Certain purchases you make are a leap of faith.
Buying a house is one. You get 30 mins to inspect a home while your competition for the property does the same.
You try to hear the neighborhood noise but the real estate agent plays music to mask any sounds.
You try to see if there are any off odors like mold. But the real estate agent burns scented candles. A lot of the time buying a home is based on a gut feeling and unexpected things need to be fixed.
Hiring an accountant to ensure you don’t get ripped on tax is another one of those leap-of-faith purchases.
The ruthless interview process
Eight months ago I copped a massive tax bill due to a bad business setup.
It nearly bankrupted me. I vowed never to be so stupid and incompetent again. I went out to market to hire a real accountant.
You know, one of those ones you see in movies that’s like “so, you put your money here, here, and here and your tax bill will go down and you’ll get rich off real estate. Sound good mate?”
I did fifteen interviews with different accountants. They all sounded boring. They do your tax return, some basic bookkeeping and that’s about it. “That’ll be $10,000 please.”
At the end of the process I was ready to give up.
Then I met one accountant that took my breath away.
Don’t buy stuff that is “on trend”
The accountant I chose mainly dealt with web3/crypto businesses. As a wannabe Web3 guy with Ray Ban Sunglasses, they spoke my language.
I immediately hired them.
They proved early on they could reply to my emails fast. Other accountants couldn’t do that so it gave me a false sense of competency. I loved them so much, I referred clients to them.
But then the wheels started to fall off.
If your accountant says “I’ll break his legs,” run
One afternoon I called up the owner of the accounting firm (instead of my account manager) to ask about a complex crypto investment.
During the conversation he tells me he had $100,000 stolen from him. I instantly felt sympathetic because I know people who’ve had it happen. Heck, even I’ve had some crypto stolen.
Me: “Why didn’t you report the crime to the police?”
Owner: “I haven’t got round to it yet.”
Me: “When did it happen?”
Owner: “12 months ago.”
Me: “Mate you gotta do something about it.”
Owner: “Don’t worry I’ll go around to his house and break his legs.”
That comment stayed with me. I’m all for a bit of fun but I stay right away from anyone breaking the law. The comment seemed out of character so I ignored it. Until…
Undisclosed costs are a pain in the ass
When you get an accountant they either charge you a subscription fee or by the hour. I got given a choice and chose subscription.
A few months in I get a random invoice out of nowhere for $6000.
Naturally, I assume it’s a mistake or miscommunication given my emails with them clearly said subscription.
At first, when I questioned the invoice, my account manager quickly jumped on the offensive.
“Ohhh I can’t talk about invoices. That has to be with the owner only. He just allocates cost where he sees fit.”
This remark made me feel like they just divide up their firm’s expenses amongst whatever clients they have on the go. It seemed totally unscientific. So I called the owner and queried the invoice.
“Ahhh all good mate. We’ll adjust the invoice tomorrow for you.”
The next day I got a new invoice. It’s by the hour. It has a timesheet attached to it with all sorts of random commentary.
“Sent text message. $300. Made a 5 minute phone call. $525.”
I added up the hours out of interest to see if it equaled $6000. Nope. It came to about $3200. Suspicious.
I emailed the owner back and told them to charge me the subscription as discussed. He then called me rather than reply in writing (always dodgy when this happens).
The phone call from hell
The call started nicely. I again asked for the invoice to be changed.
Owner: “We add so much value though. All of our customers love us. Did we not add value to you Tim?”
I hate these throwaway sales lines.
Me: “No, you didn’t add much value at all, otherwise I wouldn’t be so pissed. You didn’t attend a key meeting or let me know you couldn’t make it.
You presented a cash flow that was wrong. Most of my accounting is automated by software. I need you for the advice. And the advice came from a 32 year old who doesn’t know anything about business.
The only advice he gave was that I should offer consulting, which he knew I used to do and discontinued. Given I told him my business goal is to get away from trading time for money, this advice was useless.”
The owner kept arguing with me, using sales lines not backed up by data. I hate arguments. My view is sometimes people you do business with don’t work out for some reason. It’s normal.
So I suggested we part ways.
I told him I’d pay their outstanding invoice and all I needed was for them to give me my data on the way out. I offered to pay them for the data to ensure they were motivated to hand it over.
“You know what, we won’t charge you for the data. Let us know what you need and we’ll send it to you.”
I emailed him 10 minutes later with the data I needed.
Owner: “We’re not doing any more for you. We have other clients who ‘see our value.”
*Becomes an adult baby in a diaper throwing a tantrum at this point*
So I paid their invoice, didn’t get my data, and moved on. Liars will always be liars and it eventually destroys their business.
What the owner of the accounting firm didn’t know is a few days before everything blew up, I found out two other customers of his had been ripped off on their invoices too.
He charged one dude $2000 to read a white paper. If I hadn’t found this out I might not have been so suspicious of them.
Then I spoke to a few people in the crypto industry and they told me they’d heard he had financial troubles. That’s when it hit me.
Manic behavior is often a red flag.
I saw this in my banking career all the time. Right before someone went bankrupt or ran into huge financial problems, I saw a change in their behavior. We were trained by our risk team to look for it.
Now the actions of this wild crypto accountant made sense.
Lessons you can apply to your own life
I now have a new accountant. The old one is gone and his bad smell has left my home office. Upon reflection there are many great lessons for you.
If you’re a business owner you’re really a recruiter
Your job is to bring people into your business who can amplify what you do. Get good at judging people’s characters to get lied to less.
When you catch someone out in business telling one lie, it usually leads to another lie
Exit them after the first lie.
Never let a key supplier, partner, or accountant own your data
Always collect your data as you go.
“Once bitten twice shy”
I was tempted to stick with the rogue accountant, as the time and cost to leave were too great. I’m glad I didn’t.
The longer you leave a bad egg in your life/business the more damage it will do. Learn to cut your losses and be okay with it.
Don’t be a business owner if you hate failing
Failure in different business activities is a guarantee. It’s why I love this experience because it’s the only way to learn the hard lessons.
If you’re not failing to some degree, you’ll probably never be successful. Failure is a sign you’re executing.
Do your due diligence when hiring someone like an accountant
It pays to read their reviews and speak to existing customers to get a sense.
Word of mouth travels fast
Don’t be like my former knobhead accountant and treat people badly.
Otherwise you’ll be forever turning over clients and having to pay for ads to attract new ones.
If you’re not sure what they do it’s a sign
That’s how I felt with my accountant. The whole time I’m sitting there going “I don’t know what they do for these huge invoices.”
Test potential partners based on their response time
My rogue accountant was always reactive rather than proactive. You want to work with people you don’t have to always chase for the basics.
Start new business relationships with a trial and let them know
It gives you a chance to test drive their bullsh*t sales pitch to see if it’s real.
The counterintuitive lesson you must hear to be successful
I’ve met plenty of people in life who’ve had an experience like this.
The problem is they let it ruin them. Suddenly they no longer trust people anymore. They become skeptical. They think everyone is out to get them.
The reality is there are no guarantees in life.
The bad actors are rare and most people will do the right thing by you. The solution is to trust and then verify … and to expect there will be losses no matter how good your decisions and research are.