really tuned in to the needs of the bookkeepers and what makes their life easier.

I remember when they rolled out that bill pay or some iteration of that bill pay and they were talking about like, oh, you can request the w nine information. And I say, fantastic. And how do you generate a report that has all that information on it? And they were like, is that an important feature? I was like, yes, it is an important feature so that I can upload it into my 10 99 software at the end of the year, 

[00:55:49] Serena Shoup: unless you're going to offer that build.

Are they going to build an integration with the like tax 10 99 or anything you 

[00:55:56] Andrew Campbell: think that was, that was my recommendation. Right. I want to be [00:56:00] able to run a CSV file out of relay that has all that information on it, and then upload that to track 10 99 and file them all in, you know, whatever. Yeah. 

[00:56:13] Serena Shoup: Yeah.

That's awesome. 

[00:56:15] Andrew Campbell: And they hadn't built that, but they were like, oh, that's a very good point. And I assume I know nothing about computers, but I assume adding a function to export a CSV file is not super advanced. 

[00:56:30] Serena Shoup: Yeah. I mean, they've accomplished that with bank statements, so, 

[00:56:34] Andrew Campbell: yeah. Right. I mean, if you have the data, how difficult can it be to export it into a CSB file, but yeah, maybe that's naive of me, but 

[00:56:43] Serena Shoup: so our, so question then since I know you're not a QuickBooks person, I bet people are now wondering, well, what software should we be using with our clients to make it a little bit Bulletproof, more Bulletproof.

Right. And I think the most Bulletproof situation you can have is to [00:57:00] not let your clients do any of the bookkeeping, whatever software you 

[00:57:05] Andrew Campbell: definitely have to kind of meet in the middle there. Yeah. Yes, you should get someone who knows what they are doing, uh, which is the assumption that the software makes.

But then also have software that has a little more, uh, a little more in the way of not necessarily protect protections, but at least ease of use. So I will tell you, I sweat blood over this. I, I researched and I researched and I researched and I did demos and I just, I worked so hard to find, uh, accounting software, bookkeeping software, uh, that I could build my practice on.

Uh, and ultimately for me, it came down to zero, um, because. [00:58:00] There's some other options out there. Like I looked at Sage, I know you had used Sage in a previous life and really liked it. And I don't know 

[00:58:13] Serena Shoup: about it these days. I used Peachtree loved it back then, but I don't know what it, how it is now, honestly.

So 

[00:58:21] Andrew Campbell: they have a cloud version now that's sort of like a zero QBO clone that, but it has fewer integrations and I didn't see any real advantage. And, and basically they were so behind on integrations that I just felt like this, this market is going to go Pepsi and Coke. Um, there's just going to be increasingly, so over time, there's going to be the one and the other it's going to be QBO and it's going to be zero.

Yeah. Zero is the better platform. Um, you know, as I, as I wrote somewhere on Facebook recently, [00:59:00] like it is cheaper, it is faster, it is more flexible. Um, and it just, and again, part of QuickBooks and into its whole kind of deal is as I used to complain very vocally about when I was an IRS agent, is that their whole thing is that they're trying to hide the accountant from you, right.

Because accounting is more than you can handle user. Um, and so we're going to put that all inside of a black box. Right. But if you're a professional, that's exactly what you want to see. Right. You want to see the gears turn, you want to see the actual, you know, what's really in there, what exactly happened.

Um, and I just find that much easier to do on Xero and I just find it. I find them a much better company. Um, I appreciate, you know, they have a local rep who you can talk to and I have a regularly scheduled meeting [01:00:00] with them every month, uh, where we just sort of go over what I'm, what I'm working on.

[01:00:05] Serena Shoup: That's awesome. I didn't, I don't meet with mine every month, but is that because you have growth plans or is it because you're submitting feature requests or all of the above? 

[01:00:16] Andrew Campbell: I know it's, I, I signed up for, uh, uh, a sort of growth plan and I, I bought a block of, uh, uh, of subscriptions and whatnot. It was all sort of this whole package they put together, but, um, yeah, it was, uh, it's, it's just, I have somewhere the most horrifying transcript of a chat that I had with Intuit.

To try to get cause cause what happened was I started my business. I had a Gmail account, right. And then I switched over to a, you know, a legit Google account that has my websites, uh, domain name on it. But my QBO like master [01:01:00] log-in is still on my old Gmail account. So now if somebody wants to link to me in their QuickBooks and want to add me as an accountant, I have to give them my janky old Gmail address.

Right. Instead of my domain name. Anyway, I was like, this should be flip fixable. Right? It's a three-hour chat that involves, oh my God. It's just an, I believe it's saved on my computer as like QVO is the worst or something. It's like the name of the file. 

[01:01:32] Serena Shoup: Oh, that's hilarious. I mean, not really, but yeah.

