On Aug. 14, 2003, during the hours before a blackout crippled almost half the U.S., I was working at home. I’d taken a vacation day because I needed to file my taxes, and I’d done a perfectly awful job during previous year or so keeping up with that important task, mostly owing to a period of unemployment in 2000 and 2001 and freelancing for a living.
My accountant was a perfectly nice fellow located in Brooklyn. Unfortunately, I couldn’t say where on earth in Kings County his office was. My memory is I had to ride the Q train forever, then transfer to a bus for a ride of similar length. If I didn’t know I was in Brooklyn, I couldn’t tell you where it was. The accountant’s rates were very good — he was also good at minimizing my debt to Uncle Sam. But I knew for logistical reasons it wouldn’t be a long-term arrangement. I had to have someone more accessible — and email friendly.
For me, the blackout more or less clinched the matter: I’d literally just turned off my laptop when I realized the cable box was dark. Then I noticed all the clocks in the apartment, digital or otherwise, were dead. I peeked into my hallway to find the light was out. Circuit breaker seemed all right, but then, stepping outside my apartment door, I realized the whole building was electricity-challenged. The block, the neighborhood, the borough, the city — you know how it happened. It was, as so many people noted at the time, a wild and crazy and wonderful and beautiful night. And then the lights came back on and I still needed a CPA who wasn’t located on an outer planet.
It was through Craig’s List, believe it or not, that I met a fellow named Jonathan Medows. He has been my accountant ever since, and because he’s been so terrific to me, I honestly don’t mind giving him a shameless plug here at the Clyde Fitch Report. In short order he helped me straighten out my tax situation and I’ve been on the (not so) righteous path ever since. He handles all kinds of individuals and businesses, but I think he works especially well with folks in the arts — actors, writers, directors, artists, musicians, the works. If you have a question, he’s great at providing answers that are direct and understandable, not larded up with technical gobbledygook. He’s extremely thorough and also, on a personal note, a very decent fellow and family man.
So if you need someone to handle your accounting matters, I highly suggest that you visit his website.
Well, full disclosure: Jonathan asked if he could link to me on his website and obviously we like any SEO benefits we can get, so I offered to do a 5 Questions with him. Just so none of you out there think this bit of content doesn’t, um, quite add up.
And now, 5 questions Jonathan Medows has never been asked — and a bonus question:
1) What’s the most perceptive question anyone has ever asked you about your work?
Someone once asked me whether I enjoy getting out of bed in the morning to go to work. I realized that if my answer was no I was in the wrong profession.
2) What’s the most idiotic question anyone has ever asked you about your work?
Whether I can do arithmetic without a calculator (yes I can!)
3) What’s the weirdest question anyone has ever asked you about your work?
A prospective client once asked whether he could deduct the cost of pornographic materials as medical expenses for a sexual dysfunction.
4) How much of your business involves clients working in creative professions (writer, actor, etc.)? What’s the biggest mistake people working in creative professions make?
My CPA practice reflects the diversity of New York City and I have clients from all industries and a significant portion of clients from the creative professions.
The biggest mistake freelancers both in the creative professions and in other self-employed professions in NYC are their failure to set aside money for taxes. People typically fail to make estimated taxes and this leads them to procrastinate and not to file tax returns for several years until the IRS, NYS or NYC tax authorities catch up with them. My advice is simple: set aside about 35% of expected profit for taxes in a separate bank account. Pay your estimated taxes on time. This will avoid much suffering.
5) What is your approach to working with clients? You’re also very entrepreneurial: Do you seek out a lot of small-business owners? What kinds of advice do you find yourself giving out most often to entrepreneurs?
My goal is to get to know my clients as this allows me to better serve them both during tax-preparation time and throughout the year. I know of another CPA who insists that people not ask questions not related to tax returns during meetings. This is wrong on so many levels. If you have a question it’s obviously important for you so it’s important for me.
Most of my advice, aside from tax planning, is related to business management, especially cash-flow management. If you do not have the proper cash flow to run your business, you won’t be in business for long. I also find I help clients with other business and non-business questions. For example, I recently met with a client and suggested he speak with a financial planner and insurance salesperson and an attorney to help him better protect his business and family.
6) The U.S. is running these huge, seemingly unstoppable deficits. Do you believe federal tax policy is entirely the reason for this? How do we revise federal tax policy to solve our long-term financial problems?
No, I do not. The federal government looks at trying to use monetary policy to affect the state of the economy. Tax policy is only one tool that it uses. It recently decided to run deficits in order to stimulate the economy. If you are out of work or are otherwise suffering as a result of the recession, it looks like it has been having some sort of positive effect. Of course, there is always a price to pay for this. The printing of money will lead to inflation. It is only a matter of time once the economy gets healthier.
I would say that federal tax policy is only part of the long-term solution. Another part of the solution, frankly, is to reduce spending. Military expenditure would be a good place to start. Getting out of Afghanistan would save us tons of money and go a long way, from a financial standpoint, to solving some of the financial problems we are facing in the next few years in this country.