The Abundant Accountant Podcast

AA 45 | Cryptocurrency

 

There is extreme value in knowing not only about your specialty but also in other areas as well. This is how you keep yourself competitive, forward-moving, and abundant. For CPAs, a great area to look into is the new era of currency—that is to say, cryptocurrencies. In this episode, Michelle Weinstein interviews Seth Wilks, a licensed CPA in Arizona and the CFO and co-founder of ProfitStance, the leading cryptocurrency tax and accounting platform for professional tax advisors and crypto investors. Seth is here to share with us why cryptocurrency is a great way to increase firm revenue and how they are helping clients learn how to speak the language of crypto and position themselves as crypto tax experts. What is more, he also provides some of the great tools that can help CPAs venturing into this niche, preparing them to take on this new sexy thing.

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Why Cryptocurrency Is A Great Way To Increase Firm Revenue With Seth Wilks

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Let’s welcome our special guest, Seth Wilks, to the show. He is a licensed CPA in Arizona and has worked both in private and public accounting for many years. He has extensive experience in domestic state, local and international taxation. He has also helped many companies expand their international operations around the world. He’s dedicated his time to researching taxation of virtual currencies also known as Bitcoin cryptocurrency. He is the CFO and Cofounder of ProfitStance, which is the leading cryptocurrency tax and accounting platform for tax professional advisors and crypto investors. Let’s welcome Seth to the show.

Thanks for having me, Michelle.

Thank you so much for being here. This show is to create the firm of abundance, the life of abundance, and the clientele of abundance, meaning quality, not many but high quality. I’m happy Seth that you’re here to talk about this new era of currency that has come about, to discuss how being knowledgeable in certain areas can increase CPAs revenue or having specialized knowledge. When you have, it pays off. Before we start, can you do a quick intro of yourself? I’ve already done the one you sent me, but I always think it’s more powerful if you share with all the accountants, CPAs, EAs, probably some tax attorneys who are chiming in. Can you share with everyone who you are and what you created?

First of all, my name is Seth Wilks. I am a licensed CPA and I am one of the Cofounders for a company called ProfitStance. We are a tax and accounting platform for cryptocurrency investors as well as professional tax preparers. This has been a fun ride for me. I’m excited to talk about it and more importantly for who I am, I am a music enthusiast and guitar lover. Those were my real passions are but we can talk about accounting and crypto.

I’m surprised you’re not on tour with a band.

I’ve done that before but it’s been a while. I toured around with a band called The Jeff Hunt Band. This was in my younger years. I love music. It’s always been a huge part of my life. Part of my career, I worked for Fender Musical Instruments. It was a lot of fun being able to bring my education in accounting and tax along with my love and passion for music. I have a cool experience.

For our audience that has clients coming to them that have made investments or trades with cryptocurrency. I’m not privy to it. I have not done it myself. It’s a great way to increase firm revenue, a great way to differentiate yourself, which is always good. It’s like if I were speaking Spanish and I had a Spanish clientele and you can communicate in that language, this is almost similar to being able to communicate in crypto language to these people. They have the stuff on their taxes and they need someone to help where not everyone is knowledgeable. Seth, how is it that you have helped accounting professionals learn this to be able to help their clients out? What are some ways that we can talk about how this could help increase their line item on their P&L, the revenue or the sales and how this could be a unique niche?

Your analogy is spot on, being able to speak the language of crypto. The way that ProfitStance has gone about trying to help professional tax preparers is through education. We have a software platform that enables you to do the calculations and everything. Many CPAs simply don’t know what crypto is and a lot of them are afraid that when their clients are going to come to them, how will they converse with them? How will they be able to understand some of the unique concepts that happen only in the crypto space? A large part of what we do is education. There’s a two-part approach we have. One, we talk about the basics of cryptocurrencies and blockchain technology.

From there, we build on that by going into the specific tax rules around cryptocurrencies and some of the unique things that they might see. From that point, we talk about what our tool can do to make their lives easier. It’s about making them feel comfortable to go out and be able to market themselves as a crypto tax expert and use that as a way to bring in additional clients. We’ve seen a lot of people who’ve been excited about it and after we get done with them, they hit their existing clients hard. Then they start opening up marketing. There’s been several who have had a lot of success, increasing revenue by making themselves stand out as crypto tax experts.