Yeah. And you know what? There's like a couple of features I like about QuickBooks, but all the other things that I love more about zero just completely outweigh those. So it's like a no brainer for me. Um, but I mean, the biggest thing is that, like it, zero has an audit trail, like a true one. You can't delete things unless they haven't been posted yet.

And you can, you [01:02:00] can there's approval levels and controls and stuff in zero that you don't have in QuickBooks. And so it's like, yeah, 

[01:02:10] Andrew Campbell: yeah. I was listening to a podcast recently. I forget which one. But, um, they were talking about how in parts of the world, where they have like VAT, um, and whatever its equivalents are around the world, but including Australia and New Zealand, um, businesses.

Have to file these tax returns more regularly, and it's a much more significant part of their business. And so zero coming out of that part of the world, like a small business in that part of the world. Would never not have an accountant to help them. 

[01:02:47] Serena Shoup: Yes. I listened to the same podcast, I think, was that the cloud accounting podcast, maybe 

[01:02:52] Andrew Campbell: it might have been cloud accounting.

Um, for some reason I don't think it was, but that's one of the many accounting podcasts I listened to. Yeah, [01:03:00] yeah, yeah. It was, it was a recent, yeah, yeah. To 

[01:03:03] Serena Shoup: where they were talking about how, um, small businesses get on software much sooner out there than they do here in the U S because 

[01:03:11] Andrew Campbell: of that. Well, and that they link with an advisor immediately.

Yeah. And zero was built for that. Zero was built in the cloud on the assumption that you're going to do your own books, but you're going to have somebody who works with you monthly or quarterly, or like it's just in the zero's DNA. That it's a collaborative tool between the client and the accountant.

And QuickBooks is of course, because it came out in 1992 or whatever. Uh, long before the internet, um, it's DNA heritage is it's a DIY tool. And I think it kind of always will be, that's just what they're after. And of course you can, but don't get me started on limited numbers of users sharing 

[01:03:57] Serena Shoup: that is another great.

That is another great [01:04:00] feature of zero. Like you eliminate that risk by allowing unlimited users. Like there's so many things that zero has enabled me to do with, like, I allow my clients unlimited transactions and unlimited bank accounts because things are so much easier and efficient inside of Xero that an influx of transactions is not going to greatly decrease the profitability on that engagement with them.

Whereas on QuickBooks, it will. 

[01:04:26] Andrew Campbell: Absolutely. Yeah. I have a, uh, like e-commerce client that. Has just zillions of these little transactions. Um, but they're all from the same, like handful of vendors. Uh, and yeah, it's so fun to go in and go into cash coding, and they're all already coded because they're from the correct vendors and you just click one button and it's like, so you have now reconciled 250 transactions.

And you're just like, I I'll take the rest of the afternoon off. [01:05:00] 

[01:05:00] Serena Shoup: Yes. It's like pure magic. Um, awesome. Okay. Well, we are coming up on our time. Do you have any closing thoughts or pieces of advice for bookkeepers, um, that you want to share? Anything that we didn't cover? 

[01:05:15] Andrew Campbell: Um, well, the one sort of cluster of topics that we didn't get to touch on it, it was just sort of what not to worry about.

Um, let's talk about it and I don't know if bookkeepers have this as bad as clients do, but I see people really sweating over whether something is supplies or is it office expense or is it yeah, the cost 

[01:05:42] Serena Shoup: of goods or is it, or expense, 

[01:05:47] Andrew Campbell: like, right, exactly. Is this a cost of goods freight or is this an expense for delivery?

Um, and at least. From the IRS's perspective, [01:06:00] who cares? It doesn't really matter. It all deducts the same as I try to assure my clients. Um, and so I like to say the standard that you're working to, at least for the benefit of the IRS is not bizarre. Right? You don't want to have, uh, a tax return that looks just bananas, right?

That just looks like no other tax return on the planet. Right. Because when you get fed into the computer, what they're going to do is they're going to take your industry code. And they're going to compare you to all the other businesses that have that same industry code. And if your return looks way different than everybody else's industry in that industry code, they're gonna flag you and they're gonna, it's going to increase your dif score, which is how they select people for audit, [01:07:00] uh, by and large.

And, you know, but that's a pretty low standard, right? Not bizarre. Like, and so if you allocate some things to, to postage or delivery or subscriptions, uh, you know, don't worry about it too much. I mean, unless you're, unless you're touching meals, right. Meals and entertainment, or I guess it's just meals now because entertainment is out, um, Cause meals of course are limited to 50% usually.

Um, but for the most part, like that's a lot of wasted energy to worry about that you can just ask your client what they think of it as, or whatever. That's 

[01:07:44] Serena Shoup: what I always default to like, if we really want to make sure that the client has input, we'll ask them what they prefer to see it as. So it helps them make decisions because, but those are already not the same categories that are on the tax return.

