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The Real Cost of Being Everyone’s Favorite Boss

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Madeline Reeves thought she’d hit rock bottom when she found herself face-down in a parking lot. She was wrong. That was before her million-dollar agency lost half its revenue in 30 days while she scrambled to save a monthly payroll costing anywhere from $88,000 to $102,000.

Meanwhile, Lynnette Oss Connell had engineered what she calls “a life of overfunctioning”—using technology and systems to layer on more and more responsibility instead of freeing up her time. When Oss Connell told her assistant she planned to add overnight Thursday shifts to handle overflow work, she expected pushback. Instead, her assistant asked how she could support the plan. That’s when Oss Connell realized, “Nobody’s coming to rescue me.”

In this episode of the Earmark Podcast, recorded at the Advisory Amplified Tour in Seattle, host Blake Oliver sits down with these two leaders who rebuilt their careers after burnout. Reeves, founder of Fearless Foundry and host of the Finding Fearless podcast, and Oss Connell, a CPA turned burnout prevention coach and founder of Burnout Bestie, share raw stories about what happens when professional success comes at the cost of personal destruction.

The Accounting Burnout Trap

The accounting profession doesn’t just attract service-oriented people. It rewards behaviors that lead to burnout. During one marketing event Reeves attended, personality testing matched attendees with unique drinks based on their personality types. The result? Out of 100 accountants, 97 received the same drink.

“This profession attracts a certain type of person,” Reeves observed. “For most accountants, their primary love language is acts of service. You live to serve. And that’s why I love accounting professionals.”

But that service mentality became destructive during the pandemic. Reeves led two firm communities during that period—one for female firm founders and another for advisory firms. For two years, she held space for leaders to “just cry privately together on Zoom because they were holding it together for their families and their staff.”

These professionals delayed their own compensation to maintain cash flow. They were filing PPP loans, figuring out EIDL requirements, and watching clients’ businesses collapse, all while absorbing the emotional and financial aftershocks.

“We went back to conferences and nobody was talking about what happened,” Reeves noted. “Doing that work for your clients was incredible, but it has a real impact on people.”

When Rock Bottom Has a Basement

Both Reeves and Oss Connell discovered that what feels like rock bottom often isn’t. “We all think we know what the burnout bottom feels like,” Reeves explained. “And then you’re like, oh wait, it can go even deeper.”

For Oss Connell, 15 years of building and rebuilding her CAS practice meant multiple burnout cycles. She had all the right support systems: a nanny, her mother as backup for her children, workflow software, and backup systems for clients.

“I had all the things you’re supposed to have,” she reflected. “But I didn’t put solutions in place that freed me up. I put solutions in place so that I could just layer more on.”

Her rainbow-blocked calendar, once a source of pride, actually represented something darker. “I was where the buck stopped and started, both at work and at home,” she explained. Even though work sometimes felt like a respite from personal stress, she wasn’t setting any real boundaries.

Reeves’s journey from that parking lot to losing half her revenue revealed similar patterns. As a service-oriented leader who loved building teams and culture, she initially got energy from mentoring her growing team. But soon she was coaching 12 employees while simultaneously mentoring all their clients, with two young children at home, a new marriage, and a recent move during the pandemic.

When four major clients, each worth over $100,000, canceled within 30 days through no fault of her team’s work, she scrambled to save everyone. She closed a $100,000 funding round in 30 days to save payroll. “That money was gone within a couple of months,” she admitted. “I was in the red for anyone who’s doing that math.”

The Three Warning Signs You Can’t Ignore

According to Oss Connell, burnout shows up in three distinct ways that serve as critical warnings.

First is emotional exhaustion. This can manifest in various ways, as seen with accountants, teachers, and healthcare workers during the pandemic.

Second is cynicism. It’s “that feeling of being jaded, the feeling that something you love doing, you now no longer find joy in. That is a big red flag,” Oss Connell says.

Third is a lack of accomplishment. You feel like “you’re on a hamster wheel, and no matter what you’re doing, you’re not getting ahead,” Oss Connell explains.

“Burnout isn’t the end of something,” she emphasizes. “It’s an indicator that you need to adjust something to be your most successful self.”

But recognizing these symptoms intellectually is different from acknowledging them emotionally. Both Reeves and Oss Connell waited for someone else to give them permission to stop.

“I was very conditioned, as I think most women are, to be a people pleaser,” Reeves admitted. She lived off the feedback of being told she did a good job, taking on clients from very large accounting firms despite values misalignment, because they represented good money and validation.

Oss Connell’s breaking point came when nobody challenged her plan to work overnight. “I desperately wanted somebody to intervene and say, ‘Hey, you’re doing too much.’ And nobody did.”

Rebuilding on Your Own Terms

Recovery required dismantling old structures and rebuilding with new boundaries. For Reeves, the first step was radical. “I stopped trying to be so likable.”

She audited every client in the firm’s history, dividing them into two categories: “love them or hate them.” Using this data, she analyzed patterns across services, timelines, and engagement types. This informed a complete overhaul of their service offerings.

“We redid our brand strategy, which clarified our ideal client. And that quickly kicked some people off the menu,” she explained. They productized all services, implemented annual repricing, and built documented processes so no single person was “the glue.”

“If I went on vacation for a week or two, people need to know how to onboard clients,” Reeves said. “If I’m the only person who can tell you how to do those things, that’s not very scalable.”

