Making the Profession Better, One Company at a Time

Today, our guest is Kristen Keats. Kristen is—and this is going to be a long list—but Kristen is the founder of Breakaway Bookkeeping and Advising, owner—and she’ll correct me if I get these titles wrong—owner of Sherwood Tax and Accounting, co-founder of Cadencia, and then this is an interesting one, Captain of Starboard Collectives. So these are what she’s currently doing. We’re going to talk about all those, and just so you know, Kristen has a history in public accounting, been in the industry for a while, and has, I guess Breakaway has broken away and started these businesses over the last three years now. Right? 

Yep, that’s correct. 

Alright. So Kristen, before we get into it, welcome to The Unique CPA.

Thank you, Randy. It’s great to be here.

Well, it is great to have you. I’ve been excited about this. I know I think I sent you an invite during tax season, I knew you’d be pretty swamped. So I wasn’t expecting to do this till after but happy after tax season to you. 

If there is such a thing anymore. 

Well, that’s true of the last three years for sure. It’s been nonstop tax season for just about everybody out there. Did it feel like a more normal one this year or not?

No. It didn’t.

No?

I don’t know if we’re ever going to get back to normal to be honest. I mean, I think a lot of us thought it would feel more normal, and then just the hits kind of keep coming.

Yeah, well, yeah, it’s not and I’m not in the thick of it anymore. To me, for some reason, it felt more normal, but I’m not doing anything during tax season really. So I was just I guess hoping it was more normal. Well, yeah, that may not happen. 

Alright, so some things that I want to talk about today: Let’s talk about—we’re gonna talk about all four of these services, because I think there’s some uniqueness, ah, to The Unique CPA, there’s some uniqueness to everything you’re doing. There’s obviously a need you saw for all these different services. And so where I want to start is, I mean, this is not—you didn’t, you know, three years and one day ago, say “Hey, I’m gonna go do this.” This is probably ideas that you’ve had for a while you saw a need, saw an opportunity. Is this something that—and you worked for a very large regional firm before this—is this some that you tried to pitch to the firm and it just didn’t go anywhere? So you decided you need to go do your own? Or how was this born?

Yeah, yes, to everything. So yeah, I came up, I was working at big firms when I was younger. I had my own tiny practice for a while. I worked at a local CPA firm for about six years, and that’s where I really got involved with cloud accounting and CAS, Client Accounting Services, and all that. I had a falling out with a partner there, that’s when I went to go work with that regional firm. And it was actually with my current partner, Martin Moll, he was the CEO of that firm. And he and I, you know, we’ve been friends for a really long time. And so he was trying to build up their accountancy department. And that was an exciting opportunity for me to try to help do that. It didn’t necessarily work out because it’s really tough in big firms to make big changes. 

Yep.

And they and they were a big firm going, you know, going in one direction, it’s hard to change a ship. 

But what came out of that was, you know, under Martin’s leadership, that firm was pretty innovative and open to ideas. And so that is actually where the idea for Breakaway was born, because it came out of my desire to—so when I left the local firm, I had wanted to start out on my own, but it was so onerous to me, to deal with all the minutiae that goes with firm ownership, that has nothing to do with serving your clients. And so that’s kind of how I ended up is that I felt like Martin kind of like threw me a life raft and was like, “Okay, just come over here.” You know, that was easy, right? It was just easy to come be an employee somewhere. 

So combining that with, once I went to work there, that firm worked with a team in India. And that just opened my eyes to this whole world of offshoring that I was like, wow, this is such a game changer to be, to have access to a train team like this, to be able to leverage that and still provide good service to our clients. So it was kind of the marrying of those two ideas of like, how do we make it easier for CPAs to go out on their own, handle the marketing and the legal and the websites and all that minutiae stuff that drags you down as a business owner, and then also provide resources with like access to an offshore team to be able to just go serve your clients. So that’s where the idea for Breakaway was born. So we were actually cooking that up for about a year and a half within the firm before we took it out.

Okay. And there just wasn’t enough commitment in the firm is that what happened?

