In the February edition of The Last Word, Ozlem Davis, CPA/CFF, alluded to some aspects of firm ownership as being "scary." In this podcast episode, she explains more about why she had those fears, how she has overcome them, and how she escapes the pressure of work.
- An explanation of what constitutes a "reportable transaction" for tax purposes.
- Advice for conducting an audit of your own skills.
- AICPA testimony before Congress on IRS service issues.
- A tax-related spearphishing warning from the IRS.
- A survey that shows how some firms capitalized on pandemic-related business opportunities.
What you'll learn from this episode:
- The advice Davis gives to those considering firm ownership.
- The reasons that Davis initially doubted herself when it came to starting her own firm.
- How she decides whether to take on new client work or refer that work to others.
- Why she considers a pen and notepad to be "a magical duo."
- A summary of highlighted articles in the Journal of Accountancy's February issue and recent news related to IRS service issues.
Play the episode below or read the edited transcript:
To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.
Neil Amato: This is the Journal of Accountancy podcast. I'm your host, Neil Amato. On this episode, I'm joined by CPA Ozlem Davis, a firm owner in Lexington, Kentucky. Ozlem is the subject of The Last Word in the February issue of the JofA. We are happy to have her join the show. Ozlem, welcome to the podcast. First, how long have you owned your firm?
Ozlem Davis: Thank you, Neil. I have owned Peer House since July 2016, so this is our sixth year.
Amato: You said in your Last Word article that it was scary at first maybe, but you're obviously learning as you go. It hasn't been a long time that you have owned the firm, but at the same time, you're not a rookie anymore. What advice would you give to someone considering doing something similar: opening their own firm or business?
Davis: Yes. Early on it was scary. I never envisioned having my own firm when I was an employee working as a controller of a firm. An opportunity of a project came my way, which I am so glad I said, "I think I can do a great job at this," and I put my name in the hat. I established Peer House for one particular project, and then it all grew from there through word of mouth.
My biggest recommendation would be know your strengths, cherish and celebrate your strengths, and know your niche. That allows you to set up a firm, a business serving certain client needs. You don't have to be the answer to everyone in every question. Thankfully, just like in the medical field, like medical professionals specialize, now accountants are also realizing that it's such a vast field. You don't have to know everything and be an expert in everything. That's why we specialize in business valuation forensic accounting, tax compliance.
That would be my biggest recommendation. Put the fear aside, if you feel the calling. Know your niche, do your research, makes sure there is a demand for that. Then also, invest in your education, and find what you enjoy, and learn more about it. Don't be afraid of making mistakes. Set up your firm. The way I did it helped me a lot. I was still full-time employed.
The project came my way, with the support of my employer at the time, I was able to do the project on my own time, and I had the opportunity to still have a steady income while exploring, "Do I have something here?" If they could do it part time at first, that would be an advantage, or they can go full on and invest in their business. I would say, do not be afraid, know your strengths, and invest in your strengths.
Amato: You mentioned that learning expertise and having a wide body of knowledge. How do you balance when to take on work yourself or referring a potential client to someone else?
Davis: It came very naturally to me from day one, because I was very conscientious about not taking on a project that I did not think I could deliver on. It was easy for me to say, "I think someone else with the proper expertise can do a better job at that." Good thing is I have built a great network of mentors over the years, and I enjoy meeting people because I enjoy learning about what they do, why are they doing it, how they decided to end up doing that.
Because I have built a good network, it's always easy to me to say, "Oh, I think this person will be so much better at this." Then again, as I mentioned with the previous question, I really, really know my strengths and what I enjoy. If it is something that's a perfect fit for me, I can clearly see that and I say, "I think I would give you the best solution here" — one of the best solutions. I wouldn't say "the best." There are great professionals in this field, and I love learning from everyone.
Amato: On the topic of firm ownership, what would you say are the challenges that you have overcome or are learning to overcome?
Davis: I had to overcome a lot of challenges. My biggest one was I am an immigrant of the United States. I'm originally from Turkey, and I always felt like, English being my second language, I wasn't eloquent enough in describing my thoughts. A lot of people may not relate to this challenge, but for me it was a huge one. Particularly in the professional world, I felt the stress of, "Am I eloquent enough to express what I'm thinking?" Even now I deal with that challenge, but I daily choose to overcome it and express myself anyways.
