Mike McKay
December 27, 2024
Nick Hammernik, CEO of Hammernik and Associates, shares insights into his journey at the family-owned tax and accounting firm. Initially drawn to marketing, Nick joined the business in various roles, eventually earning his enrolled agent license and embracing a leadership position. After about ten years in the firm, Nick took on the CEO role, working through generational differences with his father while implementing new ideas. The firm focuses on small business owners in Milwaukee and Waukesha counties, providing services like tax planning, advisory, and personalized tax reduction strategies that help businesses save money and plan for long-term success.
In the conversation, Nick highlights the importance of cash flow management and tax planning, especially in a changing industry where many accountants focus only on compliance rather than proactive strategies. He emphasizes that tax reduction strategies must be tailored to each client, considering factors like business goals, entity structure, and tax laws. Looking ahead, Nick is focused on expanding advisory services and helping small businesses thrive by providing not just tax planning but also financial consulting and alternative business loans. His firm’s vision is to empower small business owners to achieve their goals while continuing to refine their services to meet evolving needs.
Podcast Transcript:
Mike McKay: I’m here with Nick Hammernik, the CEO of Hammernik and Associates, a second-generation tax and accounting firm started by his father, Dale. Nick is a big Wisconsin sports fan—except for his choice of college team, the Marquette Golden Eagles, instead of the Badgers. We’ll forgive him for that. Fun fact: Nick’s firm saved business owners $250,000 in taxes just this tax season alone. Good morning, Nick.
Nick Hammernik: Good morning! How’s it going, Mike?
Mike: I’m doing great. How about you?
Nick: It’s Friday, so I’m looking forward to the weekend, and excited to chat with you today.
Mike: Thanks for joining us. Let’s dive right in. Can you tell us a little about your background—where you’re from and where you live now?
Nick: I grew up in the Milwaukee area, in New Berlin. I went to college at Whitewater and now live in Greenfield, where our business is located. So, I’ve always been in the general Waukesha County area. As for how I got into this industry, it’s an interesting story. My dad started the business the year I was born—almost 38 years ago. So, naturally, you’d think I’d follow in his footsteps, but I was actually more interested in marketing in high school. I went to school to study marketing at Whitewater. After graduating, I did a few sales and marketing jobs, but eventually, I stepped into the business. I started doing front desk work—answering phones, filing paperwork—and then eventually moved into tax preparation. Over time, I got my enrolled agent license with the IRS, which is the highest designation for a tax professional. I’ve been able to combine my marketing background with the tax side of things to help grow the business, and it’s given me a well-rounded view of the company.
Mike: When did you take on the CEO role, and how did you and your dad decide it was time for you to take over?
Nick: It was a gradual process over the past three years. After working here for about 10 years, it became clear that this was the next step, as long as I wanted it. There were times when there was a bit of conflicting viewpoints, as I had different ideas about the business compared to my dad, who was used to doing things a certain way. But we worked through it. I showed him how my vision could work, and he’s still actively involved in the business. He doesn’t plan on retiring immediately, but he’s happy to let me implement new ideas moving forward.
Mike: That’s a big step, and it’s not easy. Many businesses don’t make it through that transition because they can’t overcome those differences.
Nick: Right. We’ve always made it a point to keep work separate from our personal relationship. That’s been key for us.
Mike: Tell us more about Hammernik and Associates. What’s your target market, and what do you specialize in?
Nick: We’ve always focused on working with small business owners, especially in Milwaukee and Waukesha counties. With advances in technology, we’ve expanded our reach over time. We’ve also been doing more individual tax prep during tax season. Recently, we’ve transitioned to offering advisory services for business owners, particularly tax reduction planning. We’ve found that this is where we can provide the most value to our clients.
Mike: Can you share a few examples of what tax advisory actually means? A lot of people don’t understand it, and the term can be vague.
Nick: Yes, tax planning or tax advisory can mean different things depending on who you ask. In a traditional accounting firm, it might just involve projecting your taxes for the year and advising you to defer money or increase expenses by buying equipment or a truck. But our approach is more in-depth. We conduct a full discovery process to understand the client’s current situation—not just what their tax returns or financial statements tell us, but also their personal financial goals. We want to know how long they plan to run the business, if they have an exit plan, and if they expect growth. All of this information helps us create a customized tax plan.