Yeah, they got a little wary of, you know, just like of new technology, and they just decided that they were just a traditional accounting firm. Okay, so We were like, well, we’re not here for that. 

Which, to their defense, I guess, but for them, that makes sense. I mean, they had a good thing going, it was not everybody is prepared to bring on new activities. I’m somebody that is very big on making sure you’re open to new ideas all the time, and they very well may be open to new ideas, it just wasn’t the right time or the right service or whatever. But the problem with that is, you know, you have a good employee, which I assume you were a good employee, that has these ideas. And if you’re not willing to listen and act on it, you’re gonna lose that good employee, and they’re gonna take that opportunity elsewhere, which is what you did. 

So we talked about the “why.” And you kind of started to get into what Breakaway is, and what let’s go through all these, but Breakaway, what was really the goal, what was what was the need you saw? And I think you just described some of that already. And then just explain what you’re doing through Breakaway.

Yeah. So Breakaway, our tagline is “Work for yourself, not by yourself.” So all of our Breakaway advisors have their own practices, they’re going out serving the clients. We just provide that infrastructure to support them. So like I said, we provide all the engagement letters, we provide the malpractice insurance, we provide, basically, you get all the benefits of what feels like being a firm, but you have the autonomy to price your clients how you want, choose your clients that you want, and really serve them on an individual basis. 

But the main thing that I think is a benefit to the advisors is having that community of like-minded people. So we have our super robust Slack channel, because we’ve got advisors all over the country, and even in other countries—we’ve got one in London, we’ve got one in Brazil, you know, so we created this network and these cohorts that are actually, like, very tight-knit. Because that’s when when I was doing my research for Breakaway, that was kind of the number one thing that I saw that people craved was having that community and how do you handle this? And what app are you using for that? And you know, just having that dialogue and not feel like, you know, you have to go to networking meetings or stuff like that, you know, it’s kind of this baked-in community there.

So explain how this works then. Is this like a franchise setup? Or how are Breakaway, they’re an individual firm, but part of this?

Technically, it is a franchise, which kind of surprised us, but just legally, that was the only way that we could get there to really have like one brand that people are under and then we don’t have I mean, at least at this point, we don’t have like a buy-in for a franchise. So it’s not a traditional franchise in that sense. It’s almost like it’s a legal thing that we had to set up, but to get to where we wanted to go.

Okay, alright. And then the support is there. And then and then you talked about offshoring. Is that part of what Breakaway offers to these advisors then as well?

Yeah, so we actually have, we are owners in a team in Coimbatore, India. So our advisors have basically a direct line to that team that’s already trained, they have like three levels of accountants there so that they can have their bookkeeping work done so that they can really be the client-facing person. And then we’re also, we’re going to talk about Cadencia—we’re also developing a team in Mexico through Cadencia.

We could talk about that now. So you saw this other need. So you’re owners, or at least part owners of this Indian—

Yeah. We own that with 10 other accounting firms. So we’re, we’re one of 10 firms that owns that entity.

Okay. And so then obviously, you saw another opportunity or another need and now Cadencia came out of that, and that is you were just starting to explain it, what is Cadencia then?

Cadencia came out of, we actually, were acquainted with another CPA in Oregon who had a team in Mexico. And he’s from Mexico. So we got really interested in that, because we love our India team, and they’re amazing. It’s just very tough. There’s a couple of things that are tough about it. One is the time difference. it’s really, really hard to have a 12 hour time difference when you’re trying to get work out the door and have dialogue back and forth. The other thing is just culturally, it’s such a big cultural difference in India. So a lot of the things that we do with bookkeeping requires a lot of explanation for people that don’t have a Starbucks on the corner or you know, things like that. It’s a lot of explaining there.

Where in Mexico, I actually did due diligence with that team, went down and met the team, saw how they did the client work, and it’s so, just culturally similar to the US. Yes, they speak Spanish, but many of them are English speakers. And so they’re just used to interacting with the U.S. And so that was really attractive to us to explore. And so yeah, it was only a little over a year ago that we started our own team in Guadalajara, Mexico. And we started with three employees, and I think—I can’t even keep up now. I feel like I think we’re at like thirty-five or something like that?

