Chase Insogna is the founder of Insogna CPA, a highly successful Austin, Texas-based CPA accounting firm that specializes in e-commerce business. What makes Chase and Insogna CPA different from other accounting firms and investment advisors is that he works with business owners to build their wealth while they’re building their businesses.
On this episode, Chase and I discuss his company's virtual CFO services, how he helps businesses grow as a CPA, staying up to date on tax laws and regulations, and more.
What is Insogna CPA
Chase Insogna: We've started in 2011. We have a team of 20 people currently mainly focused on counting and taxes kind of split the house. We start our firm kind of bridging. The gap between if you have a bookkeeper and you have a tax cpa, those never are incentivized to talk to each other.
So that was our main focus initially. And we've been pretty agnostic on clients, but we've been doing Amazon, I've been doing online sellers since late two thousands. But my firm's been focusing on it since 2011 officially, so we're very experienced in it. And then business is diagnostic.
As far as other business types from your one owner consultants to seven, eight figure businesses. Don't do restaurants, don't do construction accounting, cause those are different accountings but pretty agnostic on everything else. And a heavy focus on e-comm here.
Alex Bond: Yeah. And that's definitely why we're here today. And you cover all levels of business in terms of LLC, scorp, incorporated, that sort of thing as well?
Chase Insogna: Yeah, that's correct. I mean, you know, usually kinda the first initial conversation is what's the formation? You know, is it tax efficient? You know, we kinda have that initial conversation and then make sure going forward it's the right thing for our clients.
Alex Bond: Great. So how large is your team specifically?
Chase Insogna: Yeah, team of 20 people, you know. Pretty much half accounting, half tax, and multiple CPAs on the team here. And then everybody's certified or licensed in some way or form. So one of the things we promote is you know, always working with a licensed CPA firm, when you have a business or rental property, because there's recourse for a CPA firm.
You know, most people don't realize if you're just working with an unlicensed bookkeeper, unlicensed tax preparer, you know, they can easily walk away. You can never get your data if it's years down the road you're trying to find it. They may never find them to get it. Whereas CPAs, most people don't realize are, you know, obviously licensed by the state board.
Even if I were to pass away, for example, the state board has team of volunteers of CPAs to come into my business and make sure my clients are taken care of as a licensed cpa. So that's one of the things we like to promote and educate people on as the difference so whether it's us or someone else. You know, we're always promoting the CPA profession because there is recourse in your business and making sure things are done correctly.
Alex Bond: And you said that all of your team members are licensed as well?
Chase Insogna: Correct. Licensed or certified. Yeah. I mean, accounting obviously isn't CPAs, but you know, they're certified in QuickBooks or something like that.
Alex Bond: Got you. So what are some of the more specific services that your firm provides to clients or can potentially provide?
Chase Insogna: It's on a kind of baseline level. We're doing monthly accounting. And reconciling the books, you know, data entering every one to three business days, reconciling when the statements drop.
You know, what we have in-house is kind of in-house controller, kind of taking it to the next level with data analysis, fractional CFO type stuff, where that's promoted out in the sphere I call it. And so budget forecast for larger clients you know, sometimes we're checking in weekly, AP and AR, and cashflow.
Usually it's like monthly, quarterly, semi-annually. Just depends on the size of the client. But man house controller and her team you know, creates a video. We send a link with a unique URL to your customize dashboard with KPIs and financials so you can click on your phone. We're always embracing technology and trying to find the most efficient way.
And the biggest thing for us is communication. I've always pushed it since day one, and so, you know, we use Slack, we use other forms of communication and try and make it easier on our clients and communicate as much as possible. And good thing about having 20 people is it's not, you know, a one owner firm where.
It's all relying on me to respond back. If somebody has questions one of my team members can easily help answer it for them. Or, you know, if it's more higher level kind of business, you know, analysis and like looking five years out, that's kind of my specialty. You know, or talking about investments, you know, I manage my own portfolio, so that conversation.
So it depends on the technicality of what team members talking about. What, but in general, you know, you're, you're getting communicated back one to. Two business days at most once you ask your question. So that's what we try to do best. And sometimes, you know, we make mistakes, but in general, you know, we're communicating as quickly as possible.
