Posts Tagged ‘workflow’

Solutions to an Accounting Industry in Crisis

Hire and retain the best accountants and tax professionals. Find the best tax consultant to save on your taxes. #tax #accountant #employment #labor #jobs #hiringIn the middle part of the last decade I found myself standing in line at the grocery store waiting to checkout. Before me were two women in their late 50s discussing work.

One woman said to her friend, “Last year I worked in a tax office and it was the hardest job I ever had!”

I had to turn away as I suppressed a smile.

Later, as I reflected on that conversation, the smile faded. Is working in a tax office so hard? Did I really choose the of the most difficult of professions as my career? 

It would explain a lot. Hiring qualified tax professionals has become nearly impossible over the last decade. Robert Half recently reported the unemployment rate for accountants stood at 1.8% in Q1 of 2019. The news isn’t any better if you plan on hiring a tax professional.

 

Crisis in Review

The crisis in the accounting industry is self-feeding. The worse it gets the more workload is shoved onto the desks of the remaining souls. Stress is taking a toll.

Several support groups for tax professionals exist on social media platforms. Tax season reveals a serious level of stress for practicing tax professionals. Complaints of long hours and clients unwilling to pay higher fees to compensate for the added complexities of the new tax laws has more professionals looking to leave the industry.

And it isn’t the tax pros facing the worst pinch. The ultimate loser is the client. With fewer experienced tax professionals accepting clients it has put taxpayers at risk. The IRS knows taxpayers have limited choices when defending themselves in an audit which means the IRS’ advantage is larger than ever.

Tax preparers are becoming more selective, too. Clients with documentation a mess are being turned away. Even clients with their documents in order are finding it hard to secure an experienced tax professional who understands the Tax Code and is willing to take on additional work.

 

Growing Demand

Experienced tax professionals are like rock stars in many environments. An accountant in my office recently joined her mother for a Bingo event. She made the mistake of telling the lady next to her she was a tax professional. From that point on the questions came rapid fire with several people around her asking for her card and if she was accepting new clients. The relaxing weekend with mom turned into another afternoon of stress.

The best job in town is helping people reach their goals and dreams. Accountants do that every day! Join the team. Make a difference. #accountant #taxpreparer #professional #accounting #jobWhen I attend conferences (or on vacation or in the park or . . . )I get the same reaction. It becomes nearly impossible to enjoy time off if the people around me know what I do. They all have a quick question. They don’t understand an afternoon of quick questions is not time off to recharge.

People don’t care; they want answers their accountant can’t or refuses to answer. Or worse, they do their own tax return and want top quality answers without paying for it (until the IRS letter arrives).

It has gotten so bad that when I’m on vacation with Mrs. Accountant I tell people I’m a farmer (because I grew up on a farm and currently live on a hobby farm) so my vacation isn’t ruined. People are intensely interested in powerful tax strategies, but for some reason don’t want to pay the tax professional $500 for saving them $10,000. And have no problem consuming an accountant’s entire vacation. 

And we wonder why the profession is shrinking.

To put it in further perspective: My office turned away over 20 new clients on April 15th this year. They just walked in and wanted us to drop everything so their return got filed on time. We don’t advertise; they just show up. Experienced tax professionals — even inexperienced tax professionals — have no problem filling their book. All they have to do is let people know what they do and it’s all over.

 

Greasing the Squeak

There are three groups who are willing to pay tax and accounting professionals well: government, big business and the wealthy. I see this even in my small tax office. Wealthy people and large businesses (I have even consulted large hedge funds) approach me in a different manner than typical clients. While they are acutely aware of the pressure tax Accountants make the world go round, are a part of all business and personal wealth creation. Be a part of the solution. Be an accountant. #accountant #accounting #retirement #earlyretirement #financial independence #FIprofessionals face, they make it clear they will pay for my time and information. In many of these cases I’m paid a fee versus and hourly rate. The incentive is to get me to stop watching the clock and focus on the Holy Grail: lower taxes coupled with higher returns and increased net worth.

While government watches my work, they don’t necessarily engage me. I’ve made it clear I don’t work for government which is probably why I haven’t been invited to do so. Businesses and individuals need my services more even if they pay less.

It is easy to see who is on the path to financial freedom and those who will doubtfully ever make it. The questions and the approach scream failure or success almost from the first words. Wealthy people want to learn while those allergic to wealth want confirmation they are right. 

As self-serving as it sounds (and is), you need a tax professional. Finding one is the chore. I understand. When it comes to legal issues the wealthy (and smart) hire an attorney; when sick they see the doctor. When it comes to taxes — the largest expense you will have in life — too many hire a commissioned salesperson for guidance. That is like hiring the pharmaceutical sales rep if you are diagnosed with cancer! Or they go it alone when they are dealing with the sum total of all their income and wealth. Boggles the mind.