Oh, wow.

So yeah, so we now we, we created an entity so that we can support other accounting firms. So it’s not just for Breakway, issues with tax, but we have, I think six or seven other firms that we’re supporting.

Oh, wow, that’s—so you started this from scratch. It wasn’t a takeover or something, you just went out open the shingle in Mexico and started hiring?

Yeah. I mean, so we’re working with a staffing agency, we’re working on getting a Mexico agency. Because like, so one of our things that we kind of always go back to “crawl, walk, run.” Okay, what did crawling look like? Crawling looked like “okay, we don’t have to form a Mexican company and all that right now,” because that was super overwhelming. Like transfer pricing, you know, like, the whole bit like that, was like too much. So okay, what can we do? Well, we can work with a staffing agency, and an HR person to go and hire the people and make sure their benefits are paid, make sure we’re legally compliant, all that kind of stuff. So we kind of outsource that part of it. And so yeah, they take care of all that part of the employee, but we, you know, do the interview, and we work with the firms, interview the clients, or interview the employees. And, you know, just make sure we’re making good, good matchmaking.

Okay, so you did the comparison of India and Mexico. Is there any—I mean, so timing, obviously, culture? Is there other benefits?

I mean, ease of travel is huge. 

Yep.

It’s, you know, I was looking at going to India to go meet with our team. I mean, it’s 10,000 bucks, because you gotta fly business class, you can’t fly coach to India. And I’ll tell you, I’ve done it and it’s not fun. So, gotta fly business class to India. And then you’re wrecked, you know? I mean, between the jetlag and everything else. Guadalajara, It’s four hours for us to get down there. 

Right.

You know, it’s easy, we can just do less than a week trip. It’s just and that time with our team is so valuable that we encourage all the clients at a minimum to get down there once a year, ideally, more than once a year two to three times a year to meet with our team and train,

Then they’re probably the same timezone as you?

They’re in central timezone. 

Okay, so okay, I should know my geography a little bit better.

So we’re west coast, so that’s a couple hours difference for us. But compared to 12 hours, that’s nothing. 

Not bad, yeah.

And they keep, they don’t mind because they don’t mind coming in a little later and working a little later, just to be more on our schedule.

It’s funny, because I was on a call, Zoom call, yesterday with somebody who was currently in India. And actually, we were going to do a podcast on outsourcing to India, because that’s why he’s there right now. Because that’s what his firm does. And he was—everything you just said he was talking about the timing difference, just the travel all that. So I can see the benefits of working with a team in Mexico then. 

Alright. Well, that’s interesting. I didn’t know before we got on this call. I didn’t know that part of things. And so now this service is not just Breakaway, as you said. You have CPA firms I assume, now, and how are you marketing?

Yeah, and we haven’t even done any marketing. It’s all just been word of mouth. 

Really! 

It’s like spreading like wildfire, yeah. And so people want in on it, because it’s a little less intimidating, I think to then like thinking about going to Philippines or going to India, you know, it’s just, most a lot of Americans have visited Mexico. You know, it just feels easier. 

Yep. Alright. So let’s not skip over this. You said you’re going to explain why business class to India?

Oh, my gosh. Okay. So the first time I went, I flew coach. So this is this is when I was at the big firm. And I went to go visit and and it was on Singapore Airlines, like a beautiful airline, like really nice. But it was a 17 hour flight from—just imagine that! 17 hours from San Francisco to Singapore. And then I still had to get from Singapore to Coimbatore. 

Yeah. 

Which was another four hours. And so it’s just I mean, you’re not, there’s no way to lay down, there’s no nothing and then compare it to the next time I went where I did do business class. I mean, you just arrive as a normal person and not just wrecked. So it’s like, well, if you’re gonna go, you might as well make it worthwhile and be fresh.

I agree. I actually the longest I did was to Beijing directly from Chicago, which is probably 14, 15 hours, I don’t even remember. I was not in business class, but there was a very empty plane. So we got to spread out, which was nice, because I couldn’t see doing otherwise. In fact, I went with my dad—we each got our own row or aisle I guess, and so we were able to just lie down and have our own thing. 