The firm now operates by a simple mantra: “Life is too short to work with people and projects you hate, so don’t do it.”

For Oss Connell, the solution involved honest conversations with her husband about their different visions for their co-owned firm. He wanted to grow and scale; she wanted to keep it lifestyle-oriented and small. They ultimately decided to sell the firm so neither had to compromise their vision.

These changes weren’t overnight. “It took us well over a year or two,” Reeves said, “but we stacked them one on top of the other and they unlocked.”

Community as Life Support

Strategic changes created the framework, but emotional support proved equally critical. Reeves and Oss Connell emphasize that isolation accelerates burnout.

“We need to have smaller spaces where we can talk candidly about what we’re going through,” Reeves said. This means being vulnerable—not in a performative way, but simply admitting “this is a part that I’m still working on” or “this part I haven’t figured out yet.”

The challenge is that many professional communities create pressure to present a polished image. “We’re all like A-plus students around here,” Reeves observed. “That pressure to show up and just show your shiny, polished ‘I have it figured out’ self is really high.”

But community requires effort to find. “Nobody’s going to come and be like, join our community, you really need this,” Reeves emphasized. “A lot of people who are like, ‘Well, I’m all alone.’ And I’m like, but are you seeking it?”

For Oss Connell, losing her entire support system during divorce while building her firm was devastating. “When I was struggling with my personal life and my firm, I had no support system, and I did not go out and search for it. That is probably the number one problem when I look back.”

Being in a community helps clarify identity. “I can see other people have these skills, and then I begin to see who I am better because I see who you are,” Oss Connell explained.

This extends to leadership transparency. Reeves now openly expresses stress to her team, clarifying, “This is not about you, this is just me getting it out of my body.” She’s learned to show anger or disappointment directly rather than always being the “nice boss.”

Oliver confirmed this approach works. “I talk to my employees when I feel stressed out, and it’s okay. You don’t have to be the perfect boss who has it all figured out. They really appreciate it when I’m honest.”

Breaking the Cycle for Good

The path forward requires accepting that sustainable success doesn’t require self-destruction. As Oss Connell frames it, burnout is an indication that you need to change something,” and that adjustment is ongoing. “As life moves on, your firm evolves. Society evolves. Your clients evolve. You’re going to need to continually recalibrate.”

The accounting profession faces a choice: continue celebrating martyrdom or recognize that sustainable success requires energized, not exhausted, practitioners. The pandemic showed us the incredible resilience of accounting professionals and the devastating personal cost of that resilience.

“When we set good examples of reducing stress for the organization, we equip our employees to be more sustainable as well,” Oss Connell noted. It’s about creating firms where everyone can thrive.

Listen to this episode to hear the full stories from Reeves and Oss Connell. Whether you’re experiencing warning signs or rebuilding from your own rock bottom, the conversation provides validation that you’re not alone and strategies for creating a practice that doesn’t require your destruction to achieve success.

When Auditors Become Robots: The Hidden Cost of Mechanical Box-Checking

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For four to five straight years, an audit team meticulously completed their control testing checklists, dutifully checking every box and signing off on every procedure. Their work papers looked pristine. Their compliance documentation was flawless. And all the while, an employee was systematically committing fraud right under their noses.

When questioned about the controls they’d supposedly tested year after year, these auditors couldn’t explain how a single one actually worked. They had fallen into what CPA Sam Mansour calls “the checklist trap”—a dangerous mindset where the very tools designed to ensure audit quality become the biggest threats to it.

This eye-opening example comes from a recent Audit Smarter podcast episode where host Sam Mansour digs into the mechanical box-checking that passes for diligent auditing in too many firms today. While audit checklists are useful tools for quality control, they become dangerous crutches when auditors stop thinking beyond the boxes they’re checking.

When Good Tools Become Dangerous Crutches

Checklists start life as helpful guides. They’re designed by experienced professionals who’ve seen common audit problems and want to prevent them. They’re meant to be guardrails, keeping auditors on track while still allowing room for professional judgment and client-specific thinking. But somewhere along the way, these helpful tools can become dangerous.

The transformation happens gradually. As Mansour explains, “If the checklists say to go look at an area, you go look at that area. If they’re silent on a specific area, then you just don’t even consider going in there. So basically, instead of it being a helpful guide, it becomes a literal crutch.”

What starts as a helpful framework eventually limits an auditor’s perspective to what’s written on forms. 

The checklist mentality is particularly dangerous because it feels so professional. Auditors complete every step, sign off on every procedure, and produce work papers that look thorough. The documentation appears complete and compliant. But underneath the surface, there’s no critical thinking.

Consider the real-world example from the podcast: auditors who marked controls as “tested” year after year, checking all the right boxes and completing all the required procedures. Their checklists were perfect. Their sign-offs were current. But when questioned about how these controls actually worked, they couldn’t provide a single coherent explanation.

“There were severe control issues at the client which allowed for fraud to occur,” Mansour explains. “And it just wasn’t discovered by the audit team. The person committed fraud for four or five years. And I think the auditors just kept coming in and checking that box.”

The consequences were predictable and severe. The fraud continued undetected, not because the checklists were inadequate, but because no one was thinking beyond them.

