Bookkeeping Trend: Less But More And More

The flavor of business always changes over time but what our resident Bookkeeping Mensch, Paul Rosenblum, has noticed recently in his own bookkeeping practice is going to surprise you. Less but more is the best way I can explain it but Paul does a better job at laying out all the details for you. Let’s just say that if you’re a deep diver, you’re going to love this trend. Listen for the full details and for Paul’s reaction to this seismic shift in bookkeeping.

🔥 Substack post mentioned:
https://paulrosenblum.substack.com/p/how-do-independent-bookkeepers-start

Transcript

Episode 50

I can hardly believe we’ve gotten to the 50th episode of this podcast at 2 episodes a month. We’ve also surpassed 10,000 downloads, and are still growing, with a small budget and not devoting full time hours to the podcast like some people can and do. I have people to thank for this – my marketing and strategy consultant (I think of her as my producer)- Steph Fuccio – see her credit in the notes and of course to all of you listeners (new and continuing).  A big thank you for listening to my voice twice a month.  I have limited time to devote to this pod, as I am still a full-time bookkeeper, but for the first time in 30 years, I am starting to re-evaluate things in the bookkeeping practice.  

 I wrote an article in Substack about the thought of semi-retirement (if you haven’t subscribed yet, why not? And please do!) – and secondly, now, I am beginning to see two trends in my practice that have started in 2024 and now continuing into 2025.  

First, I had one client with two businesses who went bankrupt in 2024.  I knew it was going to happen at one point, since they didn’t listen to my and the accountants’ suggestions but just didn’t know quite when.  So, one client, two entities lost.  I was charging them a lower hourly fee since they were struggling almost from the beginning of 2015 when they started the businesses, and they became more and more stressful in terms of bookkeeping because of all their many loans, and 7 or 8 credit cards to reconcile every month, as well as 3 or 4 bank accounts. And they were slow payers. I have patience with the slow payers which I know I shouldn’t – it’s one of my business faults, for sure. So, there was a partial sense of relief when they announced that they were going out of business. And getting W9 forms from them in a timely fashion was always a nightmare! But somehow, I helped keep them out of an audit even though they had not showed a profit in any year in 10 years of being in business. 

I also had a client who I had been doing bookkeeping for since 2014 move on to a new accounting firm and wanted to keep everything in-house.  He left his tax preparer as well. He wanted his books done by the 10th of the next month since he had 3 entities, all related to each other, and all much more complicated than they used to be, hence more time for me to put together.  So far, 2 clients, 5 entities lost.  

I also had another client who never gave me access to the bank account, and they were supposed to send me bank statements and credit card statements every month. In 2024, I stopped emailing them to ask – I had other things to do and other companies to do bookkeeping for.  In December, my contact called me and told me that they found a new bookkeeper who specialized in their field, which was art.  Another stressful client lost. 3 clients/6 entities.  But I’m not complaining.   Losing stress with lower paying clients isn’t a bad thing. 

I walked away from two more clients who did not give me access to the bank and credit card accounts.  Four clients/8 entities.

So, some of these losses were planned, and some were not, but I knew that I had new clients who were in the wings since I didn’t have the band width to get them done.  Now I do -- so all of these clients lost have been replaced within about 5 minutes flat, which I can’t figure out at my age if that’s a good thing or a bad thing!  

I have taken on a large project that I finally, after two months or more, received all the bank statements dating back to 2017 for a now closed bank account.  Their books need to be totally re-done from the beginning.  They are accrual based, but I will be recreating the books on a cash basis for prior years, and starting in 2025, adding accounts payable and accounts receivable to the mix before handing the books over to them. 

I have had a client since 2017 with one LLC, 4 bank accounts, two credit card accounts, (and to keep with the holidays), and a partridge in a pear tree. However, they were not all for the business—each account had/has personal expenses, businesses expenses, and, mixed in, expenses for two properties that are separate LLC’s.  I entered the separate LLC properties and created Equity accounts for them on the balance sheet and separated those expenses from the profit and loss.  It was painstaking since I entered most everything in ASK MY ACCOUNTANT and then re-categorized them based on their answers to spreadsheets that I sent them.  I started in 2020, entering 2017 data since they were not filed. Now I am just finishing 2023, and hopefully by the due date coming up in April, they will be able to file. And then on to 2024, which will be on extension expecting to be done with that during the summer of 2025.  And I was beginning to let out a breath when they came to me and asked me if I was interested in doing the bookkeeping for yet another company that they owned since they don’t like their current bookkeeper.  Since it makes perfect sense for me to do that, because there is a loan between the entity that I am working on and the other company, I am taking it on.  And I am charging an hourly fee that is acceptable for both parties and on the higher end of the spectrum.  Starting in 2025 (when I get there), the 2 properties will have separate books, the personal expenses won’t be input at all, the business LLC will have a separate set of books, and the entity that I’ll be taking over will be separate. Different credit cards and bank accounts, of course, for all the entities and no more mixing everything together.

I also have another client who owns a historic bar that has been around close to 200 years. To celebrate 2 years from now, he wants to open bars in both NYC airports, JFK and LaGuardia.  I suggested that each new bar should be new LLCs, and the CFO agreed. So, another client with soon to be 3 entities, 3 different QBO databases and 3 times the work.  

The point of this episode?  Bookkeeping is changing with A.I. being introduced, but  businesses are also changing in a major way.  It seems like suddenly, there are business owners expanding their businesses by creating more entities, not just locations all under the same Corporation or LLC.  So, I see a trend in my practice going from having a hundred plus clients diminishing down dramatically since each client could have two or three entities.  So, the number of clients would go down to maybe 15 or 20, tops, each one having multiple entities, so the workload would stay roughly the same.  And financially, the hourly rate would be consistent throughout my practice. 

The conundrum is that: I never really wanted this – I like the idea of having dozens of clients, so if some are lost by attrition or closing down their business, or I decide to walk away from some of them, it wouldn’t hurt me financially.  That has always been a sweet spot for me personally.  But I see the change coming. In a year from now, I will have fewer clients, but just as many sets of books to do, which means that I have pick clients carefully, and try and come up with a plan on how many I can comfortably handle.  Having separate entities for the same client also means transferring money between entities, and sometimes one entity would purchase inventory from another entity if needed- (that would be a customer invoice from one entity, and a vendor bill in another entity).  

Having less clients could mean more income as I get into my 70’s (which is another 2 months for me).  How many people can say that they made more money in their 70’s than any other time in their working life?  I’m lucky and I’m cursed, I guess, but mostly lucky. I recognize that fully. 

I’m lucky to be able to do what I do at my age, lucky to have what seems to be an un-ending supply of potential clients, lucky to have a good reputation with accountants and tax preparers, lucky to have this podcast with all of you listening, and lucky to have Steph in my corner. She is my reality checker, cheerleader, and all-around podcast guru. If anyone wants to start a podcast, contact her – she’s the best. 

Next episode—back to tax season stories of specific situations that I know I will run into (I am recording this before Jan. 6th, 2025 when I expect tax season to fully hit).  

Stay warm and dry and get your 2024 bookkeeping done soon, deadlines are coming fast!  

Be coming out of your Android, I-Pod, or tablet soon --- I’m Paul Rosenblum.