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The Accounting Profession Has AI Completely Backwards

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When Accounting Today surveyed industry thought leaders about AI’s impact on the profession, every expert agreed that AI would automate the boring stuff like bank reconciliations, data entry, and transaction matching while humans would rise to strategic advisory work. Not one thought their own job was at risk.

On a recent episode of The Accounting Podcast, hosts Blake Oliver and David Leary did something clever. They fed the same questions to ChatGPT, asking it to respond as an accounting thought leader. The AI’s answers were just as good as the human experts’.

“None of the accounting thought leaders think their job could be replaced,” David said, “which is crazy because essentially AI can at least do the thought leader job.”

Blake and David argue that the profession has AI’s impact exactly backwards. While everyone confidently predicts automation will eliminate mundane bookkeeping tasks, the technology actually excels at synthesis, narrative-building, and strategic analysis—the very work that defines “thought leadership.”

What AI Actually Does Well

The standard story about AI in accounting is machines will handle the boring, repetitive tasks while humans ascend to strategic advisory work. It’s comforting and logical. But according to Blake and David, it’s completely wrong.

“AI can take financial statement information and turn it into a narrative better than I can, better than almost anyone can at this point,” Blake states. “That’s what we should be using it for.”

Consider Mike Salvatore, a Chicago business owner with two cafes, two bars, and a bike shop. He used to analyze his cost of goods once or twice a year, spending hours crunching numbers. Now he does it every three weeks by feeding data from QuickBooks and his point-of-sale system into Google’s NotebookLM, which creates a podcast-style summary of his business performance. He sends these AI-generated recordings to his managers.

“It’s essentially my CFO,” Salvatore told The Wall Street Journal.

This isn’t AI doing mundane bookkeeping; it’s performing executive-level analysis and communication.

Blake’s own experience drives the point home. He built an AI system that turns news articles into detailed research notes and social media posts. That work used to eat up hours each week. He also trained an AI ghost writer on hundreds of his past writings. Now he can dictate a voice memo and get back a polished article in his own style.

“Basically, it has made it so, as ‘thought leader,’ I don’t do any of that anymore,” he admits. “It’s like I have a team that does that for me. I started working out and I’m just enjoying life.”

Meanwhile, the supposedly “easy” transactional work is stubbornly resistant to automation. David, who spent years taking QuickBooks support calls before co-founding the podcast, gets fired up about this misconception.

“Matching bank feeds is not bookkeeping. That’s just matching,” he argues. “Accounting is sending an invoice to somebody so they’ll pay me.”

He describes his recent struggle trying to upload an invoice to a client portal. It’s a “mundane” task that should be simple but isn’t. The process requires navigating confusing interfaces, making contextual decisions, and handling exceptions that don’t fit predetermined patterns. AI can’t do this reliably because it lacks the real-world context that humans take for granted.

The disconnect is striking. Thought leaders keep repeating the same message they’ve preached about cloud accounting for a decade: technology will free you up for advisory work. But as David points out, “I don’t think AI is freeing up your time to do that work yourself.” Instead, AI is doing the advisory work directly.

Are You Willing to See the Opportunity?

Where things get interesting is the same AI capabilities that threaten thought leaders create a massive opportunity for regular practitioners if they’re willing to see it.

Mike Salvatore, the Chicago business owner interviewed by the Wall Street Journal, wasn’t working with an accountant before. His AI “CFO” didn’t displace a human. He simply started getting insights he’d never received.

“Very few accountants serving Main Street businesses will actually do that kind of work for a price these business owners want to pay,” Blake explains. “So they do it themselves, but they don’t do it often and they don’t do it well.”

AI is filling a vacuum, not replacing existing services. And that vacuum is huge.

If a business owner can get advisory insights that are even 50-80% accurate from AI, that’s better than the nothing they’re getting now. The question for accounting firms is whether to let clients figure this out themselves or to offer AI-powered advisory services with professional oversight.

“Firms can feed data from clients’ QuickBooks files and their point of sale systems into these tools to generate AI analysis,” Blake suggests. “You can charge for it, because you’re adding the oversight—checking the numbers, making sure it actually makes sense.”

David connects this to a decade-old challenge. He remembers when LivePlan tried to train bookkeepers to offer business planning services. “They really struggled with it because they’re good at bookkeeping. But it’s hard to teach somebody to tell a story and create the narrative around the numbers.”

Now, “all those bookkeepers can basically offer that with AI out of the box and charge for that additional service.”

When ChatGPT (playing the role of thought leader) was asked what would make it worry about being replaced, it gave a revealing answer: clients accepting “AI-generated advice as good enough, even in ambiguous scenarios.”

Blake’s interpretation is blunt. “That’s what AI will fill—the gap in the market where accountants aren’t providing the service. There’s a big gap and there aren’t enough of us.”

Why Billable Hours Kill Innovation

One survey question asked about the “AI premium.” How much more should an AI-savvy accountant earn compared to an identical colleague who doesn’t use AI? The thought leaders said these employees should obviously be paid more.