This creates blind spots where fraud and errors can flourish. As Mansour notes, “Checklists are designed kind of as a textbook solution. The checklists don’t necessarily catch everything..”

The Hidden Forces That Kill Critical Thinking

The checklist trap isn’t the result of lazy auditors or character flaws; it’s the predictable outcome of systemic problems that even dedicated professionals can’t overcome through willpower alone. When we look beneath the surface of mechanical box-checking, we discover forces that make thoughtful auditing nearly impossible.

The most damaging culprit is budget pressure created by systematic underbidding. As Mansour explains: “Some firms tend to price engagements very low. And so let’s say, for example, your budget is $5,000 for an engagement, when really it should be $15,000.”

The math is brutal. If your firm targets $150 per hour but you’re forced to complete work in one-third the appropriate time, you’re effectively working for $50 per hour while still being held to $150-per-hour quality standards. This creates an impossible situation where taking time to truly understand complex checklists is financially unsustainable.

The cultural reinforcement runs deep. In many firms, the message from leadership focuses on completion rather than understanding: “Make sure you fill out these checklists, make sure they’re done correctly, make sure every box is checked.” This message, coupled with crushing deadlines and impossible budgets, transforms checklists from investigative tools into speed tests.

“A lot of times, unfortunately, in public accounting, that kind of curiosity, that dialog is seen as a waste of time because it takes up billable hours,” Mansour observes. The system rewards speed over understanding and punishes the curiosity that leads to quality work.

The training gap makes things worse, particularly for new auditors who find themselves drowning in technical terms they never learned in school. Mansour recalls his own experience: “I actually remember sitting there, looking at my computer, looking at my screen, and thinking, oh my gosh, I had no freaking clue what I’m doing.”

When new auditors are handed complex checklists filled with unfamiliar concepts but given no time to learn, mechanical completion becomes their only survival strategy. The system even punishes the behaviors it claims to want. Mansour describes being criticized early in his career: “The criticism that I used to get is look at this person next to you, how quick they are.”

While his colleague was flying through checklists, Mansour was taking time to understand the work and feeling “so far behind” and “so dumb” as a result. The irony? Years later, Mansour had surpassed his speedy colleague in seniority, proving that thoroughness ultimately beats speed. But how many talented auditors give up or develop bad habits before they can prove this point?

This creates a cycle where underbidding forces rushed work, rushed work requires increased checklist dependency, and checklist dependency reduces the quality that justifies higher fees. Breaking free requires systematic change.

Breaking Free: The Strategic Approach to Better Auditing

The path out of the checklist trap isn’t about abandoning structure or telling auditors to simply “think more.” It requires systematic changes that address the root causes we’ve identified. Forward-thinking firms are implementing coordinated solutions that transform their economic models, training approaches, and cultural expectations.

The foundation starts with honest pricing. Firms must have the courage to move their fees to industry-standard levels, even if it means difficult conversations with clients. As Mansour explains, when firms properly price their engagements and explain the increases, the client, a lot of times, will stay. Because if they ask around, they’ll find those fees are industry standard, and what they were getting with you was really an unreasonable deal.

Adequate pricing creates the breathing room necessary for thoughtful analysis rather than mechanical box-checking. With realistic budgets in place, firms can modernize their training by focusing on the “why” behind procedures rather than just the “what.”

Effective training requires creating psychological safety for new auditors to admit knowledge gaps. Mansour offers this advice to entry-level staff: “Look, if you don’t know it, you’re better asking the questions now. Because if I hear you asking in 12 months or 24 months those questions you should have asked in the first two, three, four months, I’m going to be very concerned.”

The shift requires moving beyond speed-focused metrics to value-based evaluation. Instead of comparing new auditors to experienced colleagues on time alone, managers should emphasize quality development first. As Mansour learned through experience, “You’re better off going slow and then picking up the speed later. Whereas if you start out with the speed to impress people, it’s difficult, I found, to pick up the quality.”

Practical implementation involves several concrete tools. Firms should customize audit programs for each engagement rather than using generic templates. Modern audit software can generate tailored checklists based on client-specific risk assessments. Adding professional judgment prompts throughout checklists helps auditors think beyond simple completion.

Mansour suggests incorporating “memory joggers,” brief explanations of how conclusions were reached. For example, when testing missing check numbers in a sequence, document not just what was done, but why. “We decided to test missing check numbers because we noticed irregularities in the sequence that could indicate control weaknesses or potential fraud.”

Successful firms also restructure their wrap-up meetings to discuss what was done and why it mattered. “We could say that we audited a specific area. But why did we choose to audit that area, especially if it’s not something we typically do?” Mansour asks.

The red flags that indicate continued checklist dependency are easy to spot. Work papers that remain essentially identical year over year signal mechanical copying rather than thoughtful analysis. Missing documentation of key discussions suggests auditors are focused on completion rather than understanding. Outdated information, like wrong contact names scattered throughout documents, reveals the copy-paste mentality that characterizes checklist traps.

Teams that successfully break free demonstrate clear evolution in their work. Their audit programs adapt as clients change and grow. They identify new risks and modify procedures accordingly. Most importantly, they can articulate the reasoning behind their decisions.

As Mansour’s technical reviewer wisely noted: “When the peer reviewers come in, they have a checklist, and their checklist is checking in on your checklist.” Understanding that audits exist within layers of professional oversight reinforces why thoughtful checklist use serves everyone’s interests better.

