Born to Be an Entrepreneur

Today, our guest is Caleb Jenkins. Caleb is an enrolled agent and a certified textbook pro advisor. He leads the outsource, tax planning, and business accounting services for RLJ Financial Services. What really caught my attention about Caleb is two things. One, he’s been recognized as the youngest Quickbooks advisor in the Global ProAdvisor Program, becoming certified at the age of 16, which you’re going to have to expand on that. And in addition, he has been listed in CPA Practice Advisors’ Top 40 Under the Age of 40, in the accounting profession for multiple years, and I just found out which I thought it was, was five years which is just amazing. Caleb, welcome to The Unique CPA.

Hey, Randy, it’s great to be here with you. Looking forward to chatting with you today.

Yeah, I am, too. I’ve been looking forward to this. I’ve been doing some research for a while to see all these accolades that you’ve received, which is awesome. And I want to ask you about a couple of those. Because I have listed two, there’s a lot more than those two out there that if anybody wants to go to your website, I think they’re on there and LinkedIn, you’ll see all these these accolades that Caleb has received, but the one that really caught my attention was at age 16, you already knew accounting was what you wanted to do. And you became a QuickBooks ProAdvisor. How did you know so young? And how did this become a thing?

Well, so as you know about me, I grew up in my dad’s accounting practice, which interestingly shares the same name with you. So I’m very familiar with the name, so yep. But I grew up in this space through age 10. My dad’s office was our home and separate building. But so I worked, we went out and helped shred and do various things. And so did filing and various things. And so I’ve been involved in this for a long time. And I started using QuickBooks to track my own personal accounting early in life. And so tracked using it for a couple different business enterprises that I had, or maybe not in business, but whatever you want to call it, but I had a cherry stand at the end of our road for three years for the month of May. So I had two of my siblings that helped me pick the cherries and also in the same timeframe, I don’t remember ages, particularly, it was probably seven and a half to 12, 14, baked cookies for my dad’s office here during tax season. So I have a recipe for chocolate chip cookies that I had modified off of the Nestle chocolate chip cookie recipe. And I’ve always enjoyed that, just actually made a fresh batch this past weekend. 

Awesome.

Did that. And so I’ve created invoices in QuickBooks, used class tracking, keep those different prices separate and etc, receive payments and made my deposits, and etc. And then also did some lawn mowing enterprise on the side and for some neighbors and etc. and used invoices as well for all that. So I started using QuickBooks, all this timeframe to keep track, I actually still have that same QuickBooks file. To this day, it’s now in QuickBooks Online. I keep track of everything there. So it’s actually very interesting, because when a discussion comes up in a family about something historically, that’s the joking comment, because I’ve made comments various times about well, let me go to QuickBooks to back it up. So because all the records are there. So it’s also a lot of arguments. 

So that’s kind of how I got into it. So, I had started working here full time, fairly early. And I was homeschooled growing up, so did my school early in the mornings. And then came to work later in the morning and worked through the day. And I had worked here for quite a while, actually not sure why I waited to age 16 to get certified, because I was already doing all this in that timeframe. So it would have made sense to even do it earlier. And since that time, I know there’s various individuals, other individuals that are definitely younger than me today that are certified and that are—I think I’ve been kicked off of the 16 as being the earliest since then, but at that time, at least from individuals at Intuit level. They have stated that I was the youngest.

So hey, well, you were the first. Somebody may have passed now but you were the first. So, man, you’ve been an entrepreneur for a long time and the recordkeeping—I’m guessing you have bypassed everybody in that aspect, so that’s awesome. So you’ve been into QuickBooks obviously, a long time, and I’m gonna want to expand on that. But before we get to that end of things, the other thing that intrigued me, and you’re the third guest I’ve had on that’s been on the 40 Under 40 list—40 individuals under the age of 40, that you know, are influential in accounting. Do you have any idea how you get on that list, I mean, is this something you lobby for, or they came to you, or how’s that work?