People in crypto want to go to people they feel comfortable understanding and getting the space. Click To Tweet

When someone becomes a crypto tax expert from where you’ve seen it, how much revenue on average have you seen a CPA, be it a one-man show or a small firm or midsize firm, increase their revenue by bringing in this knowledge and learning the unique concepts and the tax rules that go along with that? You’ve separated yourself from your neighbors and from the other people who are also CPAs looking for new clients.

The way it’s worked in the past, there haven’t been great tools up to this point. What’s happened is a CPA’s favorite tool is Excel and what’s happened in the past is they get all of this trading data from their client, and then they have to go through hundreds to thousands of lines of data and calculate it by hand. What happens is they end up investing 20 to 40 hours in a project. You can’t charge your client your billing rate for 20 to 40 hours to find out that they had a $3,000 capital gain or even a $10,000 capital gain. You can’t build that way. What we’ve done is we’ve built tools that make this process much more efficient. They can go into our system and invite a client. The client can log in, they pull all of their trading data into the system on their own, and then once it’s ready for the CPA or enrolled agent to review, they click a button and they jump in there. The CPA is paying the license fee so the end client doesn’t ever have to pay that out of pocket to us.

The CPA can then turn around and put that as a line item on the invoice but that line item doesn’t have to be just the straight one-to-one price that they’re paying for the license, because they’re also going to be putting in review hours and that kind of thing. We’re talking about anywhere from $500 to $1,000 for a line item depending on how much trading activity is taking place. Licenses for us, depending on how many you buy range anywhere from $100 to $250. That’s a lot of profit built into this system where you don’t have to invest a ton of time. A lot of the heavy lifting is done on the backend through the software. You can focus on the important things like adding value to the client to help them understand how they can save taxes on crypto transactions, not only in the past but also going forward.

Let’s say you’re piquing someone’s interest and they’re like, “Let me go check this out.” What are some good research tools or places that if someone wanted to invest 20 to 40 hours in a project on themselves to do the research that you would lead them to, granted you’ve created a way where they can do it in a couple of hours, have a license fee and make it more profitable? Before they can maybe realize that, they need to go and do all the research you’ve done. What are a couple of good tools that you think would be helpful for a CPA that hasn’t tapped into this language yet or this niche per se?

There are some fantastic podcasts out there. I know that podcasts sometimes can be like a Wikipedia. They’re not always as accurate as you would hope, but there’s a few out there that I love. I feel like they do a great job of explaining in a way that it’s understandable and shows you the value of what crypto and blockchain are all about. There are also some specific resources that we liked. A few of the podcasts that I enjoy, there’s one called Unchained. This is from a woman named Laura Shin. She also has another show called Unconfirmed. Both of those are fantastic. Unconfirmed is a little bit more condensed and a quicker listen. Unchained is a little bit more expanded format.

Another great one is called Off The Chain. You might hear a theme here. Everybody is building off the chain. Anthony Pompliano or Pomp is another great resource to listen to. There are your traditional books out there. A lot of this is not about trying to gain the tax. It’s about gaining the understanding of crypto and blockchain because that’s the part that’s a little bit scary. The tax side isn’t complicated, but it’s getting comfortable with the technology side so that you can get out there and talk with your clients. I think that’s where they spend most of their time, in the beginning, is learning that. We’ve done a couple of resources. In our company, we host webinars twice a week. On Tuesdays, we cover the basics of crypto and blockchain. On Thursdays, we cover a little bit more in detail the specific tax rules surrounding that. There are lots of resources out there through the podcast world but we’ve also produced some material for CPAs and EAs to have access so that they can gain that language and understanding.

Did they get CPEs?

Absolutely and it’s free, so you can’t go wrong there.

AA 45 | Cryptocurrency

Cryptocurrency: Get the education that you need, so that when your clients come to you, you are prepared and ready.

 

How do they sign up? Tell them. Free CPEs on a topic that could increase your revenue sounds like a great investment of time for the pitch queen.

Go to ProfitStance.com and you can find our education there. We do it twice a week. At a minimum, you can get two CPE hours but it is great stuff. In the last few months, we’ve had almost 10,000 CPAs and EAs take our classes. It’s been great. This is the sexy thing that’s going on. When we’re in the accounting space, there’s not a lot of super exciting stuff, but crypto is an interesting one. We get a lot of curious onlookers who want to come in and then a lot of people who walk away thinking, “I can take this and make this a big part of my firm.” It’s been fun.

Tell us one client or CPA that went through the webinars, got your software, turn their business around and skyrocketed their revenue. Give us the details on that one case study that you’ve got for us. For someone who might be a little bored with their current. This the new sexy thing and it’s like Tesla. It’s like everyone will have automatic driving cars in the future. I think pennies and dimes might go away one day. You might want to get with the times and be able to educate themselves on this. What is that one client or business or accounting firm that you saw transformed?