 

Solutions

It is easy to cry about the crisis in the accounting and tax industry. I’m a solutions guy so I prefer to look for answers instead. The outline above expressing the stress professionals in the industry face is only to set the stage so you understand what is going on behind the curtain. There are actionable solutions professionals need to know and the public needs to understand so they can gain the maximum advantage to the benefit of all.

Several goals are necessary to improve the performance of the industry: reduce stress on the accountant, adequate compensation to encourage more to enter and stay the profession and more responsiveness to the client. 

While salaries might be the easy culprit, money isn’t the overriding problem. Money would salve many wounds within the industry, especially at the entry level, and would encourage more to pursue an accounting career, but it will not alleviate the stress from endless deadlines and demands from clients. Let’s look at a variety of solutions, starting with salaries and fees, then addressing stress followed by industry trends sure to improve performance and reduce stress.

Salaries

Money motivates. . . to a point. Offering tax professionals and accountants a larger salary is always nice. But if the stress is never-ending and job satisfaction is low more money will only make it easier for more to retire early and leave the rat race. 

While there is an acute shortage of qualified tax and accounting professionals, many in the industry tend to work up to and beyond what is typically considered retirement age. People attracted to the industry love the work and the challenges even when it is demanding. Helping people manage their business, taxes and life is a powerful draw. Working with clients as they reach for their goals is addicting.

Accounting: A profession that pays more than you think. Might be time for a career change. Be a mover, a doer, a shaker: be an accountant. The career for the best people. #accountant #accounting #money #clients #career #jobsLarger firms have the advantage to segregating pricing from the front line accountants. Fees are negotiated between the firm and client by the sales teams. The tax and accounting professionals doing the work only need to record their time spent working on the account and serving the client’s needs. I do oversimplify a bit. The important takeaway is that the larger the firm the more distant fees and their collection are from the accountant doing the work.

Small and mid-sized firms are another story. Frequently the accountant working with the client in smaller firms is instrumental in the fee determining process. The client always wants a lower fee. What clients need to understand is a lower fee means a pay cut to the accountant in many cases, especially if she is also a partner or the owner of the firm. Nothing demotivates faster than a pay cut while the workload increases.

Fees and salaries go hand-in-hand. Clients need to be educated that lower fees mean fewer qualified candidates will seek a career in accounting and fewer qualified professionals available to work on their account in a timely manner.

The tax end of the profession feels the pinch hardest. Finding people willing to work a seasonal job at a high level of knowledge and experience for a seasonal salary has always been difficult.

Tax offices can best meet demand with adequate fees to cover the salaries of their professional team with a reasonable profit for the partners/owners. Tax work comes in various sizes. Business returns are different from individual return. For a tax office to be most efficient they need to focus on the type of client they wish to serve. It is difficult mixing very simple returns with complex return without dedicated staff to handle each type of return separately. Very small office are best served when focusing on a niche. Highly experienced accountants working on simple returns is a poor use of resources and an under qualified preparer working on a complex return opens the firm to litigation risk.

The right compensation package allows you to attract and retain high quality employees. Robert Half provides an excellent salary guide for the industry and there are several resources for compensation of tax professionals. Where you are located also determines how far you deviate from the averages. One thing is clear: Tax and accounting professionals can earn very substantial salaries with excellent work-life balance when handled properly. You want to be one of these firms or work for one.

Accounting and tax firms can maximize their efficiency by dealing with the next area of concern: stress. Reduced stress should lead to higher salaries and profits while providing optimal work-life balance and provided the client with the best value.

Stress

Stress is a constant in many accounting offices with deadlines constantly bearing down. Tax offices are even worse during the filing season. There are several way to reduce stress and improve your team’s well-being. 

It starts with the client. Some clients increase the stress in the accounting and tax office. Paperwork hastily tossed in a box and missing paperwork tops the list. Everyone in the industry can tell stories about clients from hell: bad records, difficult to work with, constant interruptions. These clients increase stress massively and can drain the lifeblood out of a firm, harming all clients. The faster you disengage these clients the better for your firm and remaining clients. If you are that client you want to reevaluate, as it will become increasingly more difficult to secure a place at a quality firm.

Once you have a clean book of clients that value your work you can now excel at serving your clients. 

Certain activities are more valuable to the client than others. Data entry is a low value task that also tends to add to stress when conducted for too long. The high value tasks are the most valuable to the client. High value tasks include planning and consulting.

