Are accounting firm partners just franchisees? Also, how Square could make cryptocurrency go mainstream

CPA Practice Advisor has announced their annual “40 Under 40” in the accounting profession for 2018. Congrats to our friend and interview victim Dr. Sean Stein Smith for making the list! His Cloud Accounting Podcast episode will drop in the coming weeks. Down under (in Australia), Jason Andrew makes the argument that accounting firm partners are essentially franchisees. Not sure if going for partner is the right move? This post should help you decide. Up in the great North (AKA Canada), Ryan Lazanis blogs about a guy who is probably the most remote cloud accountant in the world. At least he’ll hold that title until someone sends us an even better story — Tweet suggestions to @BlakeTOliver and @DavidLeary. Meanwhile, back home (in the USA) our fabulous FASB has simplified GAAP for cloud computing, but manages to use complicated English to describe it (if you can call it English). Finally, it looks like Square could be the disruptor that makes cryptocurrency payments go mainstream. The payment processor and point of sale supplier has got a new patent that could make accepting Bitcoin and Ether super easy for millions of Main Street merchants. Oh, and Blake had an exciting morning.

Stories in this episode:

Blake Oliver: Welcome to the Cloud Accounting Podcast, a show for accountants and bookkeepers using cloud technology to make their jobs more strategic, and impactful. I'm Blake Oliver-
David Leary: And I'm David Leary.
Blake Oliver: What is new in the world of cloud-accounting technology?
David Leary: One thing's new this week. The CPA Practice Advisor announced their 40 Under 40, for 2018. That just came out on August 26. I know I've been on the list once, when I was like 39. You [00:00:30] were on it a couple times, right?
Blake Oliver: You're not old enough to even be on that list, are you? Oh, wait, there's no minimum, just ... 
David Leary: I'm itching the 50 under 50, now. That's what I'm reaching for. 
Blake Oliver: Yeah, I was a 40 under 40, in 2016, and 2017, and, actually, I'm happy to report that this year, the CEO FloQast, where I work, Mike Whitmire, he is on the 20 Under 40, which is the accompanying list for folks who are not in public accounting, but on the vendor space. We're very happy for [00:01:00] him, and for FloQast, for getting that recognition.
David Leary: What I like about this list, always, because it's like almost always half the list are people you either know, or you're friends with. We've had some of these people on the podcast, actually, I think. I don't know if we put the interview out there, yet, but Sean Stein Smith's on the list-.
Blake Oliver: Yep, still working on that one. 
David Leary: What else? 
Blake Oliver: No, wait, did we do that? We did that one, and I think he's the only guy that we've interviewed, but this is great, cuz now we have a list of people to go after.
David Leary: Now, they still have to be interviewed ... Yeah, that's true.
Blake Oliver: Exactly.
David Leary: It's always cool, cuz you see this, and you can ... A [00:01:30] lot of these people as friends, and you're connected to them on social, so it's really ... It's just exciting. It's a good celebration to see this.
Blake Oliver: Yeah. 
David Leary: I recommend everybody go, and click on the ... We'll give the link, but you can click on each person, and then, each person provides kind of a little bio, which is cool. Then, they talk about what drove them into the profession, who their mentors are. It's a good way to learn about other people in the profession that are really changing it for the next 5 to 10 years.
Blake Oliver: Yeah. What I like about it, too, is you go into those bios, those interviews, and so many people are talking about [00:02:00] technology being a driving force of change.
David Leary: Do you have any articles this week? 
Blake Oliver: Yes, I do. This is by Jason Andrew. He's the co-founder of SmartBooks Online, an Australian firm. He posted this on Medium. It's called Accounting Partners are just Franchisees. You can tell from the title that he's not exactly the biggest fan of accounting partnerships. He basically goes through, and he looks at the attributes of what it's like to work as a partner in [00:02:30] an accounting firm. Then, he talks about what it's like to own a franchise. Honestly, they're kinda similar, right? 