This is a bigger topic than crypto. I will get specific to it. This is one of the things in the accounting world where people are trying to use automation as much as possible that some of those routine tasks can be done, whether it’d be bookkeeping or tax prep. It then frees their time up to do a little bit more value-add work like advisory services or things with higher billing rates. What I’ve seen specifically in our case is that we’ve had firms that have come to us where they’ve had a few crypto clients but they’re like, “We hate doing it because we’ve had to do it by hand. It takes way too many hours and we can’t bill for it because the value is not there. Yet we still want to do a good job for our client.” They’ve come to us and said, “What can we do?” We go through the process of showing how the software works, letting them go out and take it into practice. These are people who’ve have come out and said, “We’ve taken our base of ten clients that were in crypto. We’ve more than doubled or tripled it.”

These are a handful of small firms that we’ve been working with as beta testers. It’s a real thing and the reason that they feel good about it is the heavy lifting of the manual calculations is off of their plate. They don’t have to worry about it. They get to worry about the fun things, those advisory type things where they can say, “I saw that you had Bitcoin and you sent it to somebody. Was that a gift? Was that a charitable contribution? If we can analyze these transactions, we can come up with ways to save you money.” A lot of that is built into the software, which allows a CPA or EA to go to their client with some great value-add things. You can take this as a way to build that clientele. People who are in crypto want to go to people who they feel comfortable that they know to understand and get it. They don’t just want to go to their dad’s CPA. They want to know that whoever they’re talking with, gets it, and understands it. That’s why learning this language is important.

When I hear, understand and get it, I hear that your clients want to feel heard. One of the key ingredients to enrollment and getting new clients is listening and being able to hear and listen and understand your clients. If you can’t speak their language and they’re speaking to you in English, and you’re speaking in Chinese, you’re going to have some problems. I love that you’ve got these test case beta ones that went from ten clients to doubling and tripling off to put a revenue number attaching to it. What does that monthly revenue look like to the accounting firm? If they’ve got 30 crypto clients using your software, do you have any numbers on the value add that they were able to go back once they were able to learn and analyze the transactions? Get rid of the manual calculations, remove that off their plate and be able to understand and show them other ways to reduce their tax liabilities.

We’re talking anywhere from $10,000 to $30,000 of increased annual revenue. That’s just scratching the surface. One thing I want to point out is that a lot of the audiences may say, “I don’t have any crypto clients.” It doesn’t seem like something you care about. The fact of the matter is based on our surveys, there’s roughly about 8% to 12% of the tax filers out there who have crypto. It means they probably have clients that have been going under the radar. There’s a question on the 2019 tax return on Schedule-1 that says, “Did you have any virtual currency activity in 2019?” This is a question that every professional tax preparer now has to ask their client. I think that what’s going to happen is they’re going to be surprised at the reaction.

Whether you want to take this new niche and make a market out of it, or you just want to be prepared for those clients who do come to you, you’re going to see them. That’s what we want to do. We want to prepare you. They start using terms like airdrop and hard fork and all these things. You’re like, “I have no idea about what you said. I don’t even know how to approach it.” We want you to feel comfortable in understanding these things. This is important and everybody is going to see it. It’s not just those who want to grow their business. This is something that’s going to impact everybody.

Cryptocurrency is a budding area for those who are looking at growing your revenue and finding a niche. Click To Tweet

In my world, it’s almost like I didn’t want to do social media but you have to. You’re all listening here or you’re watching my funny Instagram post about Michelle’s Thursday Things. You embraced the times. The yellow phone book is dead. The fact that it is now a box that someone has to check, if I were a CPA, I’d probably go sign up for your Tuesday, Thursday class so that I know what all those words were. I was like, “Fork? Are we having lunch?”

It’s interesting that you mentioned being forced to adopt technology sometimes. You don’t want to do social but it’s a great way to market, so you figured out a way to do it. I was tuned-in to your show about the ten qualities every accountant needs. The idea of adopting this crypto tax technology falls well within that.

Is that the 11th quality?

This could be part of flexibility or listening skills or committing to your sector. You follow those ten qualities and you apply it to crypto and it can be a marketing strategy for you.