Helping eCommerce brands maximize their financial potential
Alex Bond: So your firm isn't just designed to be as you've mentioned, a bookkeeper or an accountant, but to actually help e-commerce brands with growth strategy and to maximize that financial potential. How involved is your team typically with your e-commerce clients and what does that strategy generally look like?
Chase Insogna: Obviously onboarding, we're getting to know our new clients you know, what are their goals. Sometimes, it's a lifestyle and they just wanna sell a few products. Sometimes it's looking to exit a brand. Sometimes it's looking to grow a arbitraging business. You know, e-comm so varies the gamut.
But in general, we're, you know, getting to know our clients initially, what are their goals, and then kind of structuring the conversations, structuring future check-ins and analysis and KPIs based off that, those goals that clients wanna reach.
And then we kind of on a business kind consulting side, people describe me as you know, whether it's talking to our controller or me in-house. If there's resources that we're hearing from you that, we know are coming down the line, then we'll say, Hey, you know, you be thinking about this. Let's contact so-and-so that we recommend to get them in the picture.
But a lot of times business owners are focused on day to day and. You know, they, they have a goal, but they don't really understand what's gonna happen in a year, three years from now. That's kind of what we, our white paper is on our website with the four phases of what we see in most e-comm businesses.
And so what does that look like? You know, when you're selling 50 grand right now you know, that can easily scale up to a quarter million or year three, you'll be doing five or seven 50 if your business is scaling quickly. So you can't be selling outta your garage at that point unless you're just sending it all to Amazon.
So commercial space, hiring people, you're not gonna be fulfilling all those packages yourself. So just kind of quickly understanding those goals and then matching with referrals or recommendations based off that.
When should you consider hiring a CPA firm for your business
Alex Bond: What stage in a company or client's growth should they consider hiring a CPA? Is that earlier than people would expect later than people would expect?
Chase Insogna: I would say in year one you know, even if you're doing 50 a hundred k, you know, a CPA is important just from a tax perspective to make sure you're capturing all your deductions properly. If your expertise is not accounting you're wasting time spending unnecessary hours doing it versus growing your business.
Or maybe you have a W2 job and you're doing e-comm at the same time. That's where CPA firm like us can help come in and just do accounting. The important part is if you don't do it early and you wait till later, it's very difficult and costly to catch all that up. What you don't wanna do is get behind the curve, because at some point when you're selling.
You're doing 50 now and then a year or two maybe you're doing a hundred fifty, two fifty, three hundred. Like that becomes a lot of volume to catch up with and get financials caught up and cost you more money at the end of the day to do that. And then inventory is obviously number one biggest issue with all of our ecom clients. Most of them manage it in Excel initially, which is fine.
But as you're scaling and if you're doing multiple channels, that becomes a big problem very quickly. And what most people don't realize is that, you know, when you get to that point of needing inventory software, you're already beyond trying to fix it because you can't just flip a switch. From day X to day Y and say, oh, let's turn on the inventory count and manage all of this with software.
So you've gotta have a period and it's very cumbersome to try and get that in implemented cause you're constantly selling product at the same time. So what is the inventory count on day Y that you're gonna make the switch and when you've got in transit and you've got inventory and the, and your multiple shops, neighbor stores, and then in your warehouse.
So it becomes very challenging quickly on inventory if you're scaling like that. So we recommend inventory, thinking about it, investing in the right software for your business very early on, even before using QuickBooks online, looking at inventory software, if you're looking to scale transactions, cause that's gonna be your number one challenge in the future.
Alex Bond: Have you had personal experience coming into, I don't know, a client trying to hire you to fix their financials that they were putting on the back burner for the last two or three years and, and you had to come in and try to fix it, or have you had one experience like that and said, I'm never doing that again.
Chase Insogna: All of my statements are based off 20 year plus years of experience. I can't even count the number of businesses we go back multiple years and fix things. So, oh my gosh. You know, that's kind of, you know, our unique perspective is we're basing this off many years of history and been doing it a long time.
So that's why we can generally foresee what's gonna happen on the roadmap. You know, where most business owners are just kind of looking in the short term and trying to match their goals there.
Virtual CFO services
Alex Bond: One of the services that you also offer is a virtual CFO to companies or e-commerce brands. Can you walk me through that process a little bit?