Blake Oliver: I'll go through the list, here. He says, for instance, characteristics of a franchisee, characteristics of an accounting-firm partnership. Be your own boss, buy into a system that works. We take care of all the boring business stuff, like marketing, admin, finance, and HR. Be part of a bigger movement. We're different from everyone else. Don't worry about the buy-in. We can vendor-finance [00:03:00] it ... That sorta thing. Of course, the two columns - the franchisee, and the partnership - have exactly the same answers, breaking it down.

His ultimate takeaway is the question: is it good to, as an accountant, want to be in a partnership these days? He says that, if you're a technician, if you love the work that you do, and you just want to do that work, and do it under an established brand, and not have to worry about any of those business-type things, like marketing, and [00:03:30] whatnot, then go be a partner. That's perfect for you. If your desire is to build a business, to build something that's bigger than yourself, then your goal should be not to become a partner in an established accounting firm, but go off, and build your own firm. Do something for yourself, and not subscribe to somebody else's agenda.
David Leary: What's interesting about this is he really talks about his own personal experience in this journey. He was all in. He's like, "I'm gonna work my way ... I'm gonna become a partner, and all the glorious benefits that [00:04:00] come with that," but he kinda stepped back, and he's like ... He gets to actually be an accountant and have his own business. He doesn't even ... They don't even refer to each other as partners in his business, cuz they're actually owners of the business, not partners.
Blake Oliver: To bring this back to tech, the thing that I experienced, and a lot of what young accountants are experiencing is that it's getting easier, and easier to start your own accounting firm, because, now, all you need is a laptop, and an internet connection. It used to be you had [00:04:30] to rent an office. You had to have a receptionist. You had all this overhead that required buying into a partnership, or, at least, banding together with others to do it. Now, you can be your own guy, and you can be out in the middle of nowhere, and you can be serving clients, pretty much from anywhere, if you know what you're doing. 
David Leary: Even reaching those clients, now, which pre-cloud, even marketing to those clients was difficult, but now, you can ... If you just want to only do comic-book stores, [00:05:00] you can only do comic-book stores, and you can survive as an accountant, or bookkeeping. You can have your firm that does that. We talk about this every week, but the technology stack that we're now living in really enables this kind of thought process. People can break free, if they don't want to ... If it's not for them, you can break free, and do something else.
Blake Oliver: Actually, I have a great story that illustrates this point, from Ryan Lazanis. He posted a blog post, based on his vacation; he just took a vacation, recently, to Indonesia, [00:05:30] and he was staying on a remote island. He met a CPA there, who ... This is an island that doesn't even have electricity, or internet, and this guy is a CPA. He's out on this island, and he provides accounting services by tethering his laptop to his phone, and getting internet that way, and, he works remotely with people, in Australia, to do their taxes, and he does their accounting online.
David Leary: He wins. He's winning ...
Blake Oliver: Yeah, there are some great pictures in this article of [00:06:00] this guy, George, the CPA, sitting in his bungalow, with a beautiful view of the beach, and the ocean, in his Hawaiian shirt.
David Leary: That's amazing, amazing, amazing. I really wish I was on the beach, right now. I joked to my wife, "I'm semi-retired," after the news last week, and I had this grandiose plan of playing Madden every day this week, hours, and hours. I literally have about eight minutes of Madden game time slotted that I played in six [00:06:30] days of retirement, early retirement, mid-retirement, whatever you wanna call this little break I'm taking. Yeah, hopefully ... We'll see how that goes in the future, a little bit more.
Blake Oliver: Yeah.
David Leary: I have an article here that's not as exciting. It's actually kind of boring, and highly technical, but I think it really aligns well with our audience. FASB Simplifies the Accounting for Cloud-Computing Service Costs. That sentence is complicated, on its own, but they really get in, and ... I'll read this one paragraph, and, I think it kind of [00:07:00] can paint a picture of how complicated this is, but we should understand that it exists. Here you go, I'll read it, literally, word for word. "The standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract, with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use-software license). Blake, can you define this? What is this change? 
Blake Oliver: What [00:07:30] this signifies to me is that the Journal of Accountancy was not particularly helpful in breaking down this standard for us, and I just don't understand why. It sounds like they copied it from the FASB guidance. I don't understand, why can't the FASB write things in normal human sentences, in speech that- in plain language, in plain English? It doesn't have to be this way.