Then, of course, the thought of there's so many people out there that have accomplished so much and have built these wonderful, strong, solid CPA firms. At my young age, who am I to set up a firm and say I will have a share of the market? Those thoughts still crossed my mind even though I knew my strengths. That imposter syndrome a lot of people feel — Am I really good enough to do this? Will I know all the answers — crept into my mind. I had to really intentionally say, "All I have to do is learn, do my best every day, and if there's a mistake or miscommunication, fix it."
Those types of insecurity things were challenges for me like most professionals. Then burnout was another challenge. I needed to make sure that I didn't overwork myself. If you build your own business, most people would relate. You work above and beyond, because you not only work on the client projects, you also work on your employees and managing your firm, particularly when it's smaller. I needed to make sure that I made room for mental health breaks and also rest to recover.
Finally, providing quotes to clients. How do you value your time? How do you say an hour, a week, or a month of my time is valued at this dollar amount? I come from a culture, the Turkish culture, it is service-oriented. So you do everything willingly, serve willingly, and do not look for anything in return really, and you're just excited to have a career. As an immigrant of the United States, I am just so excited to be part of this country and be able to have a career here.
Early on in my career with my own business, I was undervaluing my time, and I was having a hard time setting the correct value for my time. This is something that I'm still learning, growing in, and I think a lot of young business owners might be feeling the same challenge.
What I have done is I reached out to my mentors, people that have done similar businesses. I just said, "How did you all come to a point where you're comfortable with presenting quotes or projects, comfortable with saying, 'This is the value of my time,' and if it doesn't work out, 'I understand. Maybe I'm not the best solution'?" Tough thing to see a potential client turn around because you didn't get that right, but you've got to learn to be OK with that.
Amato: In The Last Word, you mentioned self-care and avoiding burnout, which you also mentioned in your last answer. What are some of the ways that you take mental health breaks and otherwise escape from work?
Davis: I love movies. It is wonderful to be lost in the fictional world and follow the stories, challenges, and triumphs of other people, fictional or real characters. So I love movies.
I always have enjoyed exercising, but now, I finally found a calming exercising that I do. I do Pilates Reformer, and I just realized that I don't have the time to go to the gym like other people might have, so I created an environment for myself at my home office where I can take that exercise break. I don't see it as only physical fitness; really mentally, it gives me that break. I feel better. It's almost like good hormones start flooding your body, and you're not thinking about work or responsibilities for a little while.
Definitely exercise — not intense, just relaxing — watching movies, and sleeping. I wasn't making enough time for sleep. Now I know what time everything shuts down, and sleep is a priority. Finally, travel. Every year I make a couple of plans with my family to focus on them, just create new memories, travel, experience new places, new people. I don't say I have it [down] perfectly, but I definitely make it a priority, particularly in the recent few years.
Amato: We will get back to movies in a second, but first I'll ask about an experience you mentioned in The Last Word, which is the experience of helping clients who were preparing to apply for EIDL or PPP loans. Did that feel like normal client service to you, or was it something that maybe taught you something new?
Davis: What a period that was for us accounting professionals, because so much was changing very quickly. New information was coming our way pretty much every other week, and things were changing along the way as well. We didn't have all the answers, and we had to rely on each other. It was a great period for me where I relied on tax professionals and attorney friends that are also CPAs, that were interpreting the new regulations that were coming out related to EIDL, PPP, employee retention credit — all of those. I tried to stay connected to my network of professionals. I stayed connected to the Journal of Accountancy and learn as much as I could.
I was very careful with my clients to say, "This is what I know as of today. Please be aware that it might change." It was not a normal period definitely; there were so many unknowns. And I collaborated with my clients. Anything I was learning, I was scheduling a meeting and informing them so that they could give their input to me of what they wanted to do.
The clients took a lot of leadership as well. And any client I have worked with, as long as they qualified, we were able to get them approved and forgiven — the PPP approved and forgiven in the second one — or the employee retention credit. It was a lot of work. My small business grew a lot during that time because a lot of new clients came saying, "I don't think my books are in the best shape to apply for these. I need help, and I need help quick." It was a good period and challenging period as well.
