Is AI Driving the Need for Bookkeeping Standardization?

0:00I have everyone producer stuff here. Shhh. Paul doesn't know I'm doing this, but today is his birthday just today and I thought it would be fun if we could have as many people call in and leave a message on his speak pipe. If you go to the show notes and click on the link for a leave Paul a voice message, you can do this from your phone. It's very quick and it's very easy, then we can leave him a bunch of happy birthday messages. I mean, how amazing would that be to let him know that you're listening to his podcast? The project that he dearly dearly loves to create and put out into the world into your ears. I mean, I think that's the best word they give, don't you? Let's do it. Let's do it. I'm going to leave a message right now. I hope you do too. Paul Rosenblum is a bookkeeper, not an accountant or a CPA, although the information in this podcast comes from professionals, it's meant to give you enough knowledge about

1:02these subjects to have a meaningful dialogue with your tax preparer about bookkeeping and taxes. Welcome to a new season of the pod. I know with the middle of the current tax season, but just wanted to keep all of us bookkeepers on our toes. Keep sending in your questions for the next Q&A season and business owners I know you have questions too. Not hearing from enough of you, so send in your questions that maybe your bookkeeper can't answer and I'll tackle them for you here. It's almost time to turn the clocks forward, so this episode kind of keeps up with that theme. I'm Paul Rosenblum. We're going into the future today. Not too far into the future, but we are taking a short leap. AI, artificial intelligence. When I'm working with QuickBooks Online, I sometimes have another word for it.

2:06Sometimes when QBO comes up with some completely illogical category for a vendor that my cat could easily determine, I look at the computer screen and say out loud, ah, artificial idiocy. And then shake my head and then change the category myself. I ran into one the other day. Avis rent the car is not a restaurant, although QBO thought it was. This is the infancy of AI. It's going to take a while for it to get better and better for certain industries and bookkeeping is definitely one of them. I think AI could be used for robots who take care of people in assisted living situations for one example, or to be a server in a restaurant, but in my opinion, bookkeeping will always have that human quality attached to it. However, AI is coming to bookkeeping.

3:07Eventually, even if the data entry could, would, or should be done, 100% by AI, and it was actually pretty accurate, there will always be that human judgment that would be based on the IRS code with things like fixed assets versus expenses, versus section 179, and were certain transactions ought to be posted to what account on the chart of accounts. So even if AI took over the data entry, in my opinion, a bookkeeper would still be needed to go over every line that AI has input into the company's books. AI is not going to take a bookkeeper's job away, it's only going to change it. Rather than the bookkeeper doing the data entry, the bookkeeper would be responsible for going over that data entered by the AI and adjusting it as need be.

4:11Maybe not to the level of professional tax preparers, but to the level of moving some expenses to fixed assets, moving some subcontracted expenses to advertising and promotion if the subcontracted service is social media, for one example. And since AI probably isn't going to know the split between paying the principal of a loan versus the interest just from the bank's download, the bookkeeper would make those adjustments too. But the most important change to a bookkeeping service, which, as you know, I do now for any client who wants it, would be that the standard duty of a bookkeeping service would be to go over the books and explain them to the small business owner. So somewhat less bookkeeping for the bookkeeper, but more explanation and teaching would be involved. It's not just data entry anymore, but it never was, as you now know.

5:14Some bookkeeping would be involved, but working closely with the client analyzing and making suggestions to help grow the company would be our job in the future. And that leads to the common thread to last week's episode. Levels of bookkeeping certifications based on knowledge, experience, and education. It makes sense. As the bookkeeping field slowly changes, now is the time to create certifications. There have been QuickBooks certifications for years. I have two of them from the middle 2010s, but it's a combination of accounting software and bookkeeping. They're not real bookkeeping certifications. There should be a certificate that gives the bookkeeper the right to make suggestions about how to invest money for tax purposes from the business, which could be the top certification, and a certificate to explain the books to the small business owner, which would be a

6:19lower certification for two examples. Neither would be categorized as financial advisors, however. My producer, Steph, her information is in the show notes, so if you need a podcast guru, please contact her. Ask me after the last episode. I'm curious. Why does the other Paul want to know that information? Thanks. Well, here's the answer, Steph, and everyone. I have a client who has done their own bookkeeping for the past seven years, and I have been consulting twice a year with her to clean up some mistakes that she made, and to teach her new things, and to change the way she was handling the POS system, just in name one. I introduced the cash on hand account to her. We had a Zoom last week, and she told me that she now has an investor, and she now has enough money to go out and hire a bookkeeper.