So yeah, I agree completely. So that makes sense. Alright. This is awesome that I didn’t even think about that, that there was an option to build teams there. And how about cost wise? Is it comparable to India?

Um, I would say it’s pretty comparable—maybe a little more expensive? I mean, we’re getting graduates, you know, with accounting degrees, the same as in India, a lot of these, but to have English speakers in Mexico, because I mean that that’s a little tougher to find. So we do pay a premium for the English speakers. My dream, though, is to build our team enough that really it would just be like the team leads that have to be the English speakers and then they can have a support team that doesn’t necessarily need to speak English, though.

Right. Alright. Alright. Well, that’s great. So So that’s two of the four things then that—I have no idea how you have all the time to do this, especially—

I’m really tired, Randy.

I can believe you. I love your email response during tax season—I think it’s an automatic response. It says something like, and you can correct me, you know, “Please be patient. It’s the middle of tax season, and I’m really busy.” But it’s not exactly that—do I have most of it right?

Yeah, I tried to update it, like every so often, just so clients weren’t reading the same thing. But you know, and this was another thing that was on Tax Twitter a lot, is like the clients asking for the status of their returns. 

Yeah!

It just cannot. So that’s why I had to do it. I’m like, “Please don’t, like you’re taking me out of the work that I’m actually doing to exactly check on your thing. That’s the same as you know, like, we’ll be in touch. We’ll call you, don’t call us.” 

Yes. Please trust me that your tax return will be done. And if we have questions, we will reach out to you. Because when you call me, not only do I lose that time, I lose a few minutes at the beginning, a few minutes at the end, because now I gotta get refocused on what I was doing. I think that’s great. And I think everybody should understand and appreciate that. Hopefully? 

Seems reasonable. It seems reasonable, doesn’t it? 

Yes, it does.

I know Jason Scott said he was gonna get a collection of every accountant’s, like auto responders, that they had on through tax season.

It’s funny, you’re the only one that I’ve run into. 

Oh really.

Oh, you know what, I think maybe I saw one other that had a quote from AICPA in it. I think they did. I think I did get one on there. But yeah. Alright. So well. Alright, so let’s go now, we talked about these two. After Breakaway, though, we skipped. In-between, Sherwood came, right, with tax and accounting? Was this part of the plan all along? Or what caused you to get involved with Sherwood or create Sherwood?

it was not really part of the plan all along. I will say when we were initially thinking about Breakaway, we had envisioned that it would be like traditional CPA services that included tax. \

Mmm hmm.

When we actually went to do Breakaway, in order to have kind of like consistent, you know, software and things to train a team, tax was just too hard to deal with. And so we really made it more CFO advisory bookkeeping focused for Breakaway. And that just made things like a million times easier. 

Right.

Well, then about a year after—actually only like six months after starting Breakaway—it just kind of randomly… so I have lived in Sherwood, Oregon for about 17 years. And the owner of Sherwood Tax approached me that she wanted to retire. And in that six months that we had had Breakaway, it is always tough, because the clients—they have the need for tax, right? 

Yes, exactly.

So to be referring them to other CPAs, who may or may not try to poach your client, is really tough, you know? So we thought, well, you know, it does seem to be a good strategic thing to have a partnership there with a tax firm, where we could have a friendly relationship, and you know, kind of have this symbiotic relationship. So that’s why we ended up even though I said I was never going to do another tax return here. And like a year later, there I was, again, back in tax season doing more tax returns, but I can’t get away from it.

Well, you can always outsource those, or delegate those as well.

Well, that leads to our other issue, which is why Cadencia came to be, right? Like staffing in our industry is so hard. 

It is tough. 

I mean, I had, I mean, I have first of all, I had an ad out for a manager for over a year that didn’t get answered, I finally filled that position, and she quit 94 days later—and I know it’s 94 days because my deal with the recruiter was for 90 days. So I lost that recruiting fee. 

Ohh.