The Choice Between Clerks and Professionals

When auditors become mechanical box-checkers rather than analytical investigators, the tools that promise consistency and quality destroy the very thinking that makes work professional in the first place.  Clients deserve better.

This isn’t about individual auditors lacking motivation or intelligence. It’s about good professionals working within systems that punish the curiosity and analytical rigor their profession demands. When firms underbid engagements, create crushing time pressures, and reward speed over understanding, they train their staff to stop thinking.

On the other hand, firms that properly price their services, invest in real training, and create cultures that reward analytical thinking avoid the checklist trap and position themselves as the strategic partners their clients need.

The goal is to use checklists as launching points for professional judgment rather than substitutes for it. The firms that learn to balance structure with thinking will build stronger relationships, deliver higher value, and attract the talent that drives long-term success.

The complete roadmap for avoiding checklist dependency is available in the full Audit Smarter podcast episode, where Mansour provides detailed implementation strategies, specific examples of cultural transformation, and the exact frameworks successful firms use to turn checklist-dependent teams into strategic thinking powerhouses.

Because in the end, the choice is simple: Continue training clerks who check boxes, or develop professionals who think, analyze, and protect the interests they’re hired to serve.

Why This Firm Owner Woke Up Unable to Move After Planning Her Path to $3 Million

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Picture being six months pregnant, climbing a ladder—not stairs, a ladder—in slingback heels to reach your desk in a famous New York fashion stylist’s loft. For most people, this would be a wake-up call about workplace safety. For Justine Lackey, it became the spark that pioneered virtual bookkeeping in the early 1990s, using FedEx, zip drives, and messengers to revolutionize an entire industry before online banking even existed.

In this episode of She Counts, hosts Nancy McClelland and Questian Telka welcome Lackey, a true trailblazer who built and sold a successful bookkeeping firm while challenging every assumption about what business success should look like. As McClelland shares in her introduction, Lackey is “a devoted mother to three and mentor and coach in her incubator program for bookkeepers and accountants growing their firms.”

When Your Body Knows What Your Mind Won’t Admit

“I’m an accidental entrepreneur,” Lackey explains early in the conversation. She landed in bookkeeping through a roommate’s invitation and never planned to build what she calls “the H&R Block of bookkeeping firms.” Without a college degree (she didn’t finish until 2009, well after she established her firm, Good Cents Management) or corporate experience, she lacked the traditional frameworks most firm owners bring to their businesses.

This lack of traditional structure had consequences. “Everybody says, ‘I wanna be successful,’ but that’s ambiguous,” Lackey says. “You have to get into the details of it. I wanna make $250,000 a year, or $500,000 a year. I wanna work 20 hours. I wanna have a team of five.” Without this clarity, she found herself swept along by what she identifies as cultural pressure to constantly expand.

The breaking point came during an Entrepreneurial Operating System (EOS) planning session with her team. Together, they mapped out a roadmap to $3 million in revenue. The math was clear: seven to nine bookkeeping teams with redundancy meant 14 to 18 bookkeepers. Add client service managers and a true integrator or COO, and they’d need approximately 28 employees.

“The energy in the room was like, yeah, woo!” Lackey recalls. “Like when you’re at conference world and you’re walking on hot coals.” Everyone left excited, including Lackey—until the next morning.

“I woke up and I literally could not move my right shoulder,” she shares. The pain was so severe her massage therapist couldn’t even work through the tension. “What is this weight on your shoulders?” the therapist asked. As Lackey recounted the previous day’s planning, the connection became clear. This wasn’t an injury; it was her body rejecting a path that violated her values.

The Hard Conversation Nobody Wants to Have

Recognizing she didn’t want to build a 28-person company meant facing her excited team with a complete reversal. “That’s ethical leadership in action,” Lackey explains. “That’s hard conversations.”

Lackey returned to her team with honesty, “It was really exciting and I believe this can be done. But at the end of the day, this is my life. I don’t wanna do that.”

“It’s terrifying to put your tail between your legs,” she admits. But as Telka points out, “Admitting that you have taken a wrong turn builds a lot of respect.”

This moment revealed a deeper truth about integrity. “We often talk about integrity in relation to other people,” Lackey notes, “but we don’t talk about integrity in relation to ourselves. When we’re out of alignment with integrity, that causes inner conflict and stress.”

Why Growing Sideways Beats Growing Up

The conversation then turns to a concept that challenges everything the industry teaches about success: lateral growth versus vertical growth.

“Whenever people on LinkedIn talk about having a successful firm, they always talk about revenue,” McClelland observes. “They almost never, ever, ever talk about profit or net income margins.”

Telka adds her favorite quote, “Revenue is vanity, profit is sanity.”

Lackey explains the difference. “Vertical growth is the most common type of growth people discuss—raising your revenue number and client acquisition. Those are really sexy numbers.” But lateral growth—the systems, processes, technology, and team development—”requires patience. It is very detailed, hard work.”

The challenge is that small firms can’t do both simultaneously. “There are very few people, particularly in smaller firms, who can do this all at once,” Lackey emphasizes. “So you need to make a choice.”