Chase Insogna: Yeah, so I mean, just kind of philosophically, you know, the marketplace, you know, you go on Google and you search fractional CFO. Most of these people are basically doing in what I consider like controller type services. Budget forecast. Some are even reconciling books. Most of the time it's pretty much controller level advising.
These are all the things that we do on a weekly, monthly, quarterly basis with our clients. On a controller level, fractional CFO in my opinion, is more like debt and equity service, where you have a larger business and a CFO is helping find financing, external financing, or maybe you're looking to exit and a transaction merger and acquisition transaction to somebody else.
You know, that's where kind of fractional CFO services can come into play. So we do market, you know, the controller fractional CFO, because that's what Google searches is promoting to people. But from an accounting, Profession perspective. The majority of the time it's just controller advisory services, which is what we're doing every day.
Alex Bond: Yeah. Not to cut you off, but what I'm kind of hearing you say is that people are looking for a CFO, not knowing that they actually need a controller, which is also a service that you offer.
Chase Insogna: That's correct, yeah. And usually they're overpaying, you know, for quote fractional CFO, because that's not generally what is needed early on. I mean, you should be doing in the seven figures at least before you even consider a fractional CFO, even if you're, you know, your own brand or you're just arbitraging and looking to sell to a third party, typical fractional CFO, that's where they should come into play.
Other than that, you know, CPA accounting firm, maybe a controller, fractional controller or like in-house controller, like what we have is generally what most majority of businesses need in early on, you know, one to one to 10 years type thing.
Alex Bond: No, that's very insightful. So how long do one of your controllers or a CFO, or even you as a CPA, how long do they usually stay with the client? Is that until they get their own? CPA or CFO or what's that look like?
Chase Insogna: Good question. I mean, you know, we've had businesses grow and exit. You know, we just had one sell to Sony. It was an e-comm business. But you know, they have sold to Sony and you know, they've obviously gotten a CFO on board where that makes sense. Accounting team.
So generally, I mean, what we can handle is Usually under 50 million you know, kind of in that range, depending on, you know, what it looks like and how many employees are there. But generally that's what we're looking at. And then obviously if they have an in-house person that we work with, maybe we're still doing the transactions.
Maybe they're doing the transactions and we're reconciling and tax planning, you know, it could be flexible and certainly recommend it when it's necessary. We're not always trying to just hold the business and you know, you've gotta use us for nothing. But, you know, we're happy to, that we've scaled and help somebody grow and exit. And leave us because we've successfully done our job at the end of the day.
Alex Bond: Yeah. And that's the goal is you wanna be able to see them succeed and get big enough to where they don't need you that exactly means that you're doing your job well. With your virtual CFOs and controllers, do they have multiple clients or how on hand is their work actually? If they have multiple clients?
Chase Insogna: Multiple clients, I mean, pretty much working with everybody here, and then it just depends on the size and the conversation and the expertise. But yeah, it's not one-to-one. I mean generally that's not necessary. And from an accounting and tax perspective, which is why we don't do restaurants and construction cause they're different for us.
Accounting and taxes are the same. Whether you're a one or a consultant or e-comm business, still the same. Accounting and taxes, maybe you code things a little bit differently and uniquely. But at the end of the day, the tax planning's the same. Advisory's still the same. We kind of have a unique business model where we're. That's why we can be agnostic to most businesses and help them because it's the same conversations we're having all day long.
Common IRS issues small businesses face
Alex Bond: So you've said before that, not in this conversation, but but elsewhere, that I read that the number one issue that IRS takes with small businesses is not filing payroll taxes or not filing them correctly?
Is that from the IRS being extremely particular and how it needs to be done and the expertise required to do that? Or is it more ignorance on behalf of small businesses, you know, confusion or anxiety that just kind of instills in people?
Chase Insogna: Yeah, I would say it's maybe a little bit of both, but I mean we use a third party for payroll services. I recommend just paying the fee and don't be cheap about it because it's the number one issue. I mean, that's quoted by the IRS and other sources.
But just go with a payroll service and make sure they're filing and paying it for you. I mean, a lot of times, you know, the largest accounting service software in America, I won't name them, but their payroll service, you know, they have different levels. And so if you get the cheap level to quote, save money.