Clients enjoy constructive conversations (planning and consulting) with their accountant because they feel they are getting value. And they are! No tax professional or accountant has ever created any real value plugging numbers. Business and personal planning — consulting — is a high profit activity for the firm that clients are happy to pay since planning with an experienced professional can yield a return into the three and four digit range. Smart clients are happy to spend $1,000 to save $10,000 or more in taxes or increase their net worth by orders of magnitude.

Consulting is a productive activity that also reduces stress. Professionals want to do more highly productive activities and avoid low value activities as often as possible. Productive is fun and makes clients happy; unproductive work is drudgery.

The issues boil down to managing the rote work activities and workflow

Automation

Stress-laden work (data entry and other mindless tasks) can be addressed with automation, outsourcing or a combination of both. 

I recently attended the XCM Users Conference in Nashville. I found XCM while researching outsourcing options and tried their services. 

While I viewed XCM as an outsourcing possibility, I missed what XCM was really all about: workflow. 

Workflow is part of the automation process. Efficient workflow reduces stress and errors. GruntWorx and similar services complete many of the basic entries on a tax return. As the technology improves less and less time will be required by the accountant for data entry. This frees time to provide value-added services to the client like deeper tax return discussions, financial statement review and planning/consulting services to increase client’s net worth and reduce taxes.

Drake Software has Secure File Pro (it integrates with their software) as a portal to transfer documents between client and accountant. (Accounts complain endlessly behind the scenes over how much they hate it when clients take a picture of a document and text it because these are so hard to read and save. Document managers solve most of this problem.) SafeSend is another option that works with many of the most popular commercial grade tax software. 

Automation reduces stress by reducing the amount of time buried in paperwork only punching numbers. Even if there is no time savings it is worth the added expense just for the reduced stress. 

As automation technology evolves into robotic automation, computers will be able to enter more and more of the data on a tax return. The tax professional’s job in five years will be to review returns and consult with the client; the computer will handle the original preparation of the return. This will free more people in the field for more enjoyable and productive tasks, partially resolving the labor shortage within the industry.

Outsourcing

Virtually all large accounting firms outsource a portion of their workload. In the last two tax season I worked on applying outsourcing a portion of my office’s work with less than exciting results

I’m not willing to give up on the idea yet as outsourcing coupled with automation will consume a larger and larger part of the industry in the near future. Even people self preparing will find in the small print some or all of their tax return outsourced (the online software is probably programmed overseas). Fighting the inevitable will leave you stressed with lower profits while your competitors have lower prices, higher profits, fewer errors, spend more time consulting with their clients and have a better work-life balance.

Accountants do it with balance. Joking aside, accountants have the best job in town helping people and businesses build a better community. Accountants are vital to the health and growth of families, businesses and the community. Make a difference. Become an accountant. #career #job #accounting #salary #wage #accountant #analyst #taxOutsourcing can be integrated with automation and probably should. 

Outsourcing also comes in two flavors: domestic and international.

Domestic outsourcing most clients have no problem with. Tax returns are either e-filed or mailed. In either case the data is handed off to another human being outside the firm for delivery to the IRS. This is all domestic and most feel comfortable with the process. 

Real domestic outsourcing, however, involves your tax firm getting help from another tax office within the U.S. It might be a branch of the same firm or an outside firm hired to do the work. Domestic outsourcing still has issues with staffing and costs tend to be prohibitive. 

International outsourcing is a whole different animal. Before an individual return can be outsourced in this manner requires approval by the taxpayer. Stiff penalties are a strong deterrent for a tax office to play it fast and lose. 

Wealthy people and corporations generally are more comfortable with international outsourcing because they frequently have operations and/or investments in international markets. When proper security precautions are in place (using a reputable firm only) there is no reason to fear international outsourcing. I will test this process deeper in the upcoming tax season with clients who give authorization and report back to you. 

When I attended the XCM conference I met many smaller firms that are using international outsourcing and making it work. (My first two years were false starts that were also expensive. If you can avoid the problems, especially the expensive ones, you may wish to consider learning from my experience.) 

Individual clients are the most apprehensive. My goal is to get 100 clients next tax season to authorize outsourcing. I never outsource any client work unless I disclose to the client first and get their approval. We’ll see how it goes.

Industry Trends

With the tax/accounting industry set to grow by 10% over the next decade, more professionals will be needed to complete all the additional work. As fewer people pursue accounting and tax as a profession automation and outsourcing will play a key role in completing work and managing workflow. Without these efficiencies more highly talented people will leave the field for less stressful work and from burnout. 