Then I had a manager just quit, April 13 was her last day. 

Okay.

So that’s what I mean, right? When I say the hits keep on coming. It’s like, so that’s the main thing now. And so we’re trying to solve it with Cadencia. But that takes time, right? To build our training team and train them in immediate to minimum three to five years to get somebody who can really know what they’re doing.

For sure. So Sherwood came out of a need. We got bookkeeping, bookkeeping needs to go somewhere for taxes, Sherwood now does all of Breakaway refer to Sherwood, or is that not a requirement at all?

It’s not a requirement at all, but it’s definitely a huge referral source. And we, you know, and frankly, I like to give priority to those clients. Because if they’re a Breakaway client, I know that their bookkeeping is good—I know that they’re working with somebody. So those are a lot easier tax returns to do, and that’s the work that we want to do. I want to do more tax strategy and planning and forward looking, than like, “Oh, your books are a mess, and now I gotta go fix all that stuff.”

Alright, so we got this whole vertical integration. Do I have that right? Vertical integration? I don’t know. I’m no, I’m no expert. I can talk. That’s all I know.

I think you’re—I think that’s true. Because horizontal will be if we were like, had competitors. 

Yes, exactly. So you’re vertically integrated.

The thing is, like we have, so Martin and I and our other partner Shea, like, we have an entity called Keymaster. It’s like our kind of—

Oh, no, I don’t even know about this!

Well, it’s a secret entity. It’s just like our holding company. Basically, we’re companies but we say that like we have goals. Our overarching goal is “bring joy to accounting,” which is the tagline, too. But like that’s our overarching goal. So how do we accomplish that? That’s our mission. 

Right.

That’s our whole addition in everything that we’re doing, so that’s so each part of these, each business is a part of that. It’s just a piece to solve that puzzle.

Got it. Got it. Alright. And I knew the joy. I forgot that. But I had to actually talk to Martin, 

How did you forget about the joy?!

I know. Well, because Martin had that behind his shoulder when I talked to him. You don’t have joy behind you there. So you need to get the joy.

Right. I need to fix that. 

Yeah! So we’ve got these three vertically integrated businesses that support each other and work together. It sounds like a great symbiotic relationship there. Does Starboard Collectives come into this, or what—this seems like it’s a brand new thing. What is Starboard Collectives?

It is a brand new thing. So it was an opportunity that came up because of just, I think, even just social media, we connected with the folks who started a program called 16 minute CFO. And they—so a gal named Tracy Beck and her dad, Dave. So Dave wrote a book called 60 Minute CFO, great book, like just like what a business owner needs to know, like, what are the metrics that you need to be tracking. 

And they had a program that they were working through, but like many of these CFO companies, if your client doesn’t have good bookkeeping, you can’t really help them on, you know, at a CFO level. So Tracy and Dave reached out to us, and they were very big in the moving and storage industry. And one of the things that they were connected with was these groups of CFOs, from moving and storage industries that got together on a semi-annual basis and just shared kind of best practices with each other, these industry groups. And they had a leader for these industry groups. And the the gal, a woman that was doing it, she was setting up to retire and had all these groups that didn’t have a place to go. And they wanted to continue. 

Randy, some of these groups had been around for 25 plus years, meeting twice a year and visiting each other’s facilities. It’s just a very cool thing. So we thought, “Well, this could be something that we could partner with Tracy on,” and Tracy was super passionate about it. She had led a couple groups. And we thought, “Well, like we can’t take on all of them. But we have access to CFOs, you know, that could as like a little perk of being a Breakaway advisor, you know, you could be involved with this other thing.” So that’s how we started Starboard, was to really start these kinds of CFO groups.

Yep. And so that’s what I was gonna ask, I assume, then you’re offering this to the Breakaway clientele. That makes a lot of sense. Everything’s still tying together. 

Right. 

We have one big Kristen Keats conglomerate being built here. I wonder what’s going to be added next to it. I assume bookkeeping already encompasses payroll, or is there another?