Blake laughed at this. “How can you pay them more if you’re looking at them in terms of billable hours? AI is going to actually reduce their billable hours, not add more.”

If an employee uses AI to finish work in half the time, they bill half the hours. Under the traditional model, they look less productive, not more. Under the traditional model, “you should pay the AI employees less because they’re working less,” Blake points out.

This creates a ridiculous situation where your most innovative, efficient employees appear to be your worst performers.

Ryan Lazanis, who built and sold an accounting firm and now coaches other firm owners, has a different approach. He focuses on just two numbers: bottom-line profit and monthly recurring revenue. Not billable hours, utilization rates, or time per client.

“He is not breaking it down by client. He’s not looking at individual job profitability,” Blake explains. The only thing that matters is whether the firm made money over the year.

This makes sense because staff costs are fixed. “The amount of hours they spend has no impact on your profitability,” Blake notes. You only need to worry if one client is so demanding they prevent you from taking on others.

“You don’t have to track hours for months to figure out which clients are eating up your profits,” David adds. “You just go to your team and say, ‘Who’s the biggest pain in the ass client?’ And they’re going to tell you.”

There’s also a technical angle to consider. Blake cites research showing AI is nearly 100% accurate on tasks that take humans 4-5 minutes. That accuracy drops for longer tasks, but the threshold is “doubling every seven months.” By the end of 2026, AI might handle 10- to 20-minute tasks reliably.

But this only matters if firms can capture the productivity gains. Under billable hours, faster work just means more hours to fill. Under outcome-based metrics, faster work means more capacity for growth.

Is the AI Accounting Influencer Coming?

As the episode wraps up, Blake and David float an idea that captures the absurdity of the current moment. They’re considering creating an AI accounting influencer—a completely artificial thought leader to see if it can build a following comparable to real industry voices.

“Let’s make an AI accounting influencer and see if we can build its following to eclipse that of those real influencers,” Blake suggests. They could have it write newsletters, create content, maybe even land sponsorship deals.

It’s partly a joke, but it makes a serious point. If an AI can answer thought leadership survey questions as well as humans, write articles, and provide strategic insights, what exactly makes human thought leaders irreplaceable?

The answer might be less comfortable than the profession wants to admit.

Looking Ahead

The Accounting Today survey offered some important insights, though probably not what it intended. The people most confident about AI’s limited impact are those whose work AI does best. When ChatGPT generated answers indistinguishable from human experts, it demonstrated the very vulnerability those experts deny.

The real story is that AI excels at synthesis and narrative, which are the heart of advisory work, but struggles with the contextual, exception-filled world of everyday bookkeeping.

Firm owners should rethink their services to capture the advisory opportunity AI makes possible, and abandon billable hours before they strangle your ability to innovate.

For individual practitioners doing transactional work, the news is actually good. Your skills remain valuable precisely because your work requires the messy, contextual judgment that AI lacks.

And for thought leaders? As David observed with obvious frustration, the elitist attitude that “I’m better than you” has been in accounting for 30 years. “The reality is completely opposite. People are completely missing what’s really going to be replaced by AI.”

The race isn’t between humans and machines. It’s between practitioners who recognize AI’s true capabilities and those who cling to comfortable narratives while missing the transformation happening around them.

To hear more about Blake’s AI-powered lifestyle, David’s thoughts on what bookkeeping really is, and their plan to create an AI influencer that might outperform the human ones, listen to episode 469 of The Accounting Podcast.

How to File 1099s Without the January Scramble

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Alicia Katz Pollock, host of The Unofficial QuickBooks Accountants Podcast, just spent a week in what she calls “1099 Heaven,” teaching her comprehensive 1099 class and attending Nancy McClelland’s Ask a CPA workshop. She came away from that week ready to share a concentrated breakdown of everything accounting professionals need to know about 1099 filing.

“I’ve been watching the socials and people are asking, ‘Which report do I run so to filter out payments under $600 and payment processors?’ and, ‘How do I export to Excel?’” Alicia observes. “And the truth is, you don’t need to.”

QuickBooks Online has built-in tools that handle most of the filtering and analysis automatically. Yet every January, accounting forums light up with practitioners frantically exporting data to Excel, second-guessing payment methods, and chasing down W-9 forms as the deadline approaches.

In episode 125, Alicia breaks down what you actually need to know, including who qualifies for a 1099 (and why small errors won’t hurt you), which payment methods trigger reporting in our fintech-heavy world, and the QuickBooks tools that eliminate hours of manual work.

Understanding 1099 Compliance

Before diving into QuickBooks tricks and automation, you need to understand what these forms actually accomplish, and what’s changing in 2026.

Essentially, the 1099 system exists because the IRS wants to verify that contractors report their income. When you pay another business for services, you’re telling the IRS about that payment. They match your report against what the contractor claims on their taxes, making sure nobody’s working under the table.

“Literally millions of dollars, if not billions of dollars, is wasted in lost productivity while we chase down W-9 forms and file all these forms and do all of our research just to make sure that everybody is on the up and up,” Alicia says, not holding back her frustration. “So it’s kind of a vicious cycle.”