The demand for solid information has never been higher. The Tax Code is complex and getting more so every year. Without automation and outsourcing there will be no time for your accountant to spend quality time with you or they will need to raise fees massively to seduce more people to work for them. The trends are a gift that reduce stress and increase accountant productivity. This is really good for the client and the accountant alike.

 

If you demand your tax and accounting work be done the old-fashioned way, don’t call me; we are full-up. We use computers to prepare returns, e-filing to file tax returns, use automation where ever we can and would love to find an outsourcing solution so we can handle more of the clients we currently turn away. And less stress would be nice before burnout sets in.

And if you demand I punch all the numbers by hand or you do your own return, don’t ask me any tax questions if you see me at a conference or at the park. I’m just a farmer. I have no idea what you’re talking about.

 

 

 

More Wealth Building Resources

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Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. QuickBooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

cost segregation study can reduce taxes $100,000 for income property owners. Here is my review of how cost segregation studies work and how to get one yourself.

Worthy Financial offers a flat 5% on their investment. You can read my review here. 

 

Workflow: Simplify Your Life at Work and Home

20160516_095451Balancing family life, personal, and business present challenges when your interests are catholic (little c, not big C). Family is always a priority while business always demands more of your time; personal time is needed for mental well-being and health. Business owners are in the toughest situation. Bill Gates, Steve Jobs, and Elon Musk changed the world with their work. The best learn quickly to avoid keeping busy. Even small business owners suffer the same demands on their time as captains of industry.

Some leaders are better at managing their time and personal lives than others. Steve Jobs was noted for his intensity. Elon Musk gave us PayPal, Tesla, Solar City, and SpaceX. Their skills in creating value are legendary, but Jobs managed to find time to meditate and stay married, while Musk has had three wives in the last decade. A burning intensity to perform does not preclude a healthy home life. Bill Gates got married and stayed married. (Bill and Melinda make a cute couple.)

If Elon Musk can run several multi-billion dollar corporations, it is possible for you to do great things while retaining balance in your life. Few of us will ever experience the demands of a Steve Jobs, Elon Musk, or Warren Buffett. It boils down to managing workflow. By creating systems to manage all the demands on your time you can create a happier, healthier, and more productive life.

Work Life

No matter where you work, there will be demands on time. I will approach this from a business owner’s viewpoint because that is my worldview and experience.

Recent events challenged the system I used for many years in my office. Additional new clients with greater needs than most of my current clients coupled with Murphy’s Law (what can go wrong, will, and at the worst possible moment) tested my skills. I am still digging out.

Here are some considerations for managing workflow at work:

  • Outline expectations with clients, co-workers, and the boss. Since everyone has different needs and expectations it can be like dancing on the edge of a razor. People will constantly try to push you off balance, not out of malice, but to gain advantage to satisfy their own needs.
  • Build a system that works and is flexible. In my tax office we have to be prepared for everything. Our best laid plans can crumble if we create a rigid workflow. A critical issue can take precedence over regular work.
  • Allow your team to shine. I refuse to dictate most workflow matters. My team is in a better position to determine the best course of action to maximize their productivity. I provide guidance when necessary. When issues arise I provide input and allow each employee to then determine the best way to manage work at their station.
  • Consider categories. We are in the process of switching our tax workflow procedures. We will list each tax return that comes in A, B, or C. Tax returns in the A category anyone can prepare with only minor review. These are the easiest returns. The B tax returns can be data entered by anyone, but will require a review. All C tax returns must be prepared by me or reviewed by me. The C returns are the most difficult or contain issues where my experience will result in significantly lower taxes.
  • Each work environment is different. Using my office as an example again, I set priorities on workload. Certain phone calls must be made today. Due dates frequently dictate work order in a tax office.
  • Record every step. We use multiple organization tools to manage workflow in my office. Every piece of work is entered on a worksheet at the front desk. We have a redundant system to reduce errors. Tax returns are reviewed. Even my work is checked. For example: When a tax return is finished and signed by the client it goes in a slot. I take these e-files and process them. When the IRS accepts the return I mark it ACK and return it to another slot. Natasha, at my front desk, checks each e-file to make sure it was really e-filed. We don’t want a return unfiled because a page stuck together.
  • Use time management tools. Each member of my team uses different methods to process their workload. I tend to be a paper and pencil guy. I have handwritten notes everywhere (and only I can read them due to my awesome handwriting skills, though I have it on good authority Natasha is able to grasp every seventh word). Many employees use Post-It notes, the digital kind, and keep them on their screen. Outlook is a great management tool. The tax software I use has several time/workload manage tools built into the program.
  • Always keep an open mind. Test ideas to improve your workflow. Team members are a great source of ideas to better manage time and workload.