Yeah, we’re not getting into the payroll business. That’s for sure. But no, I don’t know. Martin always likes to cook up new ideas. But he knows—he knows I’m tired. So we’ll see. I gotta, I gotta find some helpers at Sherwood Tax before we have any new ideas.

So I often come up with ideas, but I do not implement anything. So I’m very spoiled, because that’s the thing. If I had to implement it, it’s not gonna go anywhere. And so it’s great that you guys work well as a team to be able to come up with them and implement them and get them running and successful. 

Anything on those four that I missed that you’d like to fill in? Any gaps that we didn’t include in those?

I mean, I would just say that we are always looking for progressive accountants who want to do something cool with a cool company, and whether you’re a tax person or whether you’re a controller, CFO, bookkeeper, like somewhere in our ecosystem, there’s a place for people who are like-minded.

Yep. I think that’s great. I think, that brings me to another question. We’re not wrapping up. That brings me another question, then. Just the industry in general. I mean, this is different than at least, you know, when I started in the industry. And this is different overall too. What do you see happening in the tax, accounting, bookkeeping industry, do you see, you know, five years ago, things be a lot different ten years from now? I mean, five years from now? Do you have a crystal ball on where we’re going?

You know, I hope it is different. And I think that—I honestly don’t know what’s going to happen to some of the more traditional firms. I mean, I feel like there’s the traditional firms that are in the, you know, they’re always going to serve the really big clients. But as far as like small business clients go, and I mean, I think that the search for talent, and educated accountants, people that want to go into accounting is the biggest crisis of our time right now as an industry, that we need to fix. 

Yep.

And even though I’m super excited about all the opportunities we have with an entity like Cadencia and bringing people in Mexico, I’m also super passionate about getting more people into the industry in the U.S., and having and people—I mean, our small business communities need accountants, you know? And we have to find a way to make it more attractive to people. And the Big Four model of churning and burning people out and this, you know, 2800 billable hour requirement, whatever the hell that they require now from staff accountants, I mean, it’s not flying. 

No.

So I really hope in the next five years that the firms are waking up and smelling the coffee, you know, that it’s not just about the term work life balance, you can’t just throw that out there and, and get people to come on. I mean, you have to, you have to really make it work.

Yep. And I think we’ve learned a lot more of that just over the last two years, the whole work life balance and being able to work remote and work anywhere and you can have employees in Mexico. You in Oregon can hire somebody in Miami, Florida and still make it work. And so that is a lot more palatable to a lot of people than “I got to sit at my desk and bill 2800 hours.” I couldn’t do it. 

So alright. Well, I think that’s great. Before we do wrap up, let me ask you a couple of final questions. First, and this is what I like to end with, not end with but get in before the end is, you’re obviously very busy. You really just got through a very busy time. It’s gonna continue to be busy. But what do you do when you’re not work-busy? What’s your passions outside of work? What do you do for fun?

I mean, I live, I feel like in the best part of the country for just exploring the outdoors and enjoying nature and hiking and camping. And you know, I’ve got two dogs and just like being able to be outside, I’ve got two teenagers, so they keep me pretty busy too. I don’t know if I can say I enjoy that all the time. But they do keep me busy.

Well, teenagers are fine. And when they get—my kids are mid-upper 20s, they’re on the second half of their 20s now and law changes at that point, so.

No, they’re fun though.

Alright. And then any last words before we wrap up? Well, obviously I want you to let people know how they can get a hold of you learn more about Breakaway or anything else, the outsourcing or anything else. 

Absolutely. Yes, I’m on LinkedIn. You can just find me Kristen Keats. I’m on Twitter. I believe my Twitter handle is @KristenKeatsCPA. So come find me there. We have a lot of fun on Tax Twitter, especially for accountants, if you just want to come and vent, just come on to Tax Twitter and you’ll be welcomed with open arms.

So yes, reach out because yeah, I love to connect with people. And I want to change this industry, and I want to make it better for everybody—I want to make it better for clients, and I want to make it better for accountants.

I think that’s a perfect wrap up. Well, Kristen, thank you very much for being part of the The Unique CPA podcast. 

Thanks, Randy. Good to see you.

Good to see you too.