So there is an open nomination period for anybody and then self nominations. I did self nominations a couple of the years, I haven’t done it all five years. Takes a nomination, whether it’s a self nomination—they encourage self nomination, they don’t say that’s boastful or whatever about yourself, they expect people to self nominate themselves. It feels a little bit awkward doing it. But they want to know from the individual, a little bit of history about who they are, and etc. And what distinguishes and separates them from the rest of the crowd. But then all of the nominations go, and whether one person nominates, or 40 people nominate, or 100 people nominate, they say it doesn’t really matter. What they’re looking for is unique individuals that are nominated. And then that goes before the CPA practice advisor, panel judges that review all of the nominations. And then they distinguish that, and particularly what they’re looking for, and that from what they’ve stated, is individuals, one, that are maybe established, that know what they’re doing, etc. That’s just the foundational level. But the thing that separates is individuals who are using that knowledge to give back to the profession in various ways. So through writing articles, through podcasts here, through teaching, through state societies, through CPA boards, or national Enrolled Agents, or whatever the groups may be, or taking your knowledge and giving back to your communities in other ways. So taking your knowledge, and instead of just living and keeping all of that housed in your own firm or your own person or individual life, taking that and being an open book, saying what I’ve learned has just been given to me. And so therefore, there’s a mandate or whatever, to pass that along to others so that everybody can rise together.

That’s great. And I can attest, you are well-deserving of the accolades you receive. So congratulations on all that. But what I want to talk about—client accounting services, and obviously, with your QuickBooks knowledge, and the clients you work with, just client accounting services is really a buzzword, or I guess that’s three words in the industry right now. Just a little background for you about me: I came out of public accounting, and it’s been 16 years since I merged my practice in with someone else. And back in ‘06, when I merged my firm in, you know, client write-up services, which is what we called it then—maybe that term is still being used—was dying. It was just everybody was getting their own QuickBooks, or some kind of accounting system that they were using internally, running their own payroll even. And so I thought that was a thing of the past. But now, you know, it is coming back strong. And I guess, question, do you—I mean, you’re a lot younger than me, you probably don’t remember those days. But why is this such a strong service that is growing in just about every firm around the country now?

Yeah, the client write-up probably still exists in some capacities. There are still some firms that are still living in archaic ages. But beyond that aspect, I think the aspect of why Client Accounting Services is strong is through that time period, when people got versions of QuickBooks and started doing their own things. It taught them one thing is that they could enter transactions, and they could see reports, and they could understand different things. But along with that, they almost across the board had messed up data. So that created faulty reporting. And so because nobody totally truly understood how to use QuickBooks, there was an older commercial before my day, but I’ve read about it, known about it quite a while, but QuickBooks came out with their commercial: if you can write a check, you can use QuickBooks. Which is true in one sense, but in the other sense it’s far more complicated than just that because there’s accounting terms. 

There’s, for myself, I’m a little bit unique, and going back to my history there, but I learned accounting by using QuickBooks, not the other way around. I didn’t learn accounting and then learn QuickBooks. A lot of people just pick it up and they just start messing everything up. And common things— as you enter an invoice and you receive a payment, and the payment goes to undeposited funds. And then you have your deposit at the bank account, you’ve got 12 checks and those 12 checks just get entered as another income line item, and now you’ve got duplicated income. And you’ve got unlinked transactions. Well, that’s a very common issue that happens when people try to manage their own books. And that’s one issue. But that is rampant across the landscape of people doing their own stuff. And that’s something we have to unwind and clean up repeatedly. And so stuff like that creates faulty reporting, which cuts the legs out underneath anyone from even doing their own books in the first place. Unless somebody is just trying to save costs, but if they’re trying to save costs, you’re not getting anything from it. So why are you doing it in the first place? The only reason that generally exists is because the IRS requires it so you can do your tax return. But if that’s the case, just there’s maybe other ways to do it as well. 

