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Business Trends

I Use QuickBooks – Do I also Need an Accountant?

I Use QuickBooks – Do I also Need an Accountant?

The traditional role of an accountant is changing. In previous years a small business would class a good accountant as one of the fundamental requirements when starting a business. Their support and guidance towards all matters connected with the set up and launch of a business was perceived as essential in order for a small business to be ultimately successful. The perceived importance of the role accountant’s play with small business has been increasingly bought into question as the internet has grown and developed. The advice that accountants used to charge for regarding company formation, company structure and VAT registration is now largely available for free on the internet. Furthermore, the rise in online accounting software has made it easier than ever for a small business to keep their company books in good shape. We wanted to explore why more and more small businesses are choosing to use online accounting software and how this has impacted the traditional role of the accountant.

Why are business owners using online accounting software?

  • Cost – When the accounting and bookkeeping world was inaccessible to owners of small business the large cost burden of having a professional accountant was seen as simply a core running cost of the business. The cost structures of accountants differ widely from per hour, fixed fees for defined work and some even charge by the minute for telephone calls. Whatever the cost structure having an accountant look after all of you small business financial affairs will be a significant burden to your cost and business profits. Basic software for accounting can be available from as little as $50 a month.
  •  Time Schedules – A piece of software can continue working 24 hours a day whereas an accountant has set schedules and opening times. As a small business you will very rarely be working to a 9-5 schedule and therefore having the rigid nature of accountant opening hours can be frustrating. Even more so if a deadline is required that requires an accountants help and you are charged overtime for an accountant working out of hours.
  • Ease of use – Software for accounting has become very user friendly with many products available that do not require the user to have any accounting knowledge at all. This allows tradesman and sole traders to be able to easily to control of their financial affairs.
  • Improved business Performance – There can be real business performance advantages of taking control of the company finances as opposed to outsourcing them.
  • Accountability – An obvious advantage of taking control of you financial affair is that there becomes greater accountability to deliver. Software for accounting allows small business owners to be much closer to the financial affairs than when they are outsourced.
  •  Collaboration – one of the risks out outsourcing all financial management to an accountant is that it stifles people from within the business talking and engaging about disciplined financial management. Taking control of financial affairs internally within the business increases engagement and collaboration across the business to improve the company’s financial performance.

If more businesses are using online accounting software is there a role for traditional accountant?

In short, yes, but in a different capacity to how they have traditionally been deployed. Accountants need to focus less on the bookkeeping and daily accounting of small businesses and focus more on the provision of advice that optimizes business performance. Subject Matter Experts (SME’s) are becoming well versed in the many advantages that exist within doing your own accounting via an easy to use, cost effective software package. That said, many small business owners still have a requirement to discuss future business optimization with a financial planning expert.

Software cannot possibly understand a business’s objectives and work with the owners to produce a strategy to optimize performance. Nor can a software package proactively restructure the company books to save tax as the company grows and develops. Once a small business is established they would benefit from advice from an ‘auditor’ regarding business structures, financial efficiency and tax planning. This annual audit ensures that the business is on the right track for sustainable growth and success.

Software allows small business to complete their day to day accounting enabling the owners to stay close to their financial affairs at a fraction of the price of an accountant. However, a good accountant can engage with the owner about optimizing the business to ensure that the right plan for growth exists. This type of engagement with an accountant can be done as a cost effective fixed fee arrangement which can be easily planned and budgeted for within the company accounts. The answer to whether a small business should have an accountant or accounting software is – they should have both but deployed for different purposes.

Good Practices for Choosing an Accountant

Here are some tips for avoiding common pitfalls and needless headaches in your search for a small business accountant:

  • Determine your needs

    There is no one-size-fits-all method for managing small business finances. Make sure that your accountant specializes in small businesses, and ideally has knowledge of your industry.  Beyond that, you will need to decide what level of support is appropriate and affordable for your business. Enrolled agents, certified public accountants, and tax attorneys bring different skills and charge different rates.

  • Just ask!

    Word of mouth is a good way to find good accountants. Talk to your family, friends, peers, even your attorney for recommendations. You can also inquire with institutions and organizations like the American Institute of Certified Public Accountants*, your state Board of Accountants, or a local Chamber of Commerce.

  • Interview your candidates
    Remember that you are hiring someone that will fulfill your business needs and requirements. Treat it like a job interview that you would give to any potential employee. Ask about:
  • Professional qualifications like their licenses and experience
  • Personnel who will actually do the work, and their response times
  • Fees and charges to make sure they are in line with your budget
  • Specialized services that you may want in the future – for example, audit support
  • Clientele (past and current) so you can gauge their expertise

 

Categories
Tax

Small Business CPA Warns of IRS SWAT Teams for Tax Dodgers

Small Business CPA Warns of IRS SWAT Teams for Tax Dodgers

Small Business CPA Gustavo A Viera warns Tax Dodgers that the Internal Revenue Service is staffing up with high-powered talent to crack down on companies shifting profits from country to country to lower their tax bills, a hot strategy the agency has targeted before with only limited success.

Small Business CPA Viera points out the IRS showed its elevated concern on the issue, known as “transfer pricing,” last May by hiring Samuel Maruca to fill the newly created post of transfer pricing director.

He has since brought aboard specialists from Big Four audit firms KPMG and Ernst & Young, as well as law firm Mayer Brown and boutique consultancy Horst Frisch, Small Business CPA Viera adds.

Maruca, who came from law firm Covington & Burling, is still recruiting. He told Reuters the agency previously had “had a difficult time attracting and retaining economists.”

Now, he said, the IRS’s international group “has significant external hiring authority.”

