Xero and Cloud Technology - An Internal Case Study

Whenever I decided to go out on my own, I will not lie to you... I had no idea where to even begin.  I spent the first 8 years of career working for various CPA firms in the Houston, TX area learning all things accounting and taxes and gained some valuable technical expertise.  While some of these companies had good systems and processes in place, there were some that did not.  This allowed me to see several different ways of how firms were run and gave me a good sense of what I wanted to do when if/when I decided to go out on my own.  Then one day I decided to take a chance on myself and said, “screw it” and went out on my own.  I will tell you that was the happiest/scariest days of my life.  My original plan was to go out on my own and study for my CPA exam.  Well here we are almost two years later, and my business is up and running and I am finally dedicated to passing the CPA exam.   

One of first things that I decided to do when I did go out on my own was the ability to “work from anywhere.”  I did not want to be restricted to just my “office” and not have the ability to be mobile.  I wanted to be able to travel and just open my laptop and start working without having to have an in-house server and remote into my computer.  I also wanted to make sure that my security was up to date.  One of the biggest things I did not want to do is keep everything locally on my computer.  This included work papers, tax returns, and everything in between.  The two main drawbacks from that:  

  1. Viruses/malware.  Someone could compromise the information on my computer 

  1. Computer malfunction – I could lose all my data  

I set out to find a solution and came up with one that I thought was acceptable at the time.  All my work papers were on a cloud-based storage system, I was using Quickbooks Online exclusively, and a tax preparation software that was stored locally on my computer.  While everything for my bookkeeping clients was on the cloud and easily accessible from anywhere where I was having trouble is my tax software and the files associated with it.  Then I found a way to have the software hosted on the tax software’s server and I was able to access it from anywhere.  My “cloud’ conversion was complete... or so I thought.   

One thing I did find myself doing a lot of was menial administrative tasks.  Everything from formatting engagement letters for every single client, trying to book clients for a meeting, on boarding new clients, and various other tasks.  Being a one man shop at the time this became difficult to do because of the time it was taking away from me being able to serve my clients.  So, I decided to find a solution that would benefit me.  I knew that there were applications out there that could help with this, but the hardest part was figuring out how they spoke to each other.  I wanted to make sure that all these systems were integrated seamlessly together without having to login to each one individually.  So, what did I do?  I demoed applications, demoed some more applications, and then demoed some more.  There were so many demos.   

After testing different applications, I came to the realization that I had a decent system in place for the time being.  What did all this lead to?  Time savings.  Incredible time savings.  How so?  Here are a few examples:  

  1. Tracking time – I was having a hard time keeping track of the projects that were being billed hourly and I found an application that was easily accessible on my phone and through a browser.  There was no more trying to figure out how much time I worked on a project when it came time to billing.   

  1. Proposals – I used to spend about an hour per each proposal we would send to each client because we would customize it to tailor their different needs.  Now with a new application I use it takes me 10 minutes max to send a proposal with an engagement letter attached to a client.  This application also collects payments for me, and I can make sure to get paid before a client signs the engagement letter.  

  1. Engagement Letters – It would take me 15 to 20 minutes per each engagement letter to make sure it was properly formatted and then I would send it to a client to sign.  I would have to upload it to the efile signature application and wait for the client to sign.  Now it is included with the proposal.   

  1. Meetings with clients – I used to spend a lot of wasted time going back and forth with clients trying to find the right time for us to meet.  Now, depending on how we are meeting, I can send them a link to my calendar, and they can choose a time that works around my schedule.  This way you take control of your time and not trying to choose a time around your clients.  

  1. Communication – Using an instant messaging system to communicate internally with my team members.  Communicating through emails can be inefficient because emails can get lost and forgotten.  This is a good way to make sure nothing “slips” through the cracks.   