So Client Accounting Services kind of brings that back to a partnership, instead of a “one or the other.” So the partnership, generally speaking, would give clients access to the information. So they could go in and run the reports at any time they may have a piece or a part of that process involved. So like in our clinic case, we don’t generally do invoicing for clients, and they might take care of the payments and etc. But we take care of everything from that point forward. Because from that point forward, a lot of times where they mess up, but then where we get involved is we might help educate them on the best ways to do invoicing, the best ways to receive their payments, utilizing apps or QuickBooks payments, or whatever the tool might be to automate whatever pieces are available to automate along that journey. 

So I think the reason that write-up is dead is because clients never saw the fruit of it, except for a financial statement that they never understood. And the reason that the QuickBooks Do It Yourself approach failed is because they messed up, because they didn’t understand. And it’s very hard to understand in some respects too. That swung the pendulum back to a partnership approach where they have access, and it’s more of a real time, whereas the write up was always 30, 60, 90, whatever days after the fact, or at the end of the year after the fact. Whereas Client accounting services is generally a lot more real time—getting involved in your accounts payable process, getting involved in your credit card choices and credit card options and publishing of those transactions and helping set up the apps that you’re using that are integrated with your accounting system data and a lot of that, so it’s a lot more holistically encompassing of the whole business process and service.

Yeah, and I like the fact that it, like you said, it is one, you’re working together and two, it’s interactive. They can see real time, for the most part, reports, and then you have an opportunity to advise, they get to get educated by seeing this, you get to advise and you get to find areas where you can help them and additional services. And I’m assuming that’s a part of what you’re doing here. It’s not just—I’ve heard you talk before and I don’t think you use these terms. But you know, you’re not really looking to be a reporter of what happens. You want to be advisor, in effect, what happens in the future for clients? And this gives you an opportunity, correct?

Correct. Yes. I mean, the reporting in the past is important. But it’s only important to tell you what did happen. You can’t change what did happen. From an accounting perspective, you can recategorize something and change what the history looks like. But you can’t change what did happen. But you have a choice into what the future does look like. And so using past data is helpful, but only to the extent that it changes our trajectory to the future. And so that’s where we need to have that conversation, in terms of what are we trying to accomplish going forward and what is it going to take to get to that point? And what are the steps along the way, the actions that need to be taken to get to that point, and that can be a lot of different things. Maybe it’s more revenue for somebody, and so how are we going to get to that? Maybe it’s more clients, maybe it’s raising your prices, maybe it’s cutting back on different things, so that we can target a certain specific niche better, or whatever. So there are a lot of different ways that we might get to something. And that requires an understanding of the client’s business, an understanding of what they’re currently doing, and options available of how we’re going to get there. And the best options of how we’re going to get to that goal or achievement that we’re looking for, lots of different options and things in that journey. But that’s where the real value is. The past has no value other than staying out of trouble with the IRS, essentially. If the budget for the IRS potentially increases here going forward, and audit rates might increase, and etc. There’s a lot of value in that. But that’s from a fear component, not from a “what’s it gonna do for me?”

Yep, that makes sense. So let’s talk about a new client for a minute. Because, and this is kind of what we’re doing already. Let’s talk about new clients. So you get this new client. From the beginning, are you advising—here’s the software we’re going to set you up on? And if they’re not using something or if they’re using something that you don’t like. Or suggest, here’s the software? I mean, what’s the normal setup of a process look like with a new client?

Yeah. So a lot of it—gathering information in the beginning, seeing what they, I mean basic information, all the name and phone contact and email and all the basic stuff, what are their goals, and what are they trying to accomplish. And that’s where we start with, and then we gather information about what software they’re currently using. We try to gather copies of past years’ tax returns and access to their accounting system data, and etc. so that we can gather information, try to gather some bank statements and credit card statements so that we can holistically kind of gather what has happened, so that we know, volume-wise, we can know, complexity-wise, we can know, lots of different metrics so that we can have an informed approach to what we’re going to do. 

And then we have an onboarding process. And there’s some education that we do along that journey. That is a package that we sell, that we require all new business clients coming to us to go through, and that’s out of learning that people don’t understand and know everything that we would generally expect them to understand. So this is just covering some of the business basics. And then once we’ve gone through that, then we scope the work and try to gather kind of what level of service that they would be interested in from us, whether it’s a) they are taking control of their bookkeeping and their payroll, but maybe want us to oversee what they’re doing from the advisor, or the outside consultant role, or whether they’re wanting us to take a more hands-on Client Accounting Services approach where we are the ones running the ship there, and they might have that overlooking from the reporting aspect. 