It has to be something that you’re also passionate about, but we don’t know sometimes what we’re passionate about until we try it. Educate yourself a little and it might bring you $10,000 to $30,000 annual revenue off 10, 20, 30 clients. I don’t know how many that was, but that’s a great niche. Especially for those of you who might be wanting to work virtually. None of these guys are going to want to see you. They’re all virtual. We’ll talk on email or Zoom or Skype, but don’t come to my office and I don’t want to see you. They’re all over the world, but for anyone in the US, that’s a massive perk. I know there are a lot of people that have been emailing and commenting about having this virtual firm model. That’s great. Seth, is there anything else that you would love to share with the audience that might be considering going down this fork in the road?

AA 45 | Cryptocurrency

Cryptocurrency: Adoption is almost doubling year over year in the crypto space, which means several crypto investors and your potential clients are going to continue to grow.

 

Come to ProfitStance.com and take our classes. Whether you end up using our tool or not, that’s less important to me than you guys getting the education that you need, so that when your clients come to you, you are prepared and you’re ready. For those of you who are looking at growing your revenue and finding a niche, this is a budding area. This isn’t about serving clients in your local area. You can be serving these clients virtually all over the country and all over the world. They’re completely accustomed to doing things via Skype and email, etc. Get educated. For those of you who want to get out there and make this a niche, it’s a real viable option. While it might be $10,000, $20,000 to $30,000 in your first year, that’s going to keep growing because of adoption. I think adoption is almost doubling year over year in the crypto space, which means several crypto investors and your potential clients are going to continue to grow. Get out there, get educated and you can do it. Tackle it.

Before we go, can you teach us two words of the cryptos language, one of them is fork? What does that mean? Can you give us one little education on what both of those mean before you depart us?

The two words you’re talking about is hard fork and airdrop. Both of those are addressed and revenue ruling that the IRS came out with. Essentially a hard fork is imagine you have a blockchain, which is a public ledger of Bitcoin. It’s run on a certain technology and data side as a consensus that “There’s another more efficient blockchain. The technology’s better. We want to move away from the old blockchain and onto the new blockchain.” That movement from one blockchain to another is called a hard fork. I’m giving the accountant version of that.

We want the accountant version for all of us. I always say us because I’m not an accountant, but I love you all. I know what conservation easement is. I know that you can hire your kids and save some taxes. I have a lot of smart friends.

The other one was airdrop. It is addressed in the same revenue ruling and that sometimes when you have a hard fork, you end up with two assets. Let’s say before the hard fork you have Bitcoin and then after the hard fork, you end up with Bitcoin and Bitcoin Cash, which are two separate currencies. When you receive that Bitcoin Cash, it virtually came to you. That’s what they are calling an airdrop. It came out of nowhere. It came to you because you own Bitcoin. Because you own that Bitcoin on a certain date, you had a right to a certain number of Bitcoin Cash. Hard fork and airdrop are both in the IRS revenue ruling. The IRS has a great frequently asked questions section on crypto. There are about 40 different questions that they go through and cover. That’s another good resource to get a little bit more technical on the tax side.

It’s like airdropping your photos to another iPhone. Thank you so much, Seth, for being here with us. It’s an honor to have you. For all of you reading, go take his webinars. It sounds like two hours of well-invested time and a couple of CPEs. Thank you so much for being here with us.

Thanks, Michelle. I appreciate it.

What an amazing episode with Seth. I love his teaching of a new language, hard fork and airdrop. I think what he’s saying is important and being of the adopting phase. Having the adoption period that you could possibly increase your revenue. If these people are doubling by the numbers every single year, this is an opportunity that if I were a CPA, I would dive 2 feet in. Make sure to check out his webinar. It should be helpful to adopt the new stuff. I had to adopt podcasting for example, and it has led me to each of you. Going outside our comfort zone sometimes can help us grow, learn and ignite our passion in a way that you never knew existed. A lot of times, I feel it myself, you do a lot of the same thing over and over again. It can get a little mundane. This might be that thing that can ignite and spark your passion back into what you do and maybe help a new set of clients that truly need you. Have an amazing day. I’ll see you in the next episode.

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About Seth Wilks

AA 45 | CryptocurrencySeth Wilks is a licensed CPA in Arizona and has worked both in private and public accounting over the past 15 years. He has extensive experience in domestic, state and local, and international taxation. He has helped companies expand their international operations around the world and over the past two years has dedicated his time to researching taxation of virtual currencies. He is the CFO and Co-Founder of ProfitStance, Inc., the leading cryptocurrency tax and accounting platform for professional tax advisors and crypto investors.

 

 

 

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