Then you're required to make sure you click the buttons and file the reports and submit the money. If you pay them more, then, you know, maybe they're submitting the forms and payments. So we don't recommend them for that because most people get confused and they just assume they signed up and everything's taken care of.
That's not always the case, you know, if clients are growing. And these days, I mean, we have team members all over the country. We have clients all over the country in all 50 states. So, you know, if you're hiring people in other states as a W2 employee and you're growing, maybe you've got a shopper or you got admin or something that you've hired as a W2 employee, that creates nexus in that state.
And technically you should be registered in that state. Need to create payroll numbers in that state, make sure you withhold and pay in that state. So doing that manually is never recommended. Using the right payroll services and making sure they're filing and paying it for you to stay compliant.
Staying up-to-date with tax laws
Alex Bond: You're based in Austin, Texas. But what I'm hearing you say is that you have clients in all 50 states. Are there significant differences in tax laws state by state? I imagine there are, and I don't know if turning this broader, do you work with anyone internationally where you can say the same thing? I mean, what are some of those differences in tax laws that you have to personally be responsible for?
Chase Insogna: CPAs are allowed to file in all 50 states. You know, a lot of people don't realize that. So we don't have to be registered in all 50 states. There's reciprocity. So we're licensed in Texas, but we're allowed to file in all 50. So yes, there are nuances here and there. I mean, sales tax is a big issue obviously these days with e-comm.
And then, are you selling enough to meet the revenue thresholds where you need to register and file as a business in that state. And so that can be an issue. And then payroll registration's an issue with Nexus. And then once you have Nexus, you know, you then need to keep track class coding those transactions.
And QuickBooks online though, they're so you can pull a p and l by class and show by state, cause then when you file taxes, you've gotta know, for example, if you're in California, selling in California, you gotta know how much income and expenses are related to California to know what your California income tax liability is.
So that becomes important to make sure we're on top of that in class coding. But other than that you know, obviously there's jurisdictions here and there, like a lot of New York and California move to Austin. So we have a lot of clients from the coast. So New York, you know, has city tax. State tax filings that we're aware of.
And you know, I know Ohio has local jurisdictions that we file there too. So other than income taxes you know, for us it's mostly straightforward. It's just making sure we tax plan correctly going into December 31st.
Alex Bond: And how do you ensure more specifically, I mean this is a little bit more of a tactile question, but it's constantly kinda like shifting and evolving a little bit. How do you ensure that you're staying totally up to date on all these different laws state by state or even internationally.
I mean, again, e-commerce is a business that is operating a little bit without borders, and the rules and regulations for it are consistently being changed and evolved and not exactly the wild West like it once was, but it's still not as regulated, I think, as it could be or will be in due time. How do you ensure that you're staying up to date on those sort of regulations, rules and laws?
Chase Insogna: Yeah, so my tax team for example, I mean we got back in January from, you know, tax CPE updates, continuing education. We're always staying on top of what's coming out or you know, what's Congress is talking about the new laws passed. We don't do international taxes.
Now we will do, if you're selling on Amazon internationally, we will help us clients with those and sync them in with a two x track, those transactions. But cause obviously us, you have to report worldwide income anyways. But we're not filing Canadian taxes or you know, European taxes. I'm aware of it. I know what needs to be done, who you need to referrals to contact, but we don't get an international tax.
Building wealth while building your business
Alex Bond: You've also mentioned, at least on your website, that building wealth while building your business, how is that different than what most business owners already do?
Chase Insogna: So, kind of a philosophical statement that I like to make is, most business owners in 20 plus years I've been studying entrepreneurship. You know, they most of 'em are always reinvesting in their business and trying to grow it. And they, you know, they're like, well, I'll wait to sell, or I'll wait to 20 years and then I'll cash out.
You know, or money will be there when I'm ready to retire or quit. And, you know, generally that's just, never happens if somebody's trying to sell their business in general you're never gonna get the blood, sweat and tears you put into it over that course of time that you think you deserve.
What I don't wanna do is, and what I do with myself personally, is I don't wanna be at the end of that rope, 10, 20 plus years, you know, whatever that looks like. And not have any money without having to somebody give it to me. So building wealth as you grow that's kind of what we promote here about whether it's saving $500 or 5,000 or 50,000 plus annually.