So depending on what level of service and then differentiating, not only kind of what package but what level of service they are looking for. So if they’re wanting the full Client Accounting Services, there’s different levels of service within that as to, how often do they want to meet with us, what guarantees they’re wanting from us on it. So we price things differently in that respect, and gather all those metrics. And then once we’ve gone through that, then we generally have a core select group of apps that we utilize. QuickBooks Online being the primary one for the general ledger, we do not work with Xero, we don’t work with the other apps, not that we’re against those other apps. But from our perspective—if I was one person, it might be a lot easier, even though I would argue that internally with myself, but it’s just too much to keep up with what’s happening across 12 different accounting systems. 

Now I do have a general understanding of what’s happening across the profession. But understanding the intricate details of each app and changes in software, and updates on a monthly release cycle or whatever. There’s no way you can bring a team along with processes and systems across what you’re doing in that way. So having a core set of apps is very crucial. Now each client may have nuances to different aspects of what they’re looking for. They might have their own type of a business service that fits their needs. So that might be one nuance to the way that we’re working with that client. But we would use QuickBooks Online, we’re utilizing Divvy quite a bit for the payments, for expense management. So that’s a credit card, but it’s a credit card—think of it as your American Express, married to Receipt Bank. And they are joined at the hip together. And so you are bringing the power of the receipt and the automation tool with the underlying card data. And so that provides a very robust and powerful system. There’s others out there like Brax and Ramp and some other tools that are doing the same thing. But that would be a system that we utilize, and that is connected to QuickBooks, so we push that data into QuickBooks. And then if they have accounts payable needs, depending on the level of accounts payable, we might utilize the internal Melio integration built into QuickBooks, or we might utilize bill.com for a robust accounts payable management, or there’s other systems too.

For payroll, we use a couple different systems on that side, we haven’t had the one system approach necessarily, we primarily use AccountantsWorld Payroll Relief, but we’ve shifted some to ADP and some to OnPay. And we utilize some of both of those systems. And then for clients that want to manage their own payroll internally, we generally utilize QuickBooks Online Payroll for that, so that we have access into, or it’s still built into the QuickBooks but for capturing the time from individuals, we utilize the old T Sheets Now QuickBooks Time quite a bit for that. That brings that time data into the payroll process. Those would be some of our just core apps.

Yeah, that makes a lot of sense.

We work through getting those apps set up, and then work through educating the clients on the different nuances to how those apps work for them. And then what their responsibilities are for that part of the journey and working with us. And then we go from there, and start going out and doing the work.

Start doing the work. So you mentioned a little bit about setting up the pricing. Is it like a subscription pricing model, three tier? I mean, how do you price these?

So it is a subscription at three tiers. We have different components of that, that is from the Client Accounting Services, we base a lot of it on the volume and level transactions. That would be the starting—you might call it a cost analysis plus some other things. And then we look at the value that we might be providing. So that’s where we get into some percentage add ons or whatever, for whether it’s one owner or there’s multiple partners, that adds complexity to describing things to more than one person and more communication and that relationship versus whether they have an internal bookkeeper that we’re working with, that and an owner or whatever. So there’s different nuances to that. 

There’s nuances to whether they need special categorizations, like Class Tracking or Location Tracking, that’d be more complex accounting than just your standard run of the mill, basic categorizations. Then we look at other things, like what is the profit of the company to start with? What are some of the opportunities that we can explore that might bring some value to that company? And then we price based off of the costs that we might incur—time and costs and kind of what we would calculate all that to be, plus some of the other values and opportunities that we might incur. And we, at the end of the day, try to relay that back in terms of value to the client, in terms of what are the outcomes that they’re going to see from this and what’s the benefit to them? And as long as they are receiving a bigger benefit, value-wise, than what they pay to us, and especially if that’s a big enough gap, then they come out a winner. And hopefully we come out a winner too. And most of the time we do, and everybody wins in that relationship.

