First, before I jump off into my blog post, I would like to welcome you to this site and this blog. I hope to use this tool to discuss the latest accounting, tax, and personal finance developments so that you, the reader, can learn from me (regardless if you are client of mine or not) and that through your comments, I can learn from you. As an intro, Joshua Lance CPA, LLC exists to provide innovative accounting solutions to innovative companies and individuals. As such, most of my blog posts will not just be “here is the latest tax credit you can take advantage of,” rather, it will be used to look at innovations in accounting practices, innovations in tax laws, companies doing innovative things and some innovative personal finance tips thrown in for good measure. With that being said, here we go!
So if you have paid attention to the stock market in the past six months, you may have heard of the meteoric rise in the stock price of Tesla. Tesla is a car company that solely makes electric cars and electric car components. Tesla has been around for a couple of years, but it is recently that Tesla has been in the news because 1. Tesla’s production and profitability have ramped up faster than expected 2. Tesla Model S received the highest rating EVER by Consumer Reports 3. Tesla is leading other car manufacturers to change and focus on electric. While points 1 and 2 are definitely important in Tesla gaining a foothold and a surging stock price, point 3 is why Tesla is on the leading edge of innovation.
Tesla is not the first car company to focus on electric cars, however, Tesla is the first car company to make an electric car that people want to drive and provide the mechanisms to make sure you can drive an electric car where you want to go through their supercharger network. And it is because of these innovations (among many—see the tiffs the state dealership associations have with Tesla’s direct sales method) that the produce the change in the auto industry towards focusing on electric cars. Case in point, see the news that GM has created a task force to study Tesla. Here is another car company basically stating Tesla is leading the charge with electric cars and we need to study them so we don’t completely get left in their dust. And then there was this nugget from the Green Parking Council (who conveniently ignores talking about Tesla) regarding BMW’s entry into electric cars in an article titled “Innovation Drives Change.” In my opinion it is Tesla’s innovations driving BMW to change by getting them into the electric car market.
So with that being said, what does innovation have to do with accounting? Isn’t accounting essentially unchanged since Luca Pacioli invented double entry accounting? Well yes and no. Similar to the car industry where cars still all essentially have four wheels and an engine and gets you where you need to go, the basics mechanisms of accounting have remained the same. However, similar to what Tesla is doing with electric cars, there are innovations occurring in the accounting industry that are causing a change to how companies interact with their accounting systems. In some upcoming blog posts, I hope to discuss further these innovations that are causing change in the accounting industry and how that impacts you.