You know, just put something away, whether it's a ira, whether it's a SEP ira, whether it's a 401k. Just save something annually while you're growing it, because you won't recognize that lump sum of money in the year you're making it. But over time as it grows and, and compounds, you'll at least have something to fall back on.
And so that's what we're kind of promoting in a wealth building. You know, beyond that, like especially e-comm clients, when they're arbitraging buying inventory, paying bills in general we're, I'm like a self-proclaimed, like points of miles person.
So we're always promoting the right credit cards and whether you want cash back or you want to travel first class and stay in five star hotels like I do worldwide when I vacation. You know, using the right cards to do that and moving points around to, to pay for things. These are kind of different tools that most professionals don't get into. CPAs, at least we're trying to make sure our clients are on track for it.
So we're always pushing for savings you know. America in general has a savings problem. You know, whenever you read the stats and look at Congress testimony and so we're trying to change the way people think and make sure, pay their spouse, pay their kids correctly, pay themselves correctly, and save correctly for the future.
Alex Bond: One thing baked in there that you said is that when a company is pretty much settling to sell their company down the road, That money will be there down the road. Right? So why is that less common nowadays? I mean, that was a pretty traditional model for a long time. Is build a business, then sell it. So what happened between them and now where that doesn't really work as much?
Chase Insogna: I'm not gonna say it doesn't work, but there's a lot of faucets that go into selling a business and somebody willing to buy it at the price you want to sell it for. You know, are you merging into a larger organization where you're still gonna have to work three to five years under contract?
You know, we had a client sell to SC Johnson for eight figures. Once you have that money in your account, you are not really motivated like you were before, to continue working. So it's different. So, you know, they were stuck in a three year agreement with built in bonuses. So you're not gonna get that lump sum day one. You're gonna have to earn it, and you're gonna have to stay on track with the numbers basically.
And it's not just, here's a check. I think a lot of people have a fallacy of watching Shark Tank and thinking, oh, I, you know, I get a build a product and you know, Shark Tank writes me a check and bam, you know, I'm successful. I mean, that's like.
I mean, we have a number of Shark Tank clients too. You know, the statistics on there, I think it's over 75% of people don't even get funded on Shark Tank that are on the show. You know, most of those people don't even get money, and so that fallacy is not there. So, you know, my philosophy and just as an example of how I run my business.
So I'm not, I'm not waiting till the end of the rope in year 20 or 30 or dying at my desk like most CPAs do, because I don't know what that money looks like in general professional services, you know, one to three X on gross revenue and then you have to earn it out over a number of years working for whoever acquires you.
So over that time, my philosophy is to continue saving money every year and letting that compound. So at the end of the day, I have options. I can sell my business as a bonus because I have enough money to live on. Now I can sell it to my employees, I can let it continue running or I could just not care and just close it and I still have money to live on.
That's really what we're trying to promote, is have options at the end of the day, not be pigeonholed into, if I don't sell this business, I'm gonna have to find a job. So with somebody else, that's not a position you ever want to be in. Now, other spectrum of that is you're building a brand.
Yes. You know, if you're building a brand, selling your own product, obviously there's a lot of investment that goes into that usually 5, 10 years, you know, you're looking to get acquired depending on what you're selling. So there is a larger multiple on those. If that's the goal, then, that's what we're trying to work you to marketing, sales, you know, make sure those things are in place too properly.
That all requires investment cashflow. Saving can be a little bit tricky, you know, building a brand, you know, can, like our client that made eight figures and earned it out over three years, you know, can be a windfall of money.
But that's not always the case with everybody. And you know, sometimes you get lucky, sometimes you, you gotta keep working harder, so take control of your own finances. Take control of your own future. Save money for yourself and your future as you earn it, is what my philosophy is anyway.
Tips and strategies for tax season
Alex Bond: So kind of circle back to the IRS a little bit. Everyone wants to essentially pay them the least amount of money possible, right? So what are some strategies and tips for tax season? Which is here, and even more around the corner for myself that you recommend to your clients that are an e-commerce business.
Chase Insogna: Yeah. First thing is you know, in our initial conversations just looking at formation, hopefully you have an LLC set up, whatever you're doing. That should be number one. Even if you're not making enough money to be an S-corp, you know, at least a hundred percent owned LLC as files as a Schedule C on your personal 10 40 taxes.