We also look at things like entity structure—whether it’s set up to minimize taxes and meet cash flow needs. From there, we explore high-level tax strategies that can be specific to certain industries or tax brackets. Sometimes, we shift income from one entity to another to reduce overall taxes. These strategies can change year to year based on both internal and external factors, like new tax laws. The best part is that tax planning is flexible. Once we set up a plan, we constantly review it throughout the year and make adjustments as needed before the end of the year to ensure it’s still effective.
Mike: Two things stand out to me. First, you’re looking at the bigger picture with cash flow management, which is often overlooked. And second, you’re transparent about the realities of taxes. Many accountants will suggest saving a few thousand dollars in taxes but fail to mention that buying unnecessary equipment or a truck might not be worth it. You’re the first CPA I’ve heard openly say that spending $10,000 on equipment to save $3,000 in taxes isn’t a good deal. You really emphasize the importance of cash flow—because, at the end of the day, a truck won’t help if you don’t have the cash to cover payroll.
Nick: Yeah, there’s definitely a connection. The main reason we’re creating a tax reduction strategy for business owners is to free up cash that would otherwise go to the IRS or state taxes. But it’s important to remember that while buying things can be helpful if it leads to more profit, I’ve seen cases where people just buy things for the sake of getting a tax break. Also, if you’re not in a high tax bracket, the savings are minimal. For example, if you’re in a 12% tax bracket, you’re only saving 12 cents on every dollar spent, which doesn’t make a significant difference. That’s why it’s more effective for higher-income earners, where taxes could be as high as 40%. In that case, any strategy we implement is saving you taxes at that higher rate.
Mike: Yeah, I want to highlight something important for those listening: your starter accountant might not be the one you need forever. As your business grows, your needs change, and your CPA should be offering different advice. I once saw a guy pull up in an $80,000 truck, one year old, and he said his accountant advised him to buy it for the tax break. But that deal didn’t work out in his favor at all. So, Nick, tell me, when did someone push you to realize you could be the CEO? Was there a particular moment or decision that led to that?
Nick: I wouldn’t say there was one specific moment. Growing up, I had leadership experience—like when I coached high school baseball in college. That helped me build leadership skills. A lot of it was just learning by reading books, seeking advice from others, and understanding their mistakes. Conversations with my dad were crucial too, making sure this was what I really wanted to do. Over time, I started to experience what being a CEO would look like and decided what parts of the role I wanted to take on. The biggest lesson I learned is that you can’t do everything yourself. You need to delegate. If you take on too many responsibilities, you can’t put 100% effort into everything. But when you focus on specific areas, you can give them your full effort and produce the best results.
Mike: What’s been the biggest challenge you’ve faced in your career so far?
Nick: For us, it’s very industry-specific. Right now, the demand for individual tax services is high, and many accounting firm owners are retiring without successors, or they’re selling to larger firms. That creates a big need in our industry. We must manage our workload carefully to provide the high-quality service we want. Finding the right people for the job is also tough. Many accounting graduates go into audit roles at bigger firms, so they miss out on the tax planning side. Tax planning requires ongoing education and time, which many firms don’t invest in. That’s why it’s harder to find people who are truly skilled in it. It’s a common issue across many industries—business owners often struggle to find the right talent. But the industry is changing, and the real challenge is whether you want to adapt or keep doing things the old way. Compliance work is important, but it only reports what’s already happened. With advisory services, we can proactively help clients shape their financial future.
Mike: I agree. People’s growth and talent are key. Every industry faces it, and the ones winning are also winning the culture game. You have to ask yourself, “Who do you want to work for you?” and “How consistently do you apply your values?” Some companies complain about hiring challenges but then mistreat their employees. Their attitude shapes their outcomes.
Nick: Right. I agree.
Mike: What’s the next big move for Hammernik and Associates in the next one to three years? What’s your vision?
Nick: We’re really focusing on expanding our advisory services. Our main focus has always been small businesses, and I believe they’re vital to the community. We are a small business ourselves, so we understand what owners need. Many small business owners want to live their dream and be their own boss, so we aim to help them succeed. We provide tax planning and financial consulting services, helping clients with cash flow analysis, trend analysis, and more. We’re also offering alternative business loans when banks are reluctant to approve loans, which helps businesses invest in marketing, hire new employees, and purchase equipment. Ultimately, we’re refining our services and dedicating resources to ensure business owners achieve their goals.