What’s New for 2026

This year brings a significant addition with Form 1099-DA for digital asset transactions. The IRS is finally tracking cryptocurrency sales and income, attempting to bring crypto economics into the traditional tax framework.

The $600 threshold that’s been in place for decades stays the same this year, but relief is coming. The One Big Beautiful Bill raises this to $2,000 starting in 2027. As Alicia notes, “The vast majority of my small businesses and micro businesses probably wouldn’t even qualify and won’t need to do this at all next year.”

Who Gets a 1099?

The rules are simpler than many make them:

Send 1099s to:

  • Self-employed individuals
  • LLCs filing as sole proprietors
  • Partnerships
  • Attorneys (even if incorporated)
  • Independent landlords (not property management companies)

Don’t send 1099s to:

  • S Corps
  • C Corps
  • Property management companies

Remember to check beyond your expense accounts. Balance sheet items like prepaid expenses, leasehold improvements, and due to/from accounts might contain qualifying payments. And if one company pays on behalf of another, the company that received the service files the 1099.

The Accuracy Question

Fear of making small mistakes keeps practitioners up at night unnecessarily.

“If your 1099 is off by $100 or $200, nobody’s going to come knocking on your door,” Alicia says reassuringly. “The IRS is short staffed. They’re really not looking for $600 in revenue. But if you’re talking hundreds of thousands of dollars, then it’s a bigger concern.”

The IRS primarily cares whether contractors report income lower than their total 1099s. If someone receives $200,000 in 1099s but reports $250,000 in income, no red flags appear. Problems only arise when reported income falls below documented payments.

Alicia shares a cautionary tale about a cleaning service client who paid cleaners as contractors for 15 years despite warnings. “Sure enough, she got audited after 15 years. And it turns out that the IRS agreed with me that they really are employees, so she now has some fines to pay.”

W-9 Best Practices

The key to avoiding January panic is to collect W-9s immediately when hiring someone. Don’t wait to see if they’ll hit the threshold; just send it. And don’t pay until you receive it back.

If contractors ignore your requests, you have leverage. Threaten to withhold 24% of their payment for backup withholding. “That warning is usually enough to get them to reply,” notes Alicia. If they still won’t cooperate, file the 1099 anyway with a blank EIN. “Unfortunately that might trigger an audit for them, but if they’re not sending you a W-9, well, what are they hiding?”

One persistent problem is W-9 forms often come back filled incorrectly, especially from LLCs. The form should show information for the entity actually paying taxes, not a pass-through or disregarded entity. Many people put their personal name on line one and business name on line two backwards, creating confusion about their tax status.

Navigating the Payment Method Maze

Much of the 1099 confusion stems from uncertainty about which payments count. With the explosion of fintech platforms, determining what triggers reporting has become increasingly complicated.

The Foundation Rule

You send 1099s for payments from your bank account, including:

  • Cash and checks
  • Online bill pay
  • ACH transfers
  • Wire transfers
  • Zelle

You don’t send them for credit or debit card payments. The merchant processors handle their own 1099-K forms.

The Fintech Gray Zone

PayPal, Venmo, and similar platforms create confusion. The determining factors are whether you use the business or personal version and whether you’re paying “friends and family” or for “goods and services.”

Alicia recommends asking two key questions:

  1. Does it charge a transaction fee? If yes, you likely don’t need a 1099
  2. Does it have its own bank balance? PayPal and Venmo do, so that’s another sign you’re off the hook.

Business versions of these platforms send their own 1099-K forms. However, merchant services use different thresholds: $20,000 and 200 transactions, maintained by the One Big Beautiful Bill. This creates a gap where payments between $600 and $20,000 via credit card aren’t reported by anyone, and that’s perfectly fine from a compliance standpoint.

For navigating the infinite fintech combinations, Alicia strongly recommends Jennifer Diamond’s 1099Problems website.

Material Reimbursements

How contractors invoice determines the treatment:

  • When materials are wrapped into the service invoice, you include everything.
  • When materials are itemized separately, you exclude materials and report services only.
  • When materials are invoiced separately, you ignore them entirely.

“The IRS knows you’re paying them the full price for the whole service, and it’s up to the contractor to do their own deductions for their own material costs,” Alicia explains.

The Reference Number Secret

Alicia shares a “hot tip” most practitioners don’t know. QuickBooks expense forms have a reference number field that automatically excludes transactions from 1099 processing.

“You would think the payment method would be the thing that allows you to do the exclusion, but no. It doesn’t work that way,” she notes. Instead, enter “debit,” “card,” “Visa,” “MC,” “Chase,” “Discover,” “PayPal,” or “Amex” in the ref number field. The wizard recognizes these and excludes the transactions—a feature carried over from QuickBooks Desktop.

Mastering QuickBooks Online’s 1099 Tools

Despite QBO’s built-in capabilities, Alicia observes practitioners still asking which report to run in order to filter out for the $600 and for the payment processors. The tools exist, but many don’t know where to find them.