Her choice involved intentional constraints that seemed counterintuitive. She worked exclusively with QuickBooks Online, turning away Xero users even when they begged. She refused wholesale clients with inventory because she “hated counting bits and bobs and COGS.” These weren’t limitations; they were strategic decisions to build deep expertise.

Even technology decisions followed this principle. When Good Cents invested months implementing a new practice management system that the team hated, they made a shocking choice: abandon it entirely and return to Google Sheets. “Sometimes lo-fi is hi-fi,” Lackey explains. “Technology platforms are like people, and not all people are your people.”

The Blindfold Moment That Changed Everything

Perhaps the most powerful part of the conversation comes when Lackey shares how she discovered her business was actually a sellable asset. “When you live in a scarcity-based poverty mentality,” she explains, “it is hard for you to see a different reality for yourself.”

During one particularly frustrating period, she vented to a designer friend, “I’m so frustrated. I just wanna quit.”

“But you could just sell it,” the designer replied casually.

“Sell what?” Lackey asked, genuinely confused.

“It’s like I was blindfolded and somebody snatched the blindfold off,” she recalls. The designer pointed out the obvious: recurring revenue, strong operations, great clients. “You’re a great business. You could sell it.”

This revelation sent Lackey on a research journey. She devoured “Built to Sell” by John Warrillow in a single day and discovered firms were selling for about one times annual revenue. Her firm was worth more than her 960-square-foot cottage.

“I couldn’t even see what was possible for myself,” she admits.

When she eventually sold Good Cents in 2023, 28 potential buyers courted her. The relationships she’d built—including one client who’d been with her 22 years and had hosted her baby shower— created incredible value. “Relationships are assets,” Lackey emphasizes, “even if we can’t line item them on a balance sheet.”

The Secret Every Firm Owner Needs to Hear

Near the end of the conversation, Lackey shares what she calls “a secret that nobody talks about.” Every firm owner wants help.

This insight applies whether you run your own firm or work in someone else’s. “When you can come into a conversation and say, ‘I really like working here and I really like the work I’m doing, but these are the recurring problems and this is the solution I propose’—that takes courage,” she explains.

McClelland adds her own experience, “My best mentor ever taught me that important lesson. She said, ‘Come to me with solutions, not problems.’”

Your Next Step Toward Intentional Growth

Lackey now channels these lessons through her Modern Firm Challenge, a free five-day program running one hour per day. “My personal mission statement is that I help the world by helping people,” she shares. The challenge focuses on the biggest pain points: onboarding, monthly close, pricing, and increasingly, technology and AI.

“You’re not gonna fix all the things,” she tells participants. “You’re gonna look at the lessons and say, this is what I’m gonna focus on right now.”

McClelland predicts some firm owners might initially resist. “You’re telling me I need to slow down to speed up? I don’t have five days to take off to do this.”

But Lackey’s response is practical: “The classes are only an hour a day. We run them from one to two.” Plus, they record everything for those who can’t attend live.

The results speak for themselves. As Lackey notes, “I’m not here to tell you you can build a million dollar firm overnight. I’m here to tell you you can do whatever you wanna do, but it’s going to take time.”

Permission to Choose Your Own Path

The conversation closes with McClelland sharing a powerful quote from author Laurie Perez: “I reserve the right to evolve. What I think and feel today is subject to revision tomorrow.”

This perfectly captures what Lackey has given listeners: permission to have clarity about what they want and to change their minds when their goals no longer serve them.

Ready to build the business you actually want? Sign up to get on the VIP list for Lackey’s next Modern Firm Challenge at justinelackey.com/register. You can also find her on LinkedIn or join her free Facebook group, The Incubator, with about 4,000 members building community together.

As this episode of She Counts proves, building with intention rather than endless expansion might just be the key to creating the valuable, sustainable business you’ve always dreamed of, even if you didn’t know it was possible.

Three Safe Harbor Elections Could Save Thousands on Your Next Big Repair Project

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When a rental property owner faces a $27,000 repair bill, can they deduct these costs immediately as repairs, or must they capitalize them as improvements and depreciate them over decades?

This exact situation confronted Jeremy Wells, CPA, EA, in his tax practice when a client’s simple plumbing leak turned into a complex restoration project. What started as a ceiling drip in a two-story rental property led to $4,000 in plumbing repairs, a $16,000 bathroom renovation, a $4,000 water heater replacement, and $3,000 in ceiling and floor repairs.

In this episode of Tax in Action, Wells walks through this real case to show how the IRS determines when expenditures qualify as immediately deductible repairs versus when they must capitalize them as improvements. The difference can mean thousands in tax savings if you understand the rules and make the right elections before filing your return.

The Framework That Changed Everything

For years, tax professionals struggled with the gap between two key code sections. Section 162 allows businesses to deduct ordinary and necessary expenses, including repairs. Section 263A requires businesses to capitalize amounts paid to improve tangible property. But the law didn’t clearly define when you’re repairing property versus when you’re improving it.

“If we want to know if a certain type of expense is ordinary or necessary, and if it’s therefore deductible by a business, we look to Section 162,” Wells explains. “We also have Section 263A,  which tells us we have to capitalize amounts paid to acquire, produce, or improve tangible property.”

Treasury Decision 9636 finally bridged this gap. Released in the early 2010s, this collection of regulations established a clear framework for making repair versus improvement decisions. The document includes about 60 pages of explanation in its preamble, showing how the Treasury Department arrived at these rules and addressed public comments.