David Leary: Well, the funny part of this- this is the simplified [00:08:00] version.
Blake Oliver: What? 
David Leary: FASB simplifies the accounting for this. This is the simplified text, apparently-.
Blake Oliver: Well, this is the simplified guidance to the standard, but I guess, the way they write it ... Basically, the way that you capitalize implementation costs for internal-use software, now, you're gonna do the exact same thing, when you capitalize implementation costs for something that is being hosted, that you are not developing yourself. [00:08:30]
David Leary: Got it. 
Blake Oliver: I guess that makes more sense.
David Leary: What else do you got, this week? 
Blake Oliver: All right, in the world of cryptocurrency, and blockchain, and Bitcoin, here's a story about how it actually might start affecting us, in our day-to-day lives, in not too long. Square has won a patent for adding cryptocurrency features to its point-of-sale technology. According to this patent that was filed, the technology will allow merchants to [00:09:00] accept virtual currencies, including cryptocurrencies - Bitcoin, Ether, that sorta thing - using their traditional payment system. 

Square is going to, on the back end, facilitate that exchange. If I wanna pay in Bitcoin, I can go up to that Square terminal, and ... For those who may not be familiar, Square is the dominant small-business-point-of-sale-credit-card-terminal thing going on, right now. They're getting huge. You go into your local coffee shop, small, one-location shop, they're probably [00:09:30] gonna be using Square. Up til now, you could just pay with credit card, using Square. The idea is you could actually pay with your Bitcoin wallet, or your other type cryptocurrency, and Square's technology will take those funds, and will, on the fly, convert that into currency that the merchant can accept.
David Leary: [Inaudible] So, me, as the merchant, I now can accept Bitcoin. I don't have any the headaches associated with accepting Bitcoin, because, at the end of the day, when [00:10:00] I do my Z reading out of my point-of-sale system, it's just cash. I just have USD, if that's the case, and it'll be ... I just handle everything the same, even though there was a Bitcoin transaction that occurred. That actually is probably the best way for this to have major adoption. It'll be interesting to see ... Is it an opt? Is that just out of a box, or is that something people'll have to add as a preference, inside of Square? I go to the coffee shop, there'll be a sign, "Now Taking Bitcoin." 
Blake Oliver: Probably. [00:10:30] If I were Square, the way I would do this is I would just add it as a new feature, and say, "By default, people are now gonna be able to pay you with cryptocurrency. It's not gonna look any different for you, cuz we're still transferring- we're converting the funds; we're transferring them into U.S. dollars." To you, it's exactly the same. You're getting exactly the same amount of U.S. currency you woulda got, if they paid with a credit card. If Square does it that way, then, yeah ... Immediately, millions, and millions of businesses will now accept cryptocurrency.
Now, one of the problems [00:11:00] with cryptocurrency, with Bitcoin, in particular, is the speed of the network. It's actually very, very slow, and expensive to pay somebody with Bitcoin, just because of the way the network was set up. It wasn't designed to handle thousands of transactions per second that you get in a credit-card-processing environment. The reason Square's patent is important is that, now, they're adding a private blockchain in between the public blockchain. My Bitcoins, on a public blockchain, when I pay, it involves, now, [00:11:30] the Square private blockchain. Square, to speed up the transaction, is gonna front the money to the merchant, and, then, will process the transaction later, on the public blockchain. They're gonna take on the risk.
David Leary: Yeah, so, Square, in a way, is becoming a Bitcoin exchange of their own. They're gonna be Bitcoin exchange. Now, is it just gonna be Bitcoin, or are they gonna do any type of currencies? Is it ...? 
Blake Oliver: Well, [cross talk] the patent is general-use, so they could, theoretically, [00:12:00] accept every type of cryptocurrency. I imagine they'll probably only do the bigger ones, but you know ... The idea being that this could really make the consumer use of cryptocurrency a thing. I would carry around funds in my wallet, if I could pay that way, perhaps; especially if merchants would give me discounts, because, if they're not paying the credit-card-processing fee, maybe I get a small discount for [00:12:30] using cryptocurrency, because it's gonna cost less. Depends whatever Square charges, right? I can see them definitely charging like one percent, instead of the two, or three percent that the credit card companies charge. merchants’ components to charge. You're eliminating one of the middlemen.