The Contractors Center Hub

The Contractors Center, located under Expenses and Bills (and under Payroll, if enabled), manages 1099-eligible vendors from start to finish. Any vendor with “track 1099” checked appears here automatically.

The standout feature is self-onboarding. Invite vendors via email to complete a digital W-9 through their QuickBooks account or the free QuickBooks Money app. The system captures everything, including their name, address, tax ID, entity type, and qualification status.

“Tell them to look for it because it looks like spam,” Alicia warns. “It just says QuickBooks needs your W-9 and bank info and who is going to click that?”

Payment Processing Options

The Contractors Center offers multiple payment methods, including:

  • QBO Payroll subscribers: Contractors treated as employees at your per-employee rate
  • Contractor-specific plan: $10.50 monthly for up to 20 contractors, $1.70 each additional
  • QBO Bill Pay: Standard functionality

The 1099 Preparation Wizard

Access the wizard via “Prepare 1099” in the Contractors Center or the dedicated 1099 section under Expenses and Bills in the new navigation.

There are two approaches available: “Try Autofilled Forms,” which is an AI-powered automation, or “Prep My Own” for manual step-by-step control.

“I tried it this year and honestly they came up with the same information,” reports Alicia. Choose based on comfort level—automation for hands-off clients, manual for those wanting verification.

Custom Reports for Analysis

The wizard includes two reports: Accounts to Pay Vendors and Vendor Transactions. “I turn on the track 1099 status and then filter it so the status is on and the amount is greater than $600 instead of looking at the big list of all the payments for all the vendors,” Alicia says, explaining her workflow.

State Filing Complications

Some states participate in the Combined Federal and State Filing Program, and QBO handles both simultaneously. Others require separate filing through state websites.

Alicia’s particular frustration is that she’s located in Oregon. “it stinks for me because QuickBooks doesn’t export any kind of report that I can import into Oregon’s filing system. So I wind up having to type them all in by hand.”

Corrections After Filing

If you make an error, QBO allows corrections after IRS acceptance. Replace incorrect forms with $0, add forgotten contractors, or submit corrected amounts. Third-party platforms offer similar capabilities.

Your 1099 Action Plan

As Alicia emphasizes throughout the episode, the tools exist to make this process manageable. Stop exporting to Excel. Stop manually filtering. Use the automation that’s already there.

Looking ahead, the 2027 threshold increase to $2,000 will eliminate this requirement for many small businesses entirely. Until then, master these tools and workflows to transform 1099 season from a compliance nightmare into a streamlined process.

For an even deeper dive into 1099 filing, check out Alicia’s Payroll Perfection bundle, which includes QBO Payroll, QuickBooks Time, and payroll compliance training. And be sure to listen to the full episode for additional insights from Alicia’s week in “1099 Heaven.”

Alicia Katz Pollock’s Royalwise OWLS (On-Demand Web-based Learning Solutions) is the industry’s premier portal for top-notch QuickBooks Online training with CPE for accounting firms, bookkeepers, and small business owners. Visit Royalwise OWLS, where learning QBO is a HOOT!

Leading with Empathy: Building Accounting Teams That Thrive

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Earn free NASBA-approved CPE for listening to this episode. Visit Earmarkcpe.com, take a short quiz, and get your certificate.

“Star performers aren’t immune from accountability,” says Lisa Gilreath, Managing Partner at Acuity. “Often they perform really high. But you’re going to see the other half of your team suffer in terms of their performance.”

This frank observation cuts to the heart of one of accounting’s toughest leadership challenges—dealing with talented but toxic employees. It’s just one of many practical insights shared during this episode of the Earmark Podcast, recorded live in Atlanta during the Advisory Amplified tour.

Host Blake Oliver sits down with Lisa Gilreath and Valerie Heckman, Accountant Community Manager at OnPay, to explore what empathetic leadership really looks like in accounting firms. Their conversation goes well beyond feel-good management theories to address the real challenges firms face when deadlines hit and pressure mounts.

Why Empathy Makes Business Sense

When Blake asks Lisa why firms shouldn’t burn out their people, her answer is refreshingly honest: “They’re really hard to replace right now.”

This practical reality drives home why empathetic leadership isn’t just nice to have—it’s essential for survival in today’s talent market. Lisa explains that with staffing shortages and people tired of 60-80 hour work weeks, firms have to build healthier workplaces to succeed.

But deadlines don’t disappear. Tax seasons still come. Clients still have needs. The key is finding ways to meet those demands without destroying your team in the process.

Building Breathing Room Into Your Firm

Traditional firms plan for 100% utilization, assuming everyone will be productive every single day. Lisa takes a different approach at Acuity, planning for 75-80% capacity instead.

“You can’t run the people to the absolute end and expect not to be in a crisis situation if somebody has an issue,” she explains. This isn’t about accepting lower productivity. It’s about building resilience into your workflows.

Personal crises illustrate why this matters. “Personal crises, tragedy or challenges never check your calendar to see if you have time to deal with them,” Lisa notes. Over 20 years at Acuity, she’s seen it all—employees who unexpectedly passed away, team members losing spouses, medical emergencies that required immediate attention.