By this point I am sure you are wondering where Xero fits into all this.  Well... my story with Xero is an interesting one.  I came across Xero through the account manager here in Houston.  Like any typical salesperson she insisted on contacting me until I came out and gave Xero a chance.  I went, checked out a demo, and instantly fell in love with the product.  What did I love about it: 

  1. It was built on the cloud for the cloud 

  1. It was an alternative to the other software's that are out there.   

  1. It was visually pleasing to the eye 

  1. It had certain features that I liked 

  1. The community 

That is when I decided to move most of my clients over to Xero.  Now I will be honest with you and say that while this was a feat in itself… it was not an easy transition.  I was under the impression that all accounting systems were the same.  While the function is the same, they do operate in much different ways.  A fact that I learned all too well.  But… once I got over the initial learning curve (like with anything new there is always a learning curve) I realized that this software was amazing.   

Xero is a cloud accounting software that was built on the cloud for the cloud.  This is a powerful tool because I am able to access it, my staff, and the client from any web browser.  There is no need to have to go to a client site or remote into a computer and have to work on a local file.  This was something I wanted to do as I made the transition to a digital firm.   

One of the many things I enjoy doing is checking out which new technologies are out there and to see if there is anyone doing things differently.  This is what happened when I came across Xero.  While there are other options in the market this was the one that called out to me the most.  The main thing I loved about it is how “beautiful” it is.  It is a very visually pleasing software that really made it easier for myself and my staff to work in it.   

Some of the features that really stood out to me were: 

  • Cash coding Feature for quick reconciliation 

  • Report Templates for cleaner looking reports 

  • Reconciliation at the transaction level instead of the statement level 

  • Find and Recode 

  • No journal entries to bank accounts, AR, and AP 

  • Open API with direct integrations to various applications 

  • Partner Program  

  • Xero U with extremely valuable information 

These were the features that stood out to me that really got me excited.  Some of these allowed me to save some even more time and I will get to that in a little bit.   

I do want to talk about the community.  That was probably one of the biggest items that led me to really use Xero.  They have done a wonderful job of creating an environment of collaboration and empowerment for everyone in the space.  I can honestly say I have made some amazing and lasting friendships and have been able to freely bounce ideas off of colleagues and vice versa.  


Now I know I spoke of some of the features that were in Xero and the one that I felt provided me the greatest value was the cash coding feature.  Why?  Because I am able to reconcile transactions in bulk.  This is extremely beneficial when I need to prepare a set of books for a client and catch up their prior year or two or whenever we are working with our schedule C clients that do not have an accounting system in place.  Let me give you guys a real-life example:  

Example #1: 

We had a new client come in with their own small business.  We took a look at it and realized it was a decent sized project.  2 bank accounts with about 500 transactions each one and 2 credit card statements with about 1000 transactions for each one.  They did not have an accounting system in place and brought us the bank statements and the credit card statements.  It took us about a day to fully get all the transactions coded in excel, to produce the income statement and balance sheet and prepare the tax return.  Fast forward a year later and the client brings us the same information again but they had grown a bit so there were a few more transactions.  By this point I had already started Xero and decided to use AutoEntry to extract the information from the bank and credit card statements and then upload them to Xero.  By using bank rules and the bulk reconciliation features of the cash coding we were able to do everything in about 2.5 hours. 

Example #2: 

We have a client who is a barber.  He has one bank account with no accounting system in place.  The first year he brought his information and took us about 3 hours to prepare the books for the tax return.  The next year we used AutoEntry and Xero and were able to do it in about 30 minutes.  

So if we look at the lifecycle of a client from initial contact to presentation of a finished product in our firm here is what we are traditionally looking at:  

  • One hour for preparation of proposal 

  • Twenty minutes preparation of the engagement letter 

  • Twenty minutes total time trying to lock down a time for us to set up a meeting 

  • Four to six hours to prepare the bookkeeping for the schedule C clients.  

  • One to two hours of tax prep  

  • Total we are looking at about anywhere from five to seven hours total for an engagement.   

With our new systems in place these is what we are looking at:  

  • Ten minutes for preparation of online proposal and engagement letter.  We include an option for our clients to prepay for the tax return or at least put a deposit down.   