Mike: Yeah, we’re definitely aligned on that. We believe that only small businesses truly care about the communities they live in. I want my family to have a thriving place to live, so if we’re not investing in and supporting small businesses, then it feels like I’m on the wrong side. I used to be part of a big business, and we closed factories in small towns all the time.
So, one last question for you, and this one’s not on the list: What do you wish I would have asked you that I didn’t?
Nick: That’s a good question. Let me think for a second.
Mike: I mean, if I did a perfect job, that’s okay too!
Nick: You just caught me off guard a little.
Actually, there’s a question you had emailed about but we didn’t touch on, and I think it’s a good one. It’s advice for leaders who are trying to do it all themselves. I mentioned this earlier when I talked about wearing too many hats. The biggest thing I’ve learned—not just in this industry but in life—is that sometimes you need to value your time more. We talked about this when we had lunch, but sometimes it’s better to find someone who’s an expert in an area, pay them to do it, and use your time for what you’re best at.
So, delegating tasks to people who have more experience in a certain area, or outsourcing to someone who knows how to handle it better, can be huge. Especially in our industry, time is one of our most valuable resources because that’s what we invest in our services. We need to make sure we’re using our time in the best way possible.
It’s never a bad thing to ask for help or admit that you need to let go of control in certain areas. If something is affecting your ability to focus on what you’re best at, you need to be okay with passing it off.
For small business owners, especially when starting out, it feels like you have to do everything. You’re producing the service your business provides, handling marketing, sales, finances, customer service, managing employees—you’re essentially doing the work of five or six people. It’s draining and stressful, and it makes it harder to thrive.
So, the key is to figure out what you truly enjoy and what you’re best at, then invest all your time and resources into excelling at that. For the other tasks, find someone who can handle them for you.
Mike: I don’t remember where I read this, but there was a story that described it like this: if you’re a small business owner wearing all the hats, it’s like you’re playing soccer against an entire team by yourself—you’re getting your butt kicked, and you don’t even realize how bad it is. And yet, you think it’s a good idea to play that way.
Nick: Yeah, exactly. In most businesses, especially in our industry, that’s how it’s always been. But I think a newer mindset is emerging, saying you don’t have to be good at everything to run a successful business. Most people can’t do it all, so you need to step back in certain areas and find someone else who’s better at it.
You need to take some time to write down and ask yourself: What do I want to be doing long-term? What am I good at and enjoy doing? Once you know that, focus on those areas, and find other ways to handle the rest.
Mike: Yeah, the thing that scares most people the most is that the first thing they should outsource is managing their email and calendar. A lot of senior business leaders are still stuck writing their own emails, and they say things like, “I’ve got to get back to everyone in ten minutes!” Well, now they’re just living in the “mail room” of their company, so to speak. They’re glued to their computer, and they’ve lost all the fun parts of the job.
Nick: Yeah, over the past couple of years, I’ve set up a system where I only check email two or three times a day. If you’re answering emails constantly, you’re not being productive. It interrupts what you’re working on, and it sets the expectation that you’ll reply immediately every time someone contacts you, which is not always possible—or even necessary. So, setting expectations and boundaries is crucial to working effectively and maintaining a balance.
Mike: My goal is to never open my email again. I want to have a virtual assistant screen it for me and only tell me if something really needs my attention. Family and close clients have my cell number, so they can text me directly. I was talking about guarantees last weekend, and I told them, “Here’s my guarantee to you: text me if there’s a problem, and I’ll get back to you by the end of the day, unless I think you can solve it on your own, in which case I’ll just ignore you.” They were like, “What?” And I said, “Look, my job is to help you be successful, not to do your push-ups for you.”
Nick: It’s great because you’re being transparent about it. You told them upfront what to expect, so they can’t be mad about it.
Mike: Exactly. Plus, it helps them grow their confidence, knowing that I believe they can handle it on their own.
Alright, Nick, I appreciate your time today. If you’re unhappy with your CPA, give Nick Hammernik of Hammernik and Associates a call. He might be able to help you out. Have a great weekend, and go Badgers!
Nick: Thanks, Mike. I appreciate it.