These aren’t rare events. They’re the reality of managing people over time. The question is whether your firm can handle them without falling apart.

Lisa recommends having your “phone a friend on speed dial”—an HR expert or advisor who can provide objective guidance when emotions run high. Small firms especially struggle when close relationships make it hard to separate business needs from personal loyalty.

How Systems Create Space for Humanity

Many firms see standardization as rigid and impersonal. Lisa flips this completely, showing how standard processes actually enable empathy.

“If you do have a standard scope of services for your transactional stuff, you can plug and play people,” she explains. “Paying bills is paying bills. Doing payroll is doing payroll. It’s just a matter of where you get that source data.”

When every client engagement follows similar patterns, any qualified team member can step in during an emergency. This protects both the employee who needs support and the client who needs continuity.

Acuity spreads work throughout the year using recurring CAS engagements rather than accepting the traditional feast-or-famine cycle. “We’re focused on being proactive in those interactions all year long,” Lisa says. This creates predictable workflows that allow for coverage when life happens.

The approach helps team members too. Lisa tells her people: “Build our workflows and build our communication patterns so that if you need to leave unexpectedly, we’ve got your back. Help us help you.”

Reading the Warning Signs

Technology provides new ways to spot problems before they become crises. But Lisa doesn’t just watch productivity metrics. She pays attention to communication patterns.

“I’m noticing when people are no longer engaging in Slack conversations at the same pace that they once were,” she explains. “They’re not showing up in meetings and being as talkative as they once were.”

These changes signal that something’s wrong before performance completely deteriorates. A normally responsive team member whose emails slow down. A strong performer whose deliverables lag. These whispers often matter more than what people explicitly say.

Valerie adds another important metric: PTO usage. “If people aren’t using it, that’s a sign,” she notes. “Are they afraid to use it? Do they feel like if they use it, they’re not contributing enough to the team?”

Her own mother exemplifies this problem, going years without taking vacation because she worried about work piling up. “She would never, ever take a day that payroll needed to be run or the day after in case there were mistakes,” Valerie recalls.

The flip side matters too. Excessive PTO usage might signal disengagement or job hunting. These patterns hide in payroll data most firms already collect but rarely analyze for team health insights.

The Toxic High Performer Problem

Every firm faces this dilemma eventually: what do you do with someone who delivers great results but poisons team culture?

“Toxic workers will take you down,” Lisa states plainly. While star performers deliver individually, the rest of the team suffers. The math is clear—protecting one toxic high performer often means losing multiple good employees.

But Lisa doesn’t jump straight to termination. “I start from a place of curiosity,” she says. “How did we get here? What’s going on with them?”

Sometimes it’s a personal crisis. Sometimes they don’t understand expectations. Sometimes they genuinely don’t realize they need to collaborate. Starting with curiosity creates space for course correction.

The same principle applies to clients. When Blake asks about unreasonable client demands on her team, Lisa’s response is swift: “They’re probably not going to be a client for much longer.”

Acuity holds both team members and clients to their values. “This is how we intend to operate,” Lisa explains. They regularly review their client base to ensure alignment, not just to cull unprofitable work but to protect team wellbeing.

Navigating Industry Change With Compassion

The pace of change creates another empathy challenge. Many experienced accountants built careers on consistency and process. Now they’re asked to develop entirely new skills.

“We liked that about them for a really long time—that they followed the process and they didn’t question the process,” Lisa observes. “Now we’re asking them to talk to clients, and they’ve never had to talk to clients. They just had to fill out the form.”

With AI transforming the profession, these changes feel overwhelming to some team members. The empathetic response isn’t to abandon these people but to “bring those people along at their pace as well as the pace of the industry.”

This is where hiring for adaptability becomes crucial. Lisa looks to new graduates who see AI as normal, not threatening. “They’re unafraid. They will just try anything,” she says. These digital natives may help bridge the gap for more experienced team members struggling with change.

Taking Action This Week

Valerie offers practical advice for leaders wanting to be more empathetic: pause.

“Taking that time when something happens, when there’s an experience with a worker or team dynamic and saying, okay, we’re going to sleep on it,” she suggests. This fights the instinct to immediately jump in and solve problems.

Pausing allows you to ask better questions rather than make assumptions. It could be personal challenges, professional struggles, or something else entirely. Without that pause, you might treat symptoms instead of root causes.

Lisa adds another suggestion: engage your team in discussing a problem and just listen. “They will often lead with things that are coming from a place of fear or concern,” she notes. Understanding these underlying worries helps you address real issues, not just surface problems.

Your Role as an Advocate

Perhaps the most important mindset shift involves how leaders see their role. “I am their number one advocate,” Lisa says about her team. “My role is not just to drive them to production, it’s really to advocate for their needs.”

This means creating multiple channels for support, recognizing not everyone feels comfortable approaching their direct supervisor. “If I’m not the person that you can reach out to, I promise you, I have paths for you to go raise your concern,” Lisa tells her team.

