Career change comes 30 years later
Grocer Turns CPA

How many CPAs can say their career began in the produce department of a grocery store? You can count Stephen McFadden of Santa Paula, California, as one.
“I have always liked numbers,” McFadden says, “and one of the ways you were evaluated in the retail industry was by how much money you made for the company. I was a produce manager for a grocery chain, and I had poor results in the first period where I took inventory. The numbers didn’t make sense to me because I had done all the things I was supposed to do. So, I got a copy of the prior extended inventory and a copy of my current inventory, and what had occurred was that the prior period was overstated by $5,000 and my current inventory was understated by $2,000, a shift of $7,000. I was in my 40s, but decided it was time to go back to school and study accounting so that I could learn more about analyzing numbers to help run a successful business.”
McFadden became so accomplished that when the company had seasonal meetings for produce managers, he would be called upon to explain calculating gross profit, understanding weekly financials and how to post good monthly numbers.
He also got along well with people, a desirable trait in the retail industry. This quality would serve him well when he bought his first accounting practice in 2003.

Reality replaces dreams
McFadden’s boyhood dream was to be a high school math teacher, cross country and track coach and adviser to the chess team. He enrolled in the University of California Berkeley, and worked part time in a grocery store to pay for his education. He married his wife, Margo, in his junior year and was offered a full-time job as a produce department manager with an annual salary of $16,000.
“This was the 1960s,” McFadden said. “Teachers were making half that salary and my decision to take the job seemed easy.”
He worked in the grocery industry for 30 years, working six days a week, going to school and raising two children with Margo. He also worked part time for an accountant, and near the end of his produce career received a degree in business, with an emphasis in accounting.
“I was 54 years old when I retired from the market,” McFadden said. “Part of the reason for getting a degree was to have another career. Thirty years in the retail food industry is hard physically.”
Margo was a bookkeeper and later a legal secretary. A CPA rented space at the law firm where she worked, and he hired McFadden part time after he graduated. Once he passed the CPA exam, McFadden worked full time for that firm for three years, always keeping an eye open for a practice he could buy.
In 2003 he found a firm about two hours north of downtown Los Angeles, in Santa Paula. It was owned by an accountant ready to retire. There were two old computers, and most of the work was completed on manual ledgers.
“I saw this as a wonderful opportunity,” McFadden said. “All I had to do was bring the practice into the 20th century. I knew I could give clients more personal service, so the next step was to talk with these customers about the changes I had in mind and find out if they had other additional needs I could meet. I also wanted to be more proactive, trying to help them grow their businesses.”
Today McFadden’s practice serves more than 400 clients, with business clients whose revenues range from $100,000 to $6 million. He prepares individual, corporate, fiduciary, non-profit and gift tax returns using Drake. He also represents clients for income, sales and employment tax audits. In addition, McFadden provides accounting/review services, live payroll and management advisory services to his business clients. McFadden obtains additional tax and accounting clients through referrals from banks, stock brokers and attorneys.
Margo comes to the office one day a week and otherwise works from home. The firm has a receptionist and two part-time employees during tax season.

Sold on Drake’s service
McFadden began using Drake Software products in 2004 when the other software company he used began to charge him a variety of fees.
“What I get for $1,000 with Drake, would cost me $15,000 with another company,” he says. “That’s why I use Drake products for all income tax preparation, whether it’s for fiduciaries, non-profits, homeowners’ associations, corporations, S corporations, individuals or partnerships.”
 He adds, “Their customer service and help desk are excellent. It’s superior to the other firm I was using. I’ve made suggestions, and Drake has implemented them. I’m really impressed with their desire to help the end user. If I have a problem with a return that they can’t solve immediately, I e-mail Drake the return. They’ll review it and tell me what needs to be done. That is absolutely phenomenal.”
McFadden has clients in eight states, and Drake products allow him to process a return and send it as a PDF or facsimile.
“I have a client who calls me every January 20 and needs her return right away because she has to fill out a scholarship application,” he explains. “She e-mails me her information, I prepare the return and send it back to her and then she signs the authorization to e-file. It’s all done in 20 minutes. I don’t even know what the client looks like; I just speak to her every year on January 20. It’s just unbelievable that I’m able to do that.”
“I can e-file my clients’ returns through Drake for no additional fee,” he said. “Other companies charge a per-use or a blanket charge. I chose Drake because there was real value to that service.”
McFadden relates another story about Drake’s commitment to service: “At the end of last year’s tax season, I was double checking to make sure all of the e-files I had done were properly accepted. The day before the last filing day, I got a call from Drake. They told me I still had three returns that had not been accepted. What other firm would do something like that? I don’t know of any.”

Community service
McFadden reaches out to the community of Santa Paula whenever he can. He is vice chairman of finance for the chamber of commerce, completes audits for the Rotary Club and is active in the Boys and Girls Clubs. He is also involved in a financial literacy program.
“I go to the local high school and present classes to juniors and seniors on learning the value of money — what it costs to borrow or use a credit card, and the difference between wants and needs. The community has been good to us, and I feel it’s important to give something back.”

From February 2008

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