  • We send the client a link to our calendar and they choose a time that works for them that we have open to schedule a meeting.  We spend no time on this.   

  • Forty-five minutes to import the bank statements and use the cash coding feature in Xero.  

  • One to two hours of tax prep 

  • Total we are looking at about two to three hours total for the engagement.   

What does this mean?   

  • Traditional conventional methods = 5 to 7 hours 

  • Utilizing cloud accounting technology = 2 to 3 hours 

  • Average savings = 4 hours.   

This is just for these situations.  If I can save 4 hours preparing a tax return and do it for about 5 different tax returns that is an additional 20 hours that I can save.   

My question to you is what would you do with 20 extra hours?  For us we used it to scale up without having to bring in more staff, ability to go out and network, and most importantly spend time with my family.   

This is why I am such a big proponent of Xero and cloud technologies.  This is why I am a big proponent of the cloud implementing the correct technology.   

Episode 9 - Building a Brand and Bringing Value with @JJTheCPA

Hey guys! Welcome to another episode of the IDP Podcast! This episode we had the pleasure of interviewing Joshua Jenson or better known as @JJtheCPA! We had a great discussion about building a brand and what it means to be a CPA. JJ talks about how we need to bring value to our clients and why it is ok to charge what you are worth if you are providing the value. He also talks about his brand and what the cigar is all about. JJ is such an amazing guy and is very collaborative! I suggest you guys reach out!

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Episode 8 - Real Estate Marketing with Remine

Hey y'all! We have another episode up of the Innovative Disruptors Podcast! I know we have been gone for a bit (tax season is here) but we are back! I am beyond excited to showcase a new episode to you guys today. We get to interview Jaime Resendiz of Echo Real Estate Advisors. I met Jaime at the NAHREP Houston luncheon where he spoke about using a software called Remine to help with his marketing and I knew I had to have him on the podcast! Jaime and I discuss the real estate industry a bit and how he utilizes Remine to help with his marketing. This is an episode that anyone in the real estate industry should listen to!

Make sure to follow Jaime on all social media platforms:

Instagram: @jaimersndz

Youtube: https://www.youtube.com/channel/UCa9Z...

Facebook: Jaime Resendiz

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Youtube: https://www.youtube.com/channel/UCP-MHVfwdACy1aKaJ7p429g

Instagram: @ztxadvisors

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Linkedin: ZTX Advisors

Thanks for listening and please like, subscribe, and share!

The IRS and selling on social media. What you need to know.

I have a question for y’all. How many of y’all sell on social media? I am talking about selling on Facebook, Twitter, Instagram, or Snapchat? I see a lot of “pop” up shops that open up on social media. They are doing one of two things:

  • Selling items on social media and accepting payment with one of the many cash apps that are available.

  • Posting where they will be at for a certain day and then opening up their pop shop and selling until they sell out.

I love the entrepreneurial spirit and the hustle behind this! That is the true definition of the being an entrepreneur. I know you can make some good money and have the temptation of not reporting it because it is just cash transactions but I will say that is not the correct route to take. Every person should be reporting all the of the income that they make during the taxable year along with every applicable expenses.

Now I know y’all are sitting here saying “But Jose, how will the IRS even know we are doing this?” Well right now they are not. They have no way of tracking it. But… and thats a big but, the IRS is working on something now to be able to track that. They National Procurement Office put out a request for a tool to mine social media accounts to be able to track those shops that operate directly on social media. They said that the tool would be used to assist with previous tax compliance cases and would not be used to create new tax audits.

This is strictly an opinion of mine but I find it hard to believe that once they have that information in hand that they will not use it. Again I want to emphasize this last statement is just my own personal opinion.

How does this affect you? If you do not have a previous tax compliance file then they say you will be ok but my recommendations is why even bother with it. You should prepare your taxes reporting all the income and expenses that are allocable. Do you need help with this? Let us know! We would love to help you out!