The business case remains clear throughout the conversation. In today’s environment where good people are “really hard to replace,” protecting team culture isn’t charity—it’s strategy. Firms that recognize their people as “the engine” and act accordingly will outlast those clinging to the burnout model.

Listen to the full episode to hear more practical strategies for implementing these changes in your firm. Lisa and Valerie share specific tips on creating buddy systems for coverage, working with HR consultants, and building workflows that respect both deadlines and humanity. Their insights offer a realistic path forward for firms ready to lead with empathy while maintaining business success.

5 KPIs That Separate Million-Dollar Firms From Expensive Jobs

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What if the difference between building a million-dollar asset and simply having a job came down to tracking just five numbers?

In this episode of Who’s Really the Boss?, Marcus and Rachel Dillon share the exact metrics that helped them grow DBA from $400,000 to nearly $6 million in revenue. These are the same KPIs they presented to over 200 accounting professionals at Intuit Connect and their Gather conference, backed by real benchmark data from firms ranging from $500,000 to well over $5 million in revenue.

Most accounting firm owners can rattle off their revenue figure without hesitation. It’s the go-to metric when someone asks about the size of your practice. But as the Dillons explain, revenue alone won’t tell you whether you’re building something valuable or just running faster on a hamster wheel.

While you could track dozens of KPIs (Dillon Business Advisors tracks over 20), five metrics form the essential dashboard for any accounting firm owner serious about building value. These numbers measure your business and determine whether you’ll have options when it’s time to step away.

The Five Essential KPIs That Form Your Firm’s Dashboard

Think about the dashboard in your car. As Marcus explains, you could scroll through dozens of gauges showing everything imaginable, but the instruments front and center are the ones critical to getting where you’re going safely. The same principle applies to running an accounting firm.

These five metrics create what Marcus calls a “level playing field” for understanding firm health and value. Let’s break down each one and see how firms in Collective by DBA benchmark data perform.

Gross Revenue (Trailing 12 Months)

This is your speedometer. It’s big, central, and impossible to ignore. The collective average sits at just under $2 million, representing a 10% increase from Spring of 2024.

But Marcus recommends tracking the trailing 12 months, not calendar year. Why? Because that trailing 12 months removes seasonality and shows what investors actually evaluate. “Think about how much has happened at DBA in the last 11 months,” he notes. “We’ve done two acquisitions. We’ve continued to grow Collective. We’ve added different people. It would be very deceiving to only focus on that last calendar year.”

That 10% growth could come from price increases, culling the client list, or organic growth. Revenue alone doesn’t tell you which, but it confirms movement.

Monthly Recurring Revenue (MRR) as a Percentage of Gross

The Collective average now sits at 47% MRR, up 2% from Spring. DBA operates at 70% MRR.

“It’s very unlikely that 70% of our business or revenue is not going to show back up next month,” Marcus explains. “That just helps us run a more stable business. It helps cover payroll, rent, technology subscriptions, and all those other expenses.”

A panel at Intuit Connect featuring firm owners who had completed acquisitions delivered a sobering insight. Matthew May from Sorren; Chris Williams, founder of System Six; and Becky Munson, Partner at EisnerAmper confirmed acquirers will buy firms without MRR, but they won’t pay as much for them. 

“Would you rather get a better valuation? Would you rather run a better business by moving them over to monthly recurring? Or would you rather somebody else do that after you sell the firm?” Marcus asks.

Revenue Per FTE

This efficiency metric shows how much revenue each full-time equivalent team member generates. The Collective average is $194,000 per FTE, up 1% from Spring. That means your typical $2 million firm operates with about ten people.

“It’s not so much about finding ways to cut people out of your business,” Rachel says, emphasizing an important point. “It’s more about not having to find that next person when you bring on two more clients or three more clients.”

The goal is moving toward $200,000, then $250,000, and eventually $300,000 as technology enables greater efficiency. But context matters. A firm heavy on bookkeeping won’t look the same as one staffed with tax attorneys billing $500 per hour.

Earnings Before Owner Compensation (EBOC)

This is where profitability gets real. EBOC equals your net profit plus owner salaries and benefits. It creates a true comparison between firms regardless of how owners structure their compensation.

The Collective average sits at 40%, down 1% from spring. For potential buyers, Marcus notes the attractive range is between 35% and 50%.

Why not use EBITDA? 

“EBITDA typically has a value in there for the owner’s role,” Marcus explains. “And if you have a succession event, they will look at EBITDA and beat you up based on the amount you pay yourself.” With a $2 million firm at 40% EBOC generating $800,000, an acquirer might value the owner’s role at $250,000 and calculate EBITDA at $550,000 for valuation purposes.

Even if you plan to give your firm away, “you want to give something other people want. You don’t want the receiver to say thanks, but no thanks,” Rachel points out.

Owner Production Hours

The final metric addresses what many firm owners care about most: their time. The Collective average is 1,152 production hours annually out of a standard 2,080, and that number dropped 12% from Spring.

“That’s not skewed by tax season,” Marcus clarifies. “This is all being pulled trailing 12 months.”