David Leary: Yeah. I think this'll be interesting to watch. Yes, everybody has Square. People are paying. I still feel like mobile payments ... The people that are winning, right now, are Starbucks. If you sit at Starbucks, amazing how many people pay for their coffee, using their phone. They've completely eliminated the card [00:13:00] swipe, almost, at a very high percentage. It'll be interesting ... I think that's when this really tips. It's nice that Square's out there. Lots of small business use Square, but, when you walk into Starbucks, and Starbucks says, "Hey, you can pay with Bitcoin," or you go to Walmart, "Yeah, you can pay with Bitcoin," I think that's when we know we've tipped; or, even when I finally go to Amazon, and I can pay with Bitcoin. That's when we finally have hit a new ... I's marching that way, it's very obvious. It's coming.
Blake Oliver: Hey David, I just realized that we're coming up at the end of our time for this show, and we've got Scott Warren waiting to talk to [00:13:30] us, so we'd better jump off, and get on to that recording session.
David Leary: Okay, perfect. Let's wrap it up, then. What's the best way to get a hold of you, if anybody needs to?
Blake Oliver: Tweet at me. I'm @BlakeTOliver.
David Leary: Got it. You can tweet at me. I'm @DavidLeary. You can track both of us down on LinkedIn, as well.
Blake Oliver: All right, thanks. Thanks, David. Talk to you soon.
David Leary: All right, later. Bye, Blake.
Blake Oliver: David, I have a crazy story. I was [00:14:00] woken up at 5:45 a.m., this morning, to the sound of what sounded to me like explosions in my backyard.
David Leary: That seems kinda close.
Blake Oliver: It felt like it was in my backyard, and I thought maybe there'd been like a gas explosion in the house near me, or something. It was like ... I've never even heard fireworks that loud.
David Leary: A gas explosion could be a viable concern, cuz didn't you guys have an earthquake, yesterday, or the day before?
Blake Oliver: Exactly, so it's possible. That's what everyone was thinking. It turned [00:14:30] out ... I went out ... I got up. I looked online to see if anything was going on. I couldn't find anything, so I went outside to walk the dog.
Blake Oliver: I get outside, and there are 20 ... Must've been 20 cop cars, and unmarked police cars; several-dozen plain-clothes police officers just hanging around our block. One of them came over, and filled me in.
Blake Oliver: They couldn't tell me much, but apparently the FBI raided my neighbor's house this morning; the [00:15:00] guy who lives on the other side of the fence, in my backyard.
David Leary: Wow. 
Blake Oliver: Yeah. His name's Rob, and he's accused of making threats against the Boston Globe, like death threats.
David Leary: Wow.
Blake Oliver: Yeah.
David Leary: I don't have anything that exciting ... Nothing.
Blake Oliver: Yeah, so it's kind of ... If I'm a little amped up this morning, on the podcast, that is why. Not something I would have expected from him, but, yeah, it's all over the national news, [00:15:30] and it's a big deal here.
David Leary: I'll have to flip on the mainstream media, here, and try to track that down a little bit, and see. I'll be like, "Look, that's Blake's house!".
Blake Oliver: Yeah. There've been reporters all over the place. There were helicopters. If you hear any sounds in the background, like helicopter sounds, that's what that is, probably. It's the-.
David Leary: Can you go outside, wearing a shirt that says Cloud Accounting Podcast? 
Blake Oliver: Yeah, unfortunately, I didn't. I haven't had those made yet.
David Leary: Oh, all right. We've tried, we've tried, we've tried. I don't know, maybe in my [00:16:00] ridiculous downtime, now, I could take time to hand-make some shirts, or something. I don't know. 
Blake Oliver: Well, so, I'm a little bit flustered, but let's get down to this. I'm looking forward to getting back to my regular life.

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