Redgear Technologies, provider of tax related products, services, and accounting software, recently announced a partnership with Deductr.com which is now available to their network of tax professionals. The real benefit of Deductr for the tax professional is to become an affiliate and encourage your business customers to use the tool to track their expenses and uncover all of their deductions.

Redgear sat down with the president and founder of Deductr, William Olsen, CPA, to ask some questions about the service and what the benefits are to you, the tax professional, and to your business clients, the tax payers.

RedGear (RG): Where did the inspiration for Deductr come from?

William Olsen (WO): I often describe a client of mine… we’ll call him Jim. Every year about a week before the tax deadline, Jim would come into my office with a large envelope full of receipts and expect a miracle. You all know this story! I’d send him home to get statements…he’d come back with four or five missing. I’d ask for his mileage log… “Mileage log?” I’d ask about asset purchases… “I needed to save the receipt for that?” So we end up reconstructing his year and estimating where we can, and you all know the answer to this question, who wins when we have to resort to estimates? When I designed the tax related functionality and output of Deductr, it came from 15 years of working with clients like Jim.

At the beginning of 2009, Deductr started out as a unique marketing idea to show independent business owners the tax advantages available to them. When my partners, all experienced independent business owners themselves, and I began to incubate and refine our initial ideas, we turned our unique marketing idea into a product. The result of the first six months was version 1.0 and a provisional patent. Then came several more months of testing and tweaking with outside actual independent business owners to achieve user-driven design. Deductr is what it is today…a proven solution designed by CPA level experience and refined by business owner experience.

RG: Why would a tax professional want to offer Deductr to their clients? 

WO: When it comes to keeping business records, I found in my practice, there were generally two types of clients; those that like to do detailed paper work and those that don’t. I was lucky if I had 10% who liked it, meaning 90% did not. Deductr was designed for the “90 percent”. You no longer have to try putting a “square peg” into a “round hole” attempting to make your non-detail-oriented clients into organized paper-pushers.

With Deductr’s automated features, your business clients will get the benefit of properly organized records at the end of the year without having to be a tax or accounting expert. Features like “Bank-link”, email, and mobile apps prompt the user when action is needed. Mobile access makes the process simple and convenient. Independent business owners will never have more fun doing something they hate. And they will love getting more deductions than ever before.

I’ve prepared many returns and I know how valuable a client is. So I’ve tried to find ways to retain as many of these clients as I could. Deductr provides a reason to stay in touch with a business client. This can be through training or communicating about features in the tool or other reasons. The word I use is “stickiness”. Deductr helps a tax professional stick with their clients through the whole year and not just at tax time.

RG: One of the big obstacles for a tool like this is getting people to actually use it. How would a tax professional convince his/her customers to use this?

Blue Bar Graph
WO: Most people have no idea what their deductions are until the year is over, we let alone the tax savings their business gets because of those deductions. If they could see an estimated tax savings indicator in real-time as they go, that instant feedback becomes a powerful validation of the value of their efforts.

We call it the “Blue Bar” graph. It compares the average monthly tax savings to a fixed cost or recurring expense they want to compare against. For example, if a real estate agent wants to make sure he is at least covering the cost of his MLS dues and his cell phone every month with his tax savings, he can put those costs in as the “Gold Bar” and see how they compare with his average monthly tax savings. It becomes a game as they track their mileage and all their business expenses to see where they stand at any given time. Combined with the ease of using the system, the motivation to keep using it does not need to come from their tax accountant.

RG: How does Deductr compare to Quickbooks? Are they complimentary or competitive products?

WO: Deductr was designed for the small independent business owner to be a simple-to-use replacement in lieu of a complicated double-entry accounting system. However, Deductr is unique in that it can be used in other ways depending on the needs of the client. For example, the year-end report from Deductr can be treated as a “cash disbursements” journal to track the mileage driven and the expenses incurred from one or more particular business cards used by the owner. Because of the bank-link automation, a secretary can log in and confirm the expenses that come in from those cards.