Owners successfully delegated over 10% of their production work while other metrics improved. As Marcus notes, “I know most owners would welcome that decrease in EBOC to work 10% to 12% less year over year.”

How KPIs Influence Each Other

Understanding these metrics is just the beginning. The real insight comes from recognizing how they push and pull against one another.

The Collective data reveals healthy, balanced growth: Revenue up 10%. MRR up 2%. Revenue per FTE up 1%. Owner hours down 12%. EBOC down just 1%.

But Marcus warns about the dangers of optimizing one metric at the expense of others. “What does revenue growth at all costs look like? It’s accepting anything that comes in the door. Probably your owner hours go up, or your costs go up because you have to employ people to do this work that may not be the best work.”

Similarly, you could improve revenue per FTE through mass layoffs. “My revenue per FTE would shoot up because I just have less FTEs,” Marcus explains. “Sure, my EBOC will increase, but my quality of life will probably go down.”

The key is finding balance. Revenue growth while owner hours decrease or hold steady, maintaining EBOC without burning out the team, and MRR creeping upward for predictable cash flow.

A Real-World Example of Pulling the Levers

The Dillons advocate for backward mapping. Start with where you want to go, identify the lever most likely to get you there, estimate costs and risks, then pressure-test results.

DBA tested several levers over the years: price increases, automation, hiring an operations manager, evaluating their client list, monthly recurring packages, and specialized hiring at the director level.

The Price Increase Lever at DBA

In 2024, DBA tackled pricing that had slipped on legacy clients. With an average monthly client at $2,100, they still had several below $1,000, which was unprofitable given their team structure.

They targeted a 14% increase, higher than typical because they’d delayed too long.

“We knew some people were on the bubble, “Marcus says, sharing his thought process. “We knew this would either move them to churn or invest and go deeper with our team.”

The messaging was crucial. “Don’t make the price increase about yourself,” Marcus advises. “No client wants to hear that. You have to have a better value perspective than your costs are increasing.”

Rachel adds that peer networks prove invaluable here. “You can talk yourself out of doing price increases. But in a peer group, you see what other people charge and what other people plan to do for their price increases. You think, ‘Well, I’m doing the same work as they are. Why am I still charging so little?’”

At the Gather event, when asked about planned increases for 2026, most firms indicated 10%, with some going up to 20-25%.

The Results

DBA lost $12,000 in monthly recurring revenue from churned clients but gained a net 4% in total billings while serving fewer clients. Revenue went up. EBOC went up. MRR percentage went up. Revenue per FTE improved. Owner hours decreased.

“You could improve all five of those metrics more than likely by price increases alone,” Marcus concludes.

Rachel emphasizes this wasn’t about pricing out clients. “The goal was to continue to serve them at a price that made sense for the business.” For truly problematic clients, she recommends direct action. “Just have the conversation and help them find a new provider. Don’t keep serving them because they’re paying you.”

Your Next Steps

The Dillons follow an Improvement Season framework:

  • April 16 – August 15: Assess progress and implement changes
  • September – October: Pressure test during higher volume
  • November – December: Reevaluate and adjust
  • January: Launch with refined plan

Some changes show results quickly. For example, price increases make a mark within a quarter. Others, like absorbing a director-level hire, might take a full year.

Marcus emphasizes involving your team. “Do it with your leadership team. Do it with somebody beyond yourself. And then invite others to improve that KPI and celebrate it with others. The cool thing about having a team is to be on a mission together.”

Rachel adds two key questions for listeners:

  • Which KPI do you need to move to increase your firm value?
  • What KPI are you not tracking yet, but you should be?

Whether you plan to sell, pass on, or simply run a better business, these five metrics determine your options. “You will have a succession event in your lifetime because you’re just not going to live forever,” Marcus says. “You’re either going to sell, give it away, or shut it down.”

The choice is yours. But it starts with measuring what matters.

Listen to the full episode for the complete conversation, including more details on implementing these strategies in your firm.

Rachel and Marcus Dillon, CPA, own a Texas-based, remote client accounting and advisory services firm, Dillon Business Advisors, with a team of 15 professionals. Their latest organization, Collective by DBA, supports and guides accounting firm owners and leaders with firm resources, education, and operational strategy through community, groups, and one-on-one advisory.

The Auditors Got Red Flags About $95 Million in Missing Funds and Signed Off Anyway

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In the last episode of 2025 of The Accounting Podcast, hosts Blake Oliver and David Leary kicked off the conversation with an unexpected problem: America is running out of pennies. David’s friend owns sandwich shops in Tucson and literally can’t get pennies from the bank anymore. Businesses are being forced to round to the nearest nickel, and point-of-sale systems are scrambling to adapt.

“Square admits one fifth of all the transactions on Square are still paid in cash,” David noted, highlighting how this seemingly small issue affects millions of daily transactions. The government claims there are 300 billion pennies in circulation, but as David pointed out, “Obviously this isn’t true because businesses all over America do not have pennies to use in transactions.”

But the penny shortage was just the warm-up. The hosts quickly moved to a much bigger story about missing money: $95 million vanished at Evolve Bank, yet the auditors still signed off on clean financial statements.