Small Business CPA VieraCPA points out that transfer pricing is a booming field of global tax law. It involves multinational corporations that are constantly moving goods, services and assets from one subsidiary to another in different countries, and how they account for these “transfers.”

Small Business CPA Viera points out that by carefully manipulating the pricing of such moves, companies can effectively shift profits to low-tax countries from high-tax ones, lowering their overall tax costs.

Many governments in the developing and developed world, faced with crushing deficits, are working to curb transfer pricing because it reduces their corporate tax revenues.

IRS Commissioner Doug Shulman made changes at the agency in mid-2010 that set the stage for bringing in Maruca, who has filled 40 positions so far and plans to bring on up to 60 more staffers.

The IRS, which employs 90,000 people, saw its budget cut by 2.5 percent by Congress for fiscal 2012 to $11.8 billion.

Small Business CPA Underpaid and Out-gunned

Federal agencies often struggle to keep up with higher-paid private-sector professional Small Business CPA. The IRS is no exception, and there is some skepticism about Maruca’s chances.

“The economic crisis allowed the IRS to attract talented, experienced industry professionals who might not have been available previously,” said ex-deputy IRS commissioner Michael Dolan, now director of KPMG’s Washington national tax practice.

“The $64,000 question is, what will Maruca be able to do … and will he really have enough resources to change the game?” Dolan said.

Small Business CPA VieraCPA notes that in order to curtail tax avoidance through transfer pricing, governments seek to limit corporations’ ability to manipulate the transfer prices. National laws, though variable from country to country, generally call for “arms-length” pricing.

Small Business CPA Viera says in theory, that means corporations must set transfer prices that are at or near market level, not artificially raised or lowered. But enforcement is complex, especially for intangible assets, such as search-engine algorithms or trademarks.

“There are billion-dollar disputes on just the arms-length transfer pricing of intangibles” said Small Business CPA Viera.

IRS Lags

By one measure of transfer pricing enforcement, the IRS lags behind tax treaty partners. In fiscal 2011, 85 percent of transfer pricing audit adjustments were initiated by a foreign country, rather than by the IRS, according to IRS statistics. That was up from 77 percent in fiscal 2010.

Two major transfer pricing court decisions went against the IRS in 2009 and 2010.

“Clearly, the IRS is trying to figure out what to do next on its litigation strategy in these important transfer pricing cases,” said Viera, a managing partner of a Small Business CPA in Miami who called Maruca’s group a “SWAT team.”

As the IRS raises its game, the pharmaceutical and high-tech sectors can expect close scrutiny, Small Business CPA professionals said.

Businesses are sure to fight back. The IRS has ruffled feathers on transfer pricing before with limited results.

“Anybody who thinks the IRS can ultimately enforce transfer pricing is either an eternal optimist or delusional,” said Richard Harvey, a tax professor at Villanova University and former senior adviser to the IRS’s Shulman.

The staff changes and hiring at IRS “will help them on the margins,” Harvey said. “But they’re still fighting a very difficult battle where the deck is stacked against them.”

Categories
Business Trends

Small Business CPA

Small Business CPA Gustavo A Viera provides accounting services for small businesses and individual alike

Categories
Business Trends

The evolving face of Small Business CPAs in business

It doesn’t seem that long ago that most accounting graduates followed a similar path – entering Small Business CPAs Firms upon graduation (with the majority aiming for a Big Three and preparing to take the CPA exam in the spring or fall. But after changes in the experience requirement and the launch of the electronic CPA exam, the road traveled now goes in many different directions.

In a session at OS Small Business CPAs Members Summit in June, Bill Chorba, CPA, CGMA, CFO at NineSigma, led an industry panel discussion that focused on long-range strategies.

“I think this will be the new norm,” said Jennifer Fallows, CPA, CFO for Moskal Gross Orchosky Inc., as she discussed the continuing growth of Small Business CPAs working in business and industry. However, Fallows also points out that the opportunities are not without challenges.

“There is so much that you need to know that falls outside of your core competencies,” Fallows said. “You are the Small Business CPAs. You are the professional. Your employers will turn to you with questions and concerns that range from IT to human resources to marketing. You have to wear multiple hats. Small Business CPAs with communication, collaboration and leadership skills will definitely be at an advantage.”

Chorba echoed Fallows’ sentiments that the current state of the profession presents significant opportunities for Small Business CPAs. “We are now as deep and broad in our organization as we have ever been,” Chorba said. “We now oversee finance, IT, HR, treasury, investor relations, risk management and even operations. We are uniquely positioned to become the expert in any of these disciplines.”

Small Business CPAs challenges, new opportunities

In 2010, the AICPA initiated “Small Business CPAs Horizons 2025,” a grassroots effort to gather the insights of Small Business CPA’s, business leaders and regulators into the continuing evolution of the CPA profession. The project examined the trends affecting the Small Business CPAs professionals and how those trends will impact Small Business CPAs in the years ahead.

The June panel discussion referenced the Small Business CPAs Horizons 2025 report and how much the profession is already beginning to reflect those findings from two years ago.

“The Small Business CPAs core competencies identified in their Small Business CPAs Horizons 2025 project are communications, leadership, anticipation, critical thinking and problem solving, synthesizing intelligence into insight and integration/collaboration,” Chorba said. “These are the same skills that give Small Business Accountants Miami working in business and industry an edge today.”

The growth of Small Business CPAs working in business and industry, whether they migrate after working in public accounting or venture there directly after graduation, seems to be a lasting trend – one that CPAs need to be prepared for. CPAs are always going to be required to have the technical skills, but their ability to adapt, learn and expand their knowledge base can ensure their success and their ability to grow.

“No longer are we just experts in accounting and finance,” Chorba said. “Having the technical skills as a CPA are a given. The value-add are all of the other skills we bring as problem solvers and critical thinkers.”