Nice, and it sounds like this whole system you have set up where, you know, you’re working together really just helps build a strong relationship with that client where it’s not just seeing them one a year or not reporting, rather advising. So that relationship, I’m assuming, just helps you retain clients, I’m guessing more than the average firm too.

Generally speaking, that is correct.

And that’s nice. So then, the other thing that I can see out of this, and I think you alluded to it, is as you’re doing all these services, as you’re digging into the accounting services, you obviously, your special projects pop up, you see opportunities that you’re going to help with this or that. I’m assuming that’s another benefit of being this entrenched into their systems.

That is correct. I mean, there’s lots of different things, whether there is a software opportunity that might pop up that we might look at. There might be different tax opportunities and different tax strategies that might come to the table related to, I mean, this year with the employee retention credits, and there’s lots of different things available on that front, or the research and development credits, which your company’s been great to work with on that side, or there’s lots of other opportunities that might raise to the surface that we can explore and see, and some of that’s from the accounting data, and some of it’s from the tax data, but we need to look at it, and one of the things that we look at, we look at that holistically, because a lot of it—sometimes you might be missing the big picture if you’re only looking at the tax data or if you’re only looking at the accounting data. You’re missing some of the big picture of some of the tax opportunities and some of the accounting opportunities that are collaborative together.

Yep, I could definitely see that. So believe me, if I’m starting a new business, I’m calling you first to get this set up and do my accounting services for me. So you know, that was awesome. One thing I want to ask if you know—people are jumping into this. I saw something on, maybe it was Accounting Today, showing that 64% of the firms reporting in the survey said that this is an area they’re growing, is their Client Accounting Services. Obviously, this is a great area that is extremely growing in the profession. And so if there’s somebody out there trying to grow this, or jump into this, you know, Client Accounting Services, is there a common couple of steps they need to do to get going?

Yeah, I would say the first thing is look at your pricing, because pricing is a big component of that, it removes the barriers and a lot of respects to a good client relationship. If you price something on the front side, and we have the conversation about the price on the front side, it removes the analysis or the review of “was it worth it on the back side,” and the client agrees to the value on the front side, and we both come out a happy, positive relationship on the end. So look at that, and pricing is so big in terms of it carries so many components to the way that we do work. It carries components into the apps that we use, the systems we use, the processes we develop, and might sound big—but in a lot of respects, it does either directly relate to it or indirectly relate to all of that. And then the client benefits and the outcomes, a lot of times it is very relevant to that as well. So spend time, do some education, there’s great resources out there. Ron Baker is one of the best. I’ve learned so much from him in that respect, and he’s more than willing to teach and educate on it. So look at him. There’s others that might give a lot more specific, practical advice as well. Mark Wickersham is a great individual. And there’s Kirk Bowman, there’s a lot of other good resources out there to go learn on how to do pricing and how to do it effectively. 

Okay, so start with pricing, which makes a lot of sense. And I think one of the resources you forgot to mention was yourself. So that’s where you want 100 calls on this. You’re a busy guy, but you obviously are a wealth of knowledge. So I appreciate the education on the Client Accounting Services. But before we wrap up, I was able to see some information and I know you have a passion on some charitable work, and I think it’s called SALT Microfinancing. Do I have that correct?

That is correct. It’s SALT Microfinance Solutions. It’s a microfinance organization that does micro loans and savings groups, primarily savings groups today. It started more as micro loans. And it’s transitioned more into savings groups over the last decade plus, but it’s an organization. I’ve known the founder of this group within the larger umbrella organization. The umbrella organization’s called Christian Aid Ministries, and this is one of their projects or programs. So the founder of this program, I’ve known him since a young individual, he actually grew up in our community, and then he moved to Washington and then Idaho, but I’ve stayed connected with him through that. So he started this program based off of some experiences he had in Haiti and other countries and just wanted to help people in ways that was actually going to help them without hurting them. 