$95 Million Went Missing While Auditors Said Everything Was Fine

Blake followed the Evolve Bank story for years, and recent Freedom of Information Act requests uncovered stunning details about what the auditors knew and ignored.

Evolve Bank is a chartered bank that worked with Synapse, a “banking as a service” company that wasn’t a bank itself but managed the technology connecting consumer apps like Yotta and Juno to actual banks. When you used these apps, you’d see your balance, but you had no idea which bank actually held your money. Synapse managed all those details.

“Everything worked great until April 2024, when Synapse filed for chapter 11 bankruptcy and shut down operations,” Blake explained. Suddenly, the banks and the apps couldn’t figure out where customer money actually was. Evolve froze withdrawals from thousands of accounts, leaving people unable to access their own money for months.

When banks examined Synapse’s records, they found massive problems. Between $65 and $95 million in customer funds couldn’t be traced to any bank. “Your Juno account might say $10,000, and the bank that’s supposed to have the $10,000 says, ‘We don’t have it,’” Blake explained.

The most damaging revelation came from the 2023 audit. When Crowe, Evolve’s auditor at the time, asked Synapse to confirm cash balances, the response should have triggered immediate action. Evolve listed 113 accounts, but Synapse was missing 29 accounts from daily data feeds. Synapse’s general counsel asked to discuss the discrepancies with Evolve’s leadership.

Evolve never responded to that request, yet Crowe still issued a clean audit opinion.

“Ninety five million is a lot of money,” Blake observed. “It would be 6% to 7% of Evolve’s total assets, likely over 100% of their annual net income, a double digit percentage of equity capital in some years. And typically, materiality would be 1 or 2% of assets.”

Are SOC 2 Reports Worthless?

The Evolve disaster led the hosts to question other compliance frameworks, particularly SOC certifications that companies display as badges of trustworthiness.

“My guess is Synapse had their SOC 2, because it’s not that hard to get a SOC 2,” Blake said. “According to my understanding, it’s really just a lot of documentation of the controls. But there’s not necessarily any confirmation that those controls are being followed.”

“They paid the money and got the badge for their website,” David observed. 

The hosts also discussed how a New Jersey accounting firm, Sax, took 18 months to inform nearly 250,000 people about a data breach. The firm claimed it followed standard procedures and saw no evidence the stolen data was misused, but for 18 months, affected individuals had no idea their personal information might be compromised.

“People could be using your stolen identity fraudulently 18 months before the accounting firm lets you know,” David said.

The problem is that while firms must have Written Information Security Plans (WISPs), they’re not necessarily legally required to execute them properly. “We focus on the wrong thing,” David argued. “We focus on having a WISP, not actually executing the WISP.”

Partners Don’t Know What Partners Make

In a lighter but equally revealing segment, Blake shared his favorite LinkedIn post of the year from Chase Birky, CEO and Co-founder of Dark Horse CPAs. Chase shared that almost a third of partners don’t know how much partners make at their own firms.

“How do CPAs not know how much they make? Isn’t that sort of what we do?” Chase wrote. The problem stems from a lack of transparency at many firms where partner compensation is calculated in a “black box” and communicated well after the fact. This secrecy is at least part of the reason talent leaves public accounting.

“I left because I got offered a job in tech that paid a lot more,” Blake said, sharing his own experience. “I didn’t know how much a partner made, and nobody could tell me what the path looked like.”

Should Companies Report Twice a Year Instead of Four Times?

The hosts also debated President Trump’s suggestion that U.S. companies should move from quarterly to semi-annual reporting, like much of the rest of the world.

Research from the UK showed that changing reporting frequency had “virtually no impact on companies’ internal investment decisions.” Studies also found that quarterly reporting creates “noisier data” that benefits sophisticated investors while hurting everyday investors.

“We’re always talking about how we have too much work to do in accounting and we’re pressed for time,” Blake said. “What better way to give ourselves more time than to make it two times a year instead of four?”

David wondered if less frequent reporting might reduce the pressure to play accounting games. “Monthly reporting probably puts pressure on people to sidestep the rules because it’s so fast and you have to perform.”

Looking Ahead to 2026

The hosts wrapped up with predictions for the coming year. David was skeptical about AI transforming bookkeeping. “I don’t see me doing bookkeeping at the end of 2026 any differently than I did in 2025, 2024, 2023, or 2022.”

Blake disagreed, pointing to new AI browsers that can actually navigate accounting software and complete tasks. “The time is doubling every seven months,” he explained. “Within the next year, we’re going to see AI able to complete tasks that take 15 to 20 minutes with 100% accuracy.”

David also predicted that OpenAI would strike a multi-million dollar deal with the AICPA, that at least two AI companies would fail, and, in his easiest prediction, “Intuit will tick off accountants in 2026.”

The episode covered far more ground than can be captured here, from the technical details of audit failures to the future of AI in accounting. For the complete discussion and all the insights Blake and David shared in their final episode of 2025, listen to the full episode of The Accounting Podcast.