The framework centers on a two-part test. First, you must determine the “unit of property”—the actual asset you’re repairing or improving. Second, you must assess whether your expenditures constitute improvements to that unit of property.

Understanding Units of Property

Determining the unit of property isn’t always straightforward. Wells uses a car engine replacement to illustrate the concept.

“Think about a vehicle. I have to replace the engine. Is the unit of property the engine? Is it the entire vehicle?” The answer depends on what appears on your balance sheet or depreciation schedule. Since you typically depreciate the entire vehicle rather than individual components, the whole vehicle is the unit of property.

For buildings, the analysis is more complex. The regulations distinguish between building structure and building systems. The structure includes the building itself: walls, doors, windows, floors, ceilings, and permanent coverings like tile or brick. The systems include HVAC, plumbing, electrical, elevators, fire protection, gas distribution, and security systems.

“We have to distinguish between what is happening with the structure of this building versus what’s happening with the specific systems,” Wells notes. This distinction matters because repairs to different units of property receive independent analysis under the improvement rules.

In Wells’ rental property case, this meant treating the ceiling and floor repairs (building structure) separately from the plumbing work (plumbing system). Each unit of property required its own improvement analysis.

The Three Types of Improvements

Once you identify the unit of property, you must determine if your expenditures constitute improvements. The regulations define improvements as expenditures that produce one of three results: betterments, restorations, or adaptations.

Betterments

Betterments include three scenarios. First, fixing conditions or defects that existed before you acquired the property or arose during its use. Using the car engine example, Wells explains, “There is something in that engine that’s not quite working right, and that’s causing a problem for the operation of that vehicle.” Replacing that faulty engine improves the vehicle.

Second, betterments include additions like enlargements, expansions, or capacity increases. Wells draws from Florida real estate: “A lot of people have paved patios right outside the back door. They’ll want to turn that into some usable space that doesn’t have the heat and the direct sunlight and the bugs. So they wall that in and create a sunroom.” This transformation adds value and functionality.

Third, betterments cover changes that increase productivity, efficiency, strength, quality, or output. Replacing an old engine with a high-performance version that delivers better speed and efficiency would qualify.

Restorations

Restorations focus on returning property to proper working condition after damage or deterioration. “Think of some piece of property that has either been damaged or it’s just worn out over time to the point where it’s become either nonfunctional or just unusable,” Wells explains.

This concept applies especially to properties affected by natural disasters. If a tornado rips off your roof or a tree damages a wall, restoring the property to its pre-damage condition qualifies as an improvement under tax law, even though you’re not making it better than before.

Adaptations

Adaptations involve converting property to entirely different uses. Wells points to pandemic-era commercial real estate: “There were attempts to convert some of that office space into apartments.” This conversion requires extensive investment to add kitchens, appropriate bathrooms, and residential layouts, adapting the property for a new use.

When Related Costs Get Bundled Together

The regulations include a rule that often catches taxpayers off guard. When multiple expenditures stem from the same project, taxpayers must capitalize together costs that directly benefit and result from improvements.

In Wells’ case, this meant the $3,000 in ceiling and floor repairs couldn’t be treated separately from the bathroom renovation and plumbing restoration, despite appearing on different invoices from different contractors.

“When these kinds of expenses are all based around the same event, those costs that directly benefit and result from the improvement have to be capitalized as all part of that improvement as well,” Wells explains. “We can’t differentiate between the expenditures that went into fixing the plumbing versus fixing the floor and the ceiling versus improving the bathroom. This is all one project.”

The water heater replacement stood apart only because it was an independent decision. “All of the work done on the bathroom and the ceiling and the floor would have still happened exactly the same way, regardless of whether or not the taxpayer actually replaced that water heater.”

Three Safe Harbors Can Help

The IRS provides three safe harbors that can transform required capitalizations into immediate deductions. But all three are elective—you must actively choose to use them and document that election on your tax return.

The De Minimis Safe Harbor

The de minimis safe harbor election allows taxpayers to expense invoices or items below certain dollar thresholds. For businesses with applicable financial statements (SEC filings, audited financials, or non-tax statements required by government agencies), the threshold is $5,000 per invoice or item.

Most small businesses and rental property owners don’t have applicable financial statements. For these taxpayers, the threshold started at just $500 when the regulations were finalized. That amount proved so restrictive that business owners and tax advisors immediately complained.

“Even ten years ago, the cost of normal business equipment like computers, tablets, and cell phones were easily over $500,” Wells recalls. The IRS eventually increased the threshold to $2,500 through Notice 2015-82, providing more meaningful relief for routine business purchases.

The Safe Harbor for Small Taxpayers

The safe harbor election for small taxpayers specifically targets rental property owners. To qualify, you must have average annual gross receipts of $10 million or less over three years and own eligible building property with an unadjusted basis of $1 million or less.

This safe harbor works building by building. You can expense all repairs, maintenance, and improvements on a qualifying building if total annual costs don’t exceed $10,000 or 2% of the building’s unadjusted basis, whichever is less.

The Routine Maintenance Safe Harbor

The routine maintenance safe harbor election applies to activities you reasonably expect to perform at least once every ten years to keep building structures or systems operating efficiently. However, it explicitly excludes betterments, adaptations, and restorations.