[01:08:00] So it's like, it really doesn't matter at that 

[01:08:02] Andrew Campbell: point. Yes. And I guess just in that sort of same vein, the last thing I'll say is that at least when I was there as a couple, quite a few years now, more than a couple years, uh, now that I have been gone, I guess I left in like 2014, something like that. Anyhow.

The software that we used, if you tried to put in an adjustment and the tax difference amounted to less than $200, the software would just pop up and say, should we just round that down to zero?

Yeah. Well, it didn't say in quite those words, you've put an adjustment that amounts to less than $200 in texts. Like, do we really want to file paperwork for 150 bucks? And the correct answer is no you don't. Right? Because an audit may take, you know, [01:09:00] 50 or a hundred hours or something like revenue agents are expensive.

So in general, if it wasn't worth $1,500, forget about it. Not worth it. So that's, uh, and that's $1,500 of tax, so that's like whatever, $10,000 adjustment or something. So, uh, cut yourself a little bit of a slack and, uh, get your clients to save their receipts.

[01:09:32] Serena Shoup: Yep. Awesome. Okay. So now that we've thoroughly helped everybody figure out the situation with auditing books and all that good stuff. Um, it was super, super helpful. I think this is a huge question that a lot of people have. Um, do you have, is there a way that if people, like, I don't know if you're trying to get people to contact you, but if you [01:10:00] want to, if you have a social handle, like a LinkedIn or anything where people can reach out to you, if, if you want, um, or whatever your website, so people can get to know you a little bit.

Yeah. 

[01:10:11] Andrew Campbell: For sure. Um, I'm not very active yet on the social media is I know that's one thing I have to, to get organized and do, and, you know, create a business Facebook page and all of that. Haven't quite got there yet, but, um, uh, yeah, my website is just Campbell tax consulting.com. Um, Um, I assume I I've looked around your Facebook group, uh, enough, you don't have too many crazy followers, so I'll go ahead and give you my email address, which is just andrew@campbelltaxconsulting.com.

Um, and so yeah, if you have any questions, I, as I said, I do have a seven week old at home, so I can't guarantee you that I'll be real, uh, on top of, of responding, but, um, by all means, if you, if you have a question or 

[01:10:58] Serena Shoup: that's okay, and it's great to know [01:11:00] of, uh, I've always in search of good, you know, helping people connect with good tax preparers because, um, not everybody should be doing taxes.

Uh, well, that's a whole nother 

[01:11:12] Andrew Campbell: episode and already I would not be doing it. 

[01:11:17] Serena Shoup: Um, but you know, if you're, if you're open to, um, taking on new clients and someone has a client that needs taxes, um, maybe shoot them over to Andrew. 

[01:11:27] Andrew Campbell: Yeah. Yeah. Especially if you've got nice tidy books. 

[01:11:31] Serena Shoup: Yeah, exactly. I'm sure you don't work with anyone who doesn't work with a bookkeeper.

Right.

[01:11:38] Andrew Campbell: I know I'm actually currently in the process of working with, um, go proposal to like rework some of my pricing and yeah, I've been trying to like find a nice way of saying if your books are garbage, how do I price that into like my schedule seat pricing or my business pricing, like various qualities of [01:12:00] books.

There you go. 

[01:12:01] Serena Shoup: Yeah. That's a, it's a, that's a big deal, 

[01:12:06] Andrew Campbell: especially in the heat of tax season. Boy, when somebody sends you a messy spreadsheet 

[01:12:13] Serena Shoup: and it's not even like, you're not even, you don't even have to go in. Verify things, but if you open the books and you know that by just glancing at them that they're a disaster, like you can't just ignore that.

[01:12:27] Andrew Campbell: Yeah. That's last year I created a little template in Excel for clients where I'm just like, if you're, if you're not going to keep books or even if you have been keeping books, but you've been using QuickBooks and it's a mess because I know it is, uh, this is too confusing for the average user. I was like, here's a spreadsheet.

Just put your stuff in this spreadsheet. It's already formatted. Take your best guess at a category. Leave me a little note and then I will run a pivot table on it at the end of the year and everything will be fine. 

[01:12:59] Serena Shoup: [01:13:00] Yeah. Yeah. Sometimes it is easier to just get that bank export and record. Reconstruct.

All right. Well, thank you Andrew so much. Yeah, exactly. Thank you so much again for coming on and chatting with us and, um, I'm sure I'll have you back on in the future. Maybe I'll have you do a little guest appearance in my program or something. 

[01:13:26] Andrew Campbell: Lovely. This has been very fun. 

[01:13:28] Serena Shoup: Yeah. Awesome. Well thank you and take care.

All 

[01:13:31] Andrew Campbell: right. Always a pleasure. Take care.

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