Ryan Morris, Partner, Sheppard Morris CPA
Ryan Morris, partner at Sheppard Morris CPA, spoke with Invest: about the firm’s specialties and natural approach to growth. He also touched on the growing demand for accountants in today’s business landscape, and the essential role of AI and related technologies in the accounting field.
How is Sheppard Morris supporting businesses?
I am an accountant and a small and middle-market consultant for businesses looking for accounting systems, tax planning, and tax compliance. We try to get boomer businesses off their legacy systems and optimize their accounting information system so they can have dashboard reporting and be able to sell their business to private equity companies. We have more of a transactional focus and do transactional advisor work for mom-and-pop companies that can sell for $25 million to $30 million. We take businesses that have been operating on legacy systems and are less automated, and we help them integrate modern accounting systems and link it to their CRMs, so business owners can sell their businesses and start to
have a level of reporting and understanding of their businesses. If you look at CPA statistics, there’s a declining trend of people majoring in accounting, resulting in a shortage of accountants. We are all United States domestic workers. We don’t outsource because we think that market is dying to AI. There’s a lot for business owners who want to move quickly, and there’s a lot of demand for accountants but not a good supply, which leaves us in a good position.
What have been the most significant achievements for Sheppard Morris over the past year?
Revenue was very strong. Jeff [Sheppard] had a legacy firm, and we worked together on many different projects before partnering up and growing this firm. We built it up from the bottom. He had really good clients but never advertised to take on new clients. Over the last year, we’ve taken a completely different position in the market, which is supporting more charities and taking more partnership positions. Many of our clients have migrated to Miami Beach and brought new wealth, looking for homes and sending their kids to private school. The private schools don’t have the capacity for these kids, and people have these good tech companies saying the talent isn’t there for the people to hire, and the transit is lacking. Other than those things, Miami is the best.
What broader trends are you seeing related to the tax environment?
Many of our clients are in real estate and privately held family businesses. The constant changing of the tax code makes it difficult for businesses. With the new administration coming in, existing tax cuts passed in 2017 will be extended. We think we’re going to see a 21% seaport break coming down to 15% for U.S. seaports and corporations that produce domestically. Opportunity zones are the big question mark. We’re bullish on the opportunity zone program and think it will get larger, and the benefits are going to get bigger. That policy incentivizes developers looking to spend $60-70 million per acre on Miami Beach to not get a tax benefit and do it in Overtown or Hub Design Centers. We’ve been advising clients to look in those areas because we think the opportunity zone funds will come online. You don’t have to pay tax now, as long as you take the money you made and invest in areas that are struggling.
What key challenges is Sheppard Morris facing?
Integrating AI and hiring the right people are the biggest challenges. Finding the right accountants who want to be in the office five days a week is difficult. It’s difficult to train people online, and we like in-person work. Hiring accountants looking for remote work is a huge challenge. In terms of compliance, our clients always have different issues. The constant themes in real estate are insurance, interest rates, what the banks want, and cap rates.
There’s a host of different things. I get different questions every day from different industries on different tax matters.
Still focusing on the past year, where have you seen the greatest demand across the different industries that you serve?
In the real estate industry, the smart managers of assets are taking advantage of suburban offices in South Florida. Suburban office is a firesale because nobody wants to work in the
office, and on top of that, suburban offices don’t have the amenities most well-off people want, such as cold plunge or a sauna. In these prime suburban markets where the office is decayed and people are willing to sell it, they’re willing to gut it and turn it into a Class-A suburban office. They have the demand for it because people don’t want to commute to the cities, and companies still want offices. When it comes to AI, it’s trying to figure out how to integrate AI into your business. You have to integrate that, and if you don’t you’re going to fall behind.
How is Sheppard Morris staying ahead in terms of AI?
We use AI in everything we do. It’s evolved into a versatile tool. The biggest concern we have is client sensitivity with information. Once we establish we are safeguarding a client’s information, we are able to upload PDFs and previous documents that have been reviewed and prepared, and we can have AI update certain information on those documents. We can streamline many other processes this way. Only about 20-30% of accountants are using it like that, but the data center power supply is going to need to be there for when 100% of people come online and start using AI. The computing power is extremely strenuous on utility plants. Unless they start enhancing the amount of power, all the AI is only as good as what the supply is going to be.
From your perspective, what is the outlook for growth in the CPA industry over the next few years?
It’s booming. Accounting is fundamentally important to so many systems. There’s a shortage of accountants and a huge demand for qualified advisors who know U.S. income tax.
What are your top priorities and goals for growth?
We’re big about slow growth. We want the right talent and the right clients. The wrong client can cost you a lot of money. Our focus is on making the right partnerships with the right people in the community and adding capacity in the right way. That’s the advantage of having a smaller practice. Many people want to use us, but we’re able to be careful with our time. It creates good problems to have, such as hiring and getting bigger offices. We love what we do. We’re passionate about it, and the biggest thing is to continue to be happy and growing while being happy.