And that’s a way to look at when we give, we can give in good ways, and we can give in bad ways. A lot of times as a giver, we have a need to give, because it’s on our conscience, and it’s on our desire to give, but sometimes we can just check a box by giving without realizing the damage that we might cause by giving. So there’s a need to do some research on what we’re actually, or how we are actually giving. And so when the founder stepped back, and he started researching this, there’s a lot of good resources, there’s a good book, it’s called Banker to the Poor, it covers his relationship and his experiences in Bangladesh, working with the poor. He started doing micro loans with them, as an individual working with them, and that was very successful. So there’s that resource. 

And so this program kind of copied some of those concepts. But it also looked at the root cause of poverty. There’s different forms of poverty. So there are critical poverty and there’s chronic poverty. Critical would be the instance of a natural disaster or something that happens to somebody. That’s nothing that was a fault of their own or their own consequences. There’s generally a need to step in and give in terms of food, clothing, water, shelter, and natural aid that is provided. But when there has been instances where there is poverty over long term generations, when we step in and give in those instances, we are actually stepping in and acting like a parent giving to the individual saying that they are our child, and they need to rely on us as the giver—that they are not self-sufficient, able to provide for themselves. They might be asking for the handout. But in reality, what they’re wanting is somebody to come alongside and help them be the solution to their own problem. And so this program utilizes whatever resources are available to accomplish that. And there are savings groups, and there’s some Agri Plus programs where they’re doing agricultural programs with those in the countryside. There are vocational schools. They are teaching young children and teenagers a vocation, actively trying to meet the individuals to break this cycle of chronic poverty. 

But at the end of the day, a lot of it is whatever program is the proper program for the individual. All of it is married with the program and teaching and community. And the teaching aspect is teaching them business concepts, it’s teaching them accounting concepts, to some extent, it’s teaching them personal life concepts and how to be a good person. There’s a lot of concepts and all of that, but it’s going to the holistic approach of what is the root cause of poverty, which a lot of it is lack of self worth and understanding of who God created us to be at the core. And so if we, if we can help them reach and accomplish their potentials as an individual, and if they can do that, they can be the solution to their own problem. My involvement with them is I went on a trip down to Haiti with a group of accountants in 2013. And the team there in Haiti approached me and said, “Hey, we need help with our accounting.”

I thought that was it. Alright.

And come to find out, they’re keeping track of everything, all their loans, all of everything in Excel. And they had a very, very good Excel program. And I was actually fairly shocked and amazed with it, but there are extreme limitations to tracking things like that in Excel. So I got involved with that. And that led to other things and I went down there numerous times to Haiti and did teaching then with the facilitators that are going out and leading these savings groups, and etc. And that’s been just an incredible joy to be able to work with them and educate, and an education is really, I’m not the one doing the teaching. I’m the one doing the learning, is what it really comes down to, because they have so much to teach. All that we’re really doing is facilitating a learning experience.

That’s nice. That’s awesome. So if anybody wants to find out more about that program, where would they look up? What’s the website, I guess?

I think it’s Christian Aid Ministries, but you can search for SALT Microfinance, and they’ve got this specific page built for that.

We’ll put it on the show notes. And then if anybody wants to get a hold of you, or find out what you’re doing, LinkedIn, website, what’s the best place to find out what’s happening with you?

Twitter’s the best way—find me on Twitter. My handle is @CalebLJenkins, that would be the place that I go to the most frequently but any avenue is fine. Go to our website, rljfinancial.com. Message us through our website or you can email me directly. My email is caleb@rljfinancial.com.

Alright, well, awesome. Well, I’ve been wanting to do a show about Client Accounting Services. I don’t think I could have picked a better guest. So I really appreciate your time and effort. And any last words? Otherwise, we’re wrapping up. 

The only last words I would say is, and what I was stating previously, is give back to others but give in a learning way, because we’re never done learning. Don’t approach life thinking that you have it all figured out, because none of us do. But we always have an opportunity to learn and give back in ways that we are learning and learn what we are giving back to.

Awesome, great advice. I appreciate you being here and I appreciate everybody listening today.