Water heater replacements are a classic example. “Water heaters seem to last like every 6 to 8, maybe ten years,” Wells observes. “Every ten years or so, you need to plan on replacing a water heater.” In his practice, Wells regularly applies this safe harbor to water heater replacements.

Applying the Rules to Real Situations

In Wells’ $27,000 rental property case, applying the improvement framework reveals how the rules work in practice:

  • The $4,000 plumbing repairs constitute restoration, replacing worn, corroded components to return the system to working order
  • The $16,000 bathroom renovation represents betterment, improving the appearance and quality of fixtures that weren’t actually broken
  • The $3,000 ceiling and floor repairs must be capitalized with the other improvements as incidental costs
  • The $4,000 water heater replacement stands apart as an independent decision eligible for the routine maintenance safe harbor

None of the individual expenditures qualified for the de minimis safe harbor since all exceeded $2,500. The total project costs far surpassed the small taxpayer safe harbor limits as well.

But the water heater replacement offered a strategic opportunity. As an independent maintenance decision that falls within the routine ten-year replacement cycle, the taxpayer could immediately deduct it under the routine maintenance safe harbor if they make the proper election.

Making Elections Before It’s Too Late

All safe harbor elections require specific statements attached to timely filed returns, including extensions. Miss the election deadline, and the opportunity disappears permanently for that tax year. Make the election, and it applies to all qualifying expenditures—there’s no cherry-picking individual items.

“You need to attach a statement to the return saying the taxpayer makes the election,” Wells emphasizes. Renew these statements annually for continued use, because there’s flexibility to use safe harbors in some years but not others.

The Bottom Line for Tax Professionals

Wells’ case study demonstrates how identical expenditures can receive dramatically different tax treatment based on understanding available options and making proactive elections. The $4,000 water heater could provide immediate relief through the routine maintenance safe harbor, while the taxpayer had to capitalize the remaining $23,000 and depreciate it over decades.

“When it comes to the decision of whether to repair versus improve, it’s important to look at these regulations, to read through them, to ask yourself, are we bettering this property?” Wells concludes.

The framework offers practical guidance that can save thousands in immediate tax relief or cost clients decades of unnecessary capitalization. But it only helps those who understand the rules, recognize when safe harbors apply, and make the required elections before filing deadlines pass.

For tax professionals, this is the difference between reactive compliance and proactive planning. Your clients need advisors who anticipate these situations and structure approaches to maximize immediate deductions within regulatory boundaries. Understanding these repair versus improvement rules before you need them could save thousands when that next unexpected repair bill arrives.

The Real Reason Your Female Colleagues Keep Disappearing from Leadership

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You’re watching your female colleagues disappear. One by one, the talented women who started their accounting careers alongside you vanish from the partnership track. When you look around the conference table at senior leadership meetings, you realize that although women make up half of all new hires, only 19% of firm partners are women.

In a recent episode of the She Counts podcast, “Still Under Glass,” hosts Questian Telka and Nancy McClelland tackle this leadership crisis head-on. But they’re not just naming the problem. They’re offering examples and solutions and calling on firm leaders to make fundamental cultural shifts.

The Pipeline Problem That Isn’t

Something dramatic happens between new CPAs entering the profession and reaching partnership, and it’s not a lack of talent.

Unfortunately, this problem isn’t unique to accounting. Across business sectors, women hold only 14% of executive roles. But accounting starts with gender parity, making the difference even more stark. “We know that we have 50% as women, and we know they’re talented,” Telka emphasizes. “The issue is that the profession is losing women mid-career, not because they aren’t capable, but because the system really isn’t designed for us to stay.”

Making the Invisible Visible

Telka shares that a male colleague recently told her he wants to help create positive change but doesn’t understand the issues or how to help. To eliminate that excuse, we need to spell out exactly what’s happening and what allies can do about it.

The biases start small but compound quickly. Studies show men interrupt women 2.5 times more often than women interrupt men. Women are routinely asked to take notes in meetings or organize office celebrations, rather than men. They receive vague feedback like, “you’re doing great, keep it up,” while men more often get specific, actionable guidance tied to promotions.

McClelland adds, “Women of color have a much harder time. There are many different kinds of privilege.” These biases get disguised with phrases like “she’s just not quite the right fit,” a convenient way to mask discrimination that’s hard to pinpoint.

However, recognizing bias is just the first step. Three critical barriers keep women under glass: the motherhood penalty, the flexibility trap, and the sponsorship gap.

The Motherhood Penalty: Same Event, Opposite Outcomes

The data is jaw-dropping. Mothers are considered 12% less committed to their jobs than non-mothers, while fathers are seen as 5% more committed than non-fathers. This perception gap translates directly into salary differences. Mothers receive starting salaries 7.9% lower than childless women and 8.6% lower than fathers.

“The exact same life event, becoming a parent, becomes either a career accelerator or a career killer depending solely on your gender,” the hosts note.

Telka shares a story about her ex-husband taking their son to a playground. When his brother asked how he felt about “babysitting” while the women went shopping, he immediately corrected him: “I’m not babysitting. This is my child.”

That single word—babysitting—captures everything. When fathers care for their children, they’re going above and beyond. When mothers do it, it’s just expected. Worse, it’s considered evidence that they’re not serious about their jobs.