Our Guide For A Free Tech Stack for Entrepreneurs. Part 1 - Sales and Payment Collection

We all know taking that journey to entrepreneurship can be intimidating but exciting. You decide to go out on your own because you have a hot new product, or you believe you can provide a service better than what is out on the market. That’s great! I love people who take a chance on themselves!!   

Starting your own business presents its challenges like:  

  • Having to build your customer/client base 

  • Limited capital to start  

  • Competition 

  • You are the CEO, CFO, CMO, CTO, and COO of the company. You are also the manager and the employee. You wear all the hats.   

It also presents its own opportunities like: 

  • Being your own boss.  

  • Making the decisions. 

  • Testing out your theories. 

  • Making money for yourself. 

  • Create something for yourself.  

It is a wild ride, but I promise you it is worth it. Now my passion has always been finding ways to leverage technology to business better, more efficiently, and automate what I can.  I want to empower entrepreneurs.  There are applications out there that can be implemented to help do all that, but they cost money. When you are a starting entrepreneur want to make sure to closely watch your cash flow and sometimes the budget is not there to implement some of these applications. Therefore, I have created this list of top applications that I think you guys can use to help you make money. The best part about them is they are FREE!!! 

This week we will be part one which will focus on applications to make you money:


Azlo – www.azlo.com   

Azlo is an online only bank that is owned by BBVA Compass.  Why do I recommend Azlo? Because it is fee free. They can do that because they have no branches and work exclusively online.  Azlo was created for entrepreneurs. They also have an open API and integrate with Stripe and Square. Why is this important? Because Azlo lets you send invoices to clients. You can connect your Square account and collect credit card payments and bank transfers. That is huge for someone that needs to send invoices to their clients. I will say if your business is cash heavy then Azlo is NOT for you. 


Azlo – www.azlo.com  

Like I said earlier Azlo has a great invoicing function built in. I use it for my side hustle, and it works great! I connect Stripe to process credit cards on sight and my Stripe account to have them pay me by credit card or ACH bank transfer.   

Invoice Ninja – www.invoiceninja.com

I LOVE Invoice Ninja. It is a much more robust invoicing tool that entrepreneurs can use to collect money. They have a strong invoicing function but what I love about them is you can send quotes as well.  So, for those of you that like to send quotes to your clients Invoice Ninja supports it. My favorite part about this application is the fact that you can connect Bitpay or any other of these crypto currency payment options and collect Bitcoin. How awesome is that! This is something that can be beneficial for you if you are working with the younger generation.   


Square – www.square.com 

Square is an awesome payment system if you collect payments face to face. They provide you with a card reader that connects to your phone and you can collect payments right then and there. The best part is they send you that reader for free. There is no monthly fee to use this. They charge you per transaction. While this is not quite free it is a free way to accept payments, so you do not have to worry about cash and checks and wasting the time to go out the bank and having to cash those or deposit those.   

Stripe – www.stripe.com 

Stripe is an online payment processing system that allows you to collect credit card payments and ach bank transfers. You can connect these to your invoice functions and your clients can pay you through there. This helps automate that process and helps increase your cashflow. It makes it easier for you clients to pay you therefore they pay you quicker.   

Bitpay – www.bitpay.com 

Bitpay is an online service that allows you to collect payments in Bitcoin. This is a great function to have if you want to add that to your revenue stream and be able to provide more payment options to your clients.   


Hubspot – www.hubspot.com 

I like Hubspot because they provide a thorough platform for you to use as their free version. A customer relationship manager is a way for you to manage the interactions between your current and potential customers. It is a great way to capture leads and ensure that none slip through the cracks. I use it for the side hustle and has helped me tremendously.   

These different applications are great for you to get started and hit the ground running with sales. As an entrepreneur we want to ensure that we do the work, but we also have to ensure that we work ON the business. This will automate a lot of those problems of chasing clients for money or waiting till the end of the week to go to the bank and deposit checks. By automating this then that means you have more time to sell and grow your business.   

Our next blog post will be Part 2 of the series which will be Back Office Processes.