And then from there, you know, our breakevens kind of 50, 60 K of net profit after expenses and, and then we're looking at an S-Corp election where we can save thousands of dollars and unnecessary FICA payroll taxes by being in, taking that same money and being an S-corp.
So it just depends on where your business is at, what your profits look like, and then, do you have partners? You know, is there equity or is there debt? Like obviously those come into play too. And then, you know, do you have employees? Do you have a spouse? Do you have kids? Can they be paid in the business is one example we, you know, try and push just kinda structure it that way to save a little bit of money.
Obviously you're taking that deduction now, putting it in their, in your family's pocket. You know, if you're using tax software, which we never recommend, For any business owner or if you own rental property, I mean, I have 15 rentals myself. You can't work in the gray area with tech software. It's black and white.
So example I like to give is if you have a e-com business and you're filing your 10 40 with that schedule C and you report home office deduction, it generally asks for your internet in the home office. So you're gonna get pennies on the dollar on that home internet, whereas the internet is required for your business.
So that $800 deduction, you know, we would put on a Schedule C tax software is gonna put it in a home office. And that's just one small example of how CPAs can add value and maximize tax deductions in the gray area.
Alex Bond: I think that's a great example, Chase, is you guys can find the sum of the parts and that's the difference maker I think is in accounting tax season. It is a game of details and those details add up to become a big, massive number in savings that, you know, software like you're saying, is not going to be able to find and navigate through the individuality of person to person, you know? So I think that's extremely valid.
Chase Insogna: We've been around a long time and you know, we have a lot of good reviews because we're not promoting to put people in things that just make us more money. We're not gonna make an S-Corp election and charge for it if it doesn't make sense for you. I mean, we'll tell people, you know. You just have a basic ten four to use TurboTax, like you don't need to pay us to do it. You just have W2 and a mortgage.
And so we're pretty honest with people and you know, we're only, we're looking for the right clients where we can add value. Where I was going with that is, you know, yeah, we're charging for our expertise, but what we're charging you is still saving you money at the end of the day in total income tax liability.
So you might be, we might make an S-corp recommendation for 2022, a late election or, or starting this year, file taxes. And yeah, you're gonna pay us, you know, money to do that, but you're still gonna save X amount of dollars in total, even though you're paying us so, You gotta look at it from a grand perspective and say, okay, this is my tax liability. I'm gonna take a little chunk of this and pay them to let the experts save some money.
And kind of think of it in that mindset. A lot of people think, well, well, you know, I don't wanna pay them this amount of money. I'm just gonna save it. But you're actually. Paying more money at the end of the day because are you filing it correctly? Are you capturing those deductions properly? If you're doing your own taxes, that's something you gotta ask yourself.
Future of eCommerce
Alex Bond: So to kind of give a general overview, to look to the past, to try to predict the future as you're an expert at your personal firm. I think you mentioned earlier that y'all started working with e-commerce businesses around 2011. Have you seen your firm grow in tandem with the growth of e-commerce and do you expect that trend to continue?
Chase Insogna: It's a large vertical for us, for sure. It's not, you know, our majority of business, but it's a large vertical. I've been doing it since, you know, I did it individually on my own. Sincerely, two thousands. Mid to late two thousands, excuse me. And then officially as a firm 2011 is what I say. But I think the trend is continuing.
I think there might be a little bit of consolidation going into a potential recession, you know, in the next couple years that the market's identifying. But it's the easiest way to start and build a brand, you know, versus going to a traditional model where you had like a SC Johnson or you know, a larger corporation, try and start your brand for you.
I mean, you pretty much can just go on Amazon and pay for some advertising and get people to buy it and get some reviews and, and it's off to the charts from there. So I think it's gonna be around and it's gonna continue building itself in the future. And I think we'll see some consolidation of some larger ecom businesses merging and creating some efficiencies there.
And some of these before interest rates skyrocketed. A lot of the m and a firms were rolling up these companies, but I don't see that happening as often these days cuz the interest rates are too high for the debt service. It's gonna be around for a long time. So we're here to help. When people want our help, we'll still be here when, you know, if you don't want it now, we'll still be here later.
You know, we're not looking to go anywhere. I'm not looking to go anywhere. Our business has been here 11 plus years. We'll be here another 11 plus years, and we just look to keep helping entrepreneurs grow.