This bias affects daily decisions that slowly strangle women’s careers. Women get passed over for major accounts based on assumptions about their availability. “They’re thinking: you’re a mom, you don’t want to have a larger account,” Telka explains. Instead of asking what support women need to keep advancing, firms quietly write them off.

The Flexibility Trap: Benefits That Destroy Careers

Many firms advertise flexible schedules and family-friendly policies. But there’s a massive gap between having these policies and creating a culture where women can use them without killing their career trajectory.

“Don’t say you’re going to give unlimited vacation or flexible schedules and then expect your employees not to use it,” Telka warns. “Real flexibility isn’t just a policy; it’s putting it in practice.”

McClelland shares an infuriating story that shows this trap in action. A lawyer friend, raising two children alone while her daughter faced serious health issues, negotiated a 25% pay cut for more flexibility. Despite maintaining her full workload and delivering the same results while working more from home, that pay cut became permanent. Future raises were calculated from her reduced salary, compounding the penalty year after year.

Meanwhile, another friend’s male boss responded completely differently to her caregiving needs. “You participate and contribute more than anybody here. I know you’ll get the work done. Take whatever time you need.”

Same situation. Completely different outcomes.

The flexibility trap extends to hiring practices. Most larger firms refuse to consider part-time senior-level roles, demanding 60-plus-hour workweeks as the baseline for showing commitment. “We could hire more women who are highly competent, highly skilled,” Telka argues. She left her position partly because there was no opportunity to work part-time while caring for her son.

The hosts challenge the entire premise of equating hours with value. “The bragging should be, ‘’I’m still hugely successful, and I’ve only had to work ten hours this week because I’m so efficient,’'” Telka suggests. Instead, the profession celebrates whoever logs the most hours, regardless of actual accomplishments.

The Sponsorship Gap: Beyond Coffee and Advice

While firms love their mentorship programs, women need sponsorship, and there’s a crucial difference. Mentors give advice. Sponsors give opportunities.

“Women need advocates who promote them even when they’re not in the room,” Telka explains. This means giving them the opportunity to work with big clients, putting them forward for promotions, and actively using influence on their behalf.

The “feedback gap” shows how this plays out. Telka noticed that men at her firm received specific, actionable feedback: complete these certifications, lead this type of project, and you’ll be ready for promotion. Women got vague encouragement that sounded supportive but functioned as a career ceiling.

McClelland’s experience breaking into professional speaking illustrates the power of sponsorship. She had no idea what to charge and accepted far less than market rates. When Telka learned what McClelland was charging, her response was direct: “You need to charge a lot more.” That single conversation of transparent peer mentorship immediately increased McClelland’s earning potential. But sponsorship is that next step: vouching for her quality of work to professional connections who were ready to pay market rates.

Because women need more than peer support. They need people—espectially men—in leadership roles actively using their privilege for change. This means interrupting when women themselves are interrupted, questioning why Jennifer’s client portfolio is smaller than John’s, and advocating for women who aren’t in the room.

“Don’t wait for women to ask for a promotion,” McClelland urges. Women are far less likely to self-advocate, since they have been socialized to be “nice and kind and warm” rather than assertive. “Intentionally promote women. Just because they’re not asking doesn’t mean they’re not qualified or don’t deserve it.”

From Awareness to Action

The good news? Change is already happening. Jason Ackerman’s firm has achieved 80% women employees with equal gender representation in leadership. Some firms tie partner bonuses to diversity outcomes. A male partner who took paternity leave shifted his entire firm’s culture simply by modeling the behavior.

The solutions are practical and achievable:

  • Track account assignments to ensure equity
  • Stop asking for prior salaries that perpetuate pay gaps
  • Provide bias interruption training for everyone
  • Create revenue-sharing models that reward value over hours
  • Hire skilled women seeking part-time or flexible roles
  • Make pay ranges transparent within organizations
  • Model the behavior you want to see

Companies like Luma Accounting have incorporated policies like these into their firm culture with such successful results that they started the Women+Workplaces community to connect talented women seeking flexible work with firms smart enough to recognize that 30 brilliant hours beat 60 mediocre ones.

“Culture is created based on what we celebrate and what we reinforce,” Telka notes. The profession rewards visibility and hours logged… but it should be rewarding impact, innovation, and results.

The Business Case for Breaking the Glass

When firms lose half their talent pipeline to preventable cultural barriers, they lose experienced professionals who could transform their practices. Women who navigate personal challenges often become more adaptable, empathetic leaders.

“My personal family struggles have made me a much more resilient individual and a more compassionate person and leader,” Telka shares. McClelland agrees, noting that her medical challenges made her more understanding and better able to support her team.

Telka shared a quote from Michelle Obama, “Strong men, men who are truly role models, don’t need to put down women to make themselves feel powerful. People who are truly strong lift others up. People who are truly powerful bring others together.”

The leadership gap in accounting won’t close on its own. But with awareness, commitment, and intentional action from everyone—not just women—the profession can finally move beyond keeping women under glass.

Whether you’re running a firm or just starting your career, you have the power to be part of this shift. Listen to the full episode for more insights, strategies, and an honest conversation about creating real change in accounting.

The hosts also invite you to join the conversation on the She Counts LinkedIn page by sharing your own stories of workplace bias and solutions that work. Recognizing the glass ceiling is just the first step. Breaking it requires all of us.