Amato: You listed as one of your favorite movies, Eternal Sunshine of the Spotless Mind. What is it about that movie that you liked?
Davis: Yes. I can talk about the movie for a very long time. It is an unusual story. It takes place in the not-so-distant future, where the technology is available to erase memories. Every time I watch that movie — my husband and I when we watch that movie — it hits us differently because as you grow in life, as you learn more about life and your wisdom increases, you learn what true love is about, true family is about, you become a parent. When you go back and watch the movie, you realize that there is really no eternal sunshine of the spotless mind.
At least that's what I got out of it. It is those spots, the messy moments that make the sunshine much brighter in comparison. You need to experience love and pain challenges and overcome them. You need to experience the darkness to enjoy the light. That's what I got out of the movie, but every time I watch it, I notice something different about true connection. It's neat. Have you ever seen it?
Amato: No, I have not actually, but it's on my list.
Davis: I highly recommend it. It's great directing, and Kate Winslet and Jim Carrey do a great job in it.
Amato: In The Last Word for favorite item to travel with or keep on your desk, you said a notepad and pen. So, are you an artist, a list maker? What are the things you're using those for?
Davis: There's not a creative bone in my body. I do enjoy singing just for myself, but that's as far as the artist part of me goes. Yes, I'm a list maker, big-time list maker. Always came naturally to me. That's the way I organize my thoughts. When I write them down, I don't have to think about them in my head. As I cross them off my list, there's almost a joy. It's almost a jolt of joy every time I complete a task to see that completed in a checkmark next to it or a scratch — I scratch through them.
I'm a big-time list maker. I believe in them, particularly as my small business started growing, and I started having employees, and as a mom and wife, family member, there's so many things we need to attend to that I realized that just couldn't rely on keeping in my mind. I'm a list maker and I go everywhere with my notepad and pen, and I recommend it to everybody, particularly if you stay up at night thinking about projects or things to do. Have a notepad and pen next to you. Just write down the best solution that you know is at the moment that you're in. Write down the problem and say, "This is what I'm going to do about it tomorrow, and that's the best I know right now." Then it helps you sleep much better. I think notepad and pen are a magical duo.
Amato: Ozlem, thank you very much for being on the podcast.
Davis: Thank you. It's been a pleasure being a part of it.
Amato: Again, that was CPA Ozlem Davis. There's more about her in the February issue of the JofA specifically in The Last Word feature. I'm going to highlight a few other articles in the February issue. One has a headline that begins with the words "full disclosure." It's about the types of tax transactions that must be reported to the IRS. That's definitely want to check out.
Also, Hannah Pitstick has an article headlined "5 Steps to Conduct a Personal Skills Audit." In the article, you'll find advice for how to take inventory of the skills you have, honestly assessing your strengths and weaknesses, and then planning to acquire the skills you want to develop.
Also, the Journal of Accountancy has continued coverage of tax season, starting in Washington. Taxpayers receiving notices to file forms and returns they've already filed. Taxpayers receiving notifications about payroll tax forms when they don't file payroll tax returns. The examples go on and on, as highlighted in testimony before the Senate Finance Committee Thursday by Jan Lewis, a CPA who is chair of the AICPA's Tax Executive Committee. Lewis was one of several speakers in a hearing that focused on IRS service issues. The AICPA is part of a coalition pushing for the IRS to make several changes, including a temporary postponement of automated compliance actions.
Paul Bonner has coverage of that hearing, and we will include a link in this episode's show notes to his article. He has also written recently about identity thieves targeting tax professionals with spearphishing emails that appear to be coming from the IRS or tax preparation software providers. That's according to an IRS news release, and again we will link to that article.
And finally, compliance and consulting work related to COVID-19 relief created new revenue for CPA firms, and it has opened up new business opportunities for those firms. Data from the 2022 Growth Outlook Survey by Inovautus Consulting LLC showed that 58% of respondents reported COVID-19 having a positive impact on their revenue, and just 2% said the pandemic had a negative impact.
Inovautus Consulting's president and founder, Sarah Dobek, said much of that added revenue was from firms helping clients with Paycheck Protection Program and employee retention credit compliance and consulting work. Ken Tysiac has that article, which we will link to in the show notes.
I'm your host, Neil Amato. Thanks for listening to the Journal of Accountancy podcast.