7:20It's above average complicated bookkeeping, two POS systems, a wholesale tax, retail tax, and other things, and since I haven't cut out every stressful client yet, I told her that I don't have the bandwidth as of right now, but maybe in the late spring or summer I could take her on. She wanted someone now, because a lot of good things are happening in her business. So she started making some phone calls to bookkeeping services, one of which was recommended to her. After her first Zoom meeting, she called me, and told me that the price quoted was $3,000 a month. I was speechless. Either I'm really not charging enough, or this was outrageous pricing. And I immediately realized that pricing for bookkeeping had no rhyme or reason.

8:20Regulation popped into my mind. Bookkeeping regulations now. That should be assigned for a rally. She had another Zoom call with another bookkeeper working at an accounting office, and they quoted $500 a month. That's more reasonable, I told her. But if she goes with a tax preparer who is not in the firm where her bookkeeper works, then it might be awkward. And as you know from prior episodes, I don't believe in having a bookkeeper and the accountant working in the same office. In most cases, what happens is that the bookkeeper creates a set of books for the accountant, not the client. And that kind of bookkeeping is called creating workpapers, not the kind of books that you can discuss with the client to help them grow and understand their own business. That's counterproductive for the client.

9:24She was close to hiring them, and I think I might have scared her into not. Then she had a phone call with another bookkeeper who told her that she was going on vacation next week, and they could have a Zoom meeting when they got back. A bookkeeper going on vacation during tax season? They don't have enough clients. I told my client that I was concerned, and now she's back to the drawing board. So that's where the last episode came from. Since bookkeeping is a very structured and organized profession, there needs to be an organized price structure, accreditation, and an organized logical way of getting the most out of AI possible. I'm not against AI, however, I am using it carefully and only for certain specific things. And yes, this episode is written by me, typed into a word processor by me, and recorded

10:26into a microphone by my own voice, as every episode of this pod is, and will continue to be. So the role of the bookkeeper will slowly change over the next 10 years, but I don't think that bookkeepers will go away. We'll just change our job duties and responsibilities. Until all the banks code the downloads going into accounting systems banking features, the same way, AI will be very difficult to rely on. I have one company downloading the banking into QuickBooks that the memo in every single transaction starts with the name of their company. So in that case, rules do not work. AI never works in a case like this. It reads the first words in the memo field that the bank feeds into the software's banking feature, AI would work much better if, oh yeah, regulations were developed for

11:33how the banks upload their information to accounting systems. As I said, the last episode and this episode are interrelated for sure. Every time an industry changes, the workers, the job duties, the certifications and regulations should have to change. The United States isn't great at being proactive with these kinds of things. Most of the time, the administration reacts to things that have already happened. Let's break the mold here. What if we had a standard for AI and how would it attempt to help each industry? What if we had a national or at least a regional price regulations for bookkeepers and tax preparers? What if we had a standard of how all the banks feed the bank transactions into the accounting software using the same standard of memos and coding?

12:37And what if the paper statement from banks in a credit card matches the online statements beginning and ending balances? These rules or regulations would just standardize things in the bookkeeping field. And then there would be minimal manual entries and much more time to spend with clients to discuss their books and help them grow their businesses. Has anyone else thought of these things? I am not planning on going into politics and organizing rallies, but any volunteers out there? I will only hold a sign in March during the late spring months to October 15 when the heat is turned on in my building where I live. After that, it's too cold for me. Taxis and still isn't over, I have work to do. Entering transactions, year end adjustments, and making an extra cup of coffee or tea during the day to keep me going.

13:39Business owners, don't forget, especially this time of year, be nice to your bookkeeper. We are under a good deal of stress to get everything done and get it done properly. I'm Paul Rosenblum.