Two or more partners in a partnership can use one Deductr account to track everything and each partner can have their own mobile access into the account. Or, a larger partnership can use a unique Deductr account for each partner to track his or her individual partner expenses. Since that can include a home office for the partner, Deductr is the perfect tool!

As a tax preparer with TaxWorks, you can sign up for a 30-day free trial of Deductr before becoming an affiliate just to see how Deductr works. It was designed to be easy for your clients with no high-level functions such as entering debits and credits or reconciling a bank account. But the information you get as a tax preparer…beats a shoebox of receipts!

RG: How can a tax professional make money by offering Deductr to their business clients?

WO: Some say that in a financial services profession, it takes a minimum of 5 “value adding” touch points a year with a client to consider them a legitimate “client”. If that’s true, then Deductr provides ample opportunity during the off-season months to have increased value-added interaction with your clients. That will translate to increased revenue to your practice.

What you do with your share of the revenue generated from the Deductr subscription is up to you. Some tax preparers will offer to assist their business customers in setting up Deductr and consider the rev share offsetting payroll to cover the time. Some will offer a discount at tax time for those clients who use Deductr, thus giving back the revenue share after the client has stayed through the year. Some may even pay for Deductr themselves then bill the client an amount that makes sense for them. A profit would be justified if Deductr is part of a new level of service that includes training or regular “follow-up” sessions to increase those value adding touch points all year long.

RG: What are some of the key areas that Deductr helps a business owner track?

WO: Deductr tracks three things: 1) Expenses, 2) Mileage and 3) Time. Whether it’s a check, credit card, cash expenditure or even an income deposit, all financial transactions can be tracked in Deductr.

Mileage and ending odometer readings can also be tracked and the value of the standard mileage rate is shown for each mileage log. Deductr has a very unique feature when it comes to vehicle deduction tracking. If a client tracks all of their actual automobile expenses in addition to the mileage (which is technically required for both methods anyway), the estimated vehicle deduction report will calculate both the actual deduction as well as the standard mileage deduction and will use the greater of the two for the estimated tax savings calculation.

Time can be tracked in Deductr as a supplemental log to demonstrate that regular and consistent activity was devoted to the business. If an event is added to the calendar in the future, when it becomes a past event, just through the passage of time, it will show up in the “events to confirm” section of the home tab or the mobile app. When a client confirms that they actually had the appointment that was scheduled, they can add expenses or mileage at the same time and capture even more deductions that they otherwise would likely miss.

RG: Can Deductr help if a customer is audited?

WO: Yes. Deductr is a taxpayer’s best friend in an audit. Even transactions and logs for past years can be added in Deductr through the manual entry window and reports and logs will print for those prior years.

RG: Is the Deductr app available for all smart phone formats?

A: Deductr has a free downloadable app for both iPhone and Android and multiple phone apps can access the same deduct account. Deductr is an online application accessible through a web browser with full functionality including access to all reporting functions. The mobile apps are just a way to have all the features one would want “on the go”. Deductr has the latest HTML5 functionality so it is fully compatible on an iPad as well.

RG: Why not sign-up as an affiliate directly with Deductr? What is the advantage of signing up through TaxWorks?

A: Although anyone can sign-up as an affiliate directly with Deductr, there is a one-time fee for the set-up. As a customer of TaxWorks, the set-up fee is waived. Even if a tax professional is not a TaxWorks customer, it would be less expensive to sign-up through TaxWorks as the set-up fee is reduced to $395.

Combined with the discount a tax professional can offer their business clients and the revenue share, the TaxWorks/Deductr Taxpayer Affiliate Program makes a lot of sense.

RG: What about support? Would a tax professional turn to TaxWorks for support or to Deductr?

WO: Deductr supports all customers directly. Even though a tax professional signs up to become an affiliate through TaxWorks, all technical support is provided by Deductr through their toll free number and email.

For more information about Deductr and answers to other tax questions inquire at www.taxworks.com