51AL-nTCBzL._SX322_BO1,204,203,200_There are many more ways to manage workflow in your professional life. Each situation is unique, as are you. What works for me may not work for you. I prefer to manage by fiat. My employees tell me they love how I grant them the latitude to determine their own work space. I refuse to spend my day hunched over the backs of my team. I hire good people and give them the authority to do the job in the most efficient way for them.

Family Life

Family is more important than work. Work life frequently requires us to spend more time with people other than family so it is imperative we prioritize family life. Since I have been married for 28 years (to the same woman, you smart ass) and have two daughters who managed to stay off drugs and not get pregnant, I assume I did something right. I make no claim to being the perfect father or husband. All I can do is share what I do that led to the current results.

  • Tell them you love them every day. This is the most important part of any relationship. Tell them you care. First thing every morning, I give all my girls a kiss, a hug, and tell them I love them. It is also the last thing I do before retiring each evening. Regardless the situation, I tell my wife and daughters I love them. If I am upset about something they still get a hug and kiss. I make it clear I am upset about the action, or lack thereof, and not with them.
  • Never go to bed angry. This is Mrs. Accountant’s rule. A good one, too. There will be times when you are not happy with a situation. No matter, we still make peace before we sleep. The next day we usually deal with the situation better anyway.
  • Praise often. It is too easy to admonish when a family member does something against your liking. Be sure to praise even faster. A child with poor grades needs a pat on the back when they ace a test. If you are married for 28 years there will be things that irritated you over the years. You can whine and complain or ask gently for some changes. When your significant other does something you like, let them know. Maybe someone needs to lose weight. Instead of harping on their eating habits and flab, comment on their choice of quality food or skipping desert. Reinforce the positive rather than focus on the negative. Once you conquer this skill there will be few disagreements in your household. Mrs. Accountant and I have not had an argument/fight in 25 years. The first three years were a different story. I had to learn some skills and I was determined to have a good marriage.
  • Give each other space. To the best of my ability I do not crowd my family. Everybody needs down time alone. I am comfortable allowing my daughters and Mrs. Accountant their free time without me. Girl time is important. So is guy time. Sometimes life events require alone time to process an event. When ready, they will seek your comfort.
  • Love unconditionally. My wife and daughters are individuals. I have no desire to mold them into what I want. I prefer family members who are their own person. When you love unconditionally your family is unlikely to leave you. Where could they possibly go where it is better? The best they could hope for is a draw.
  • Fix yourself. It is impossible to fix someone else. It is a fool’s errand. I worry about my behavior and encourage my family in theirs. I take care of my health and encourage my girls to do the same. Then it is up to them. No harping. I am not perfect and do not expect anyone else to be either.
  • Make your family special. I spend very little money on myself or family. Mrs. Accountant and I have not exchanged Christmas, birthday, or anniversary gifts in decades. Our relationship is not predicated upon stuff. Instead, we spend quality time together sharing stories, ideas, loves, concerns, and feelings. Our gift is ourselves.
  • Learn to push buttons. People together a long time know each other’s buttons. Always avoid pushing buttons to control or harm. Instead, learn which buttons make your family members happier. Too many people push the wrong buttons on their significant other for a variety of crazy reasons. Stop! You have no idea how fun and fulfilling your relationship can be until you start pushing the buttons that turn him/her on.

It takes commitment and work to have a solid marriage or relationship. Do not get lost in work, school, kids, life obligations, or anything else for that matter. Make your significant other number one in your life. Encourage your children toward excellence. Love them unconditionally. Remain faithful. (It is easy remaining faithful when your relationship is anchored on the deepest of bedrock.)

Personal Life

People get so caught up in work and family that they forget to take care of themselves. Family is more important than work; you are more important than family. Think of it this way: why do airlines tell you, in the event of an emergency, to put on your oxygen mask first, then the kids? Because you can’t help the kids if you are unconscious or injured. You must put “you” first. This is not self-centered arrogance. To provide for your family you need to mange yourself; before you outperform at work you need a healthy home life. It all makes sense.

Here are some tips to maintain a healthy personal life, including mind, body, and soul:

  • Quiet time. To maintain good mental health you need time alone to separate your thoughts.
  • Mental health is increased by running alternative lives. You soon realize how lucky you are when you visualize alternatives. It is natural to think of other people in ways you would not in real life. It creates balance, showing your mind the high quality life you actually have.
  • Clear the mind for a few moments minimum every day. Pray if you are religious.
  • Who cares who is watching? Read what trips your trigger.
  • If you are walked in on, don’t stop singing. Instead, start dancing with the new arrival. Who cares if the police serving a search warrant think you are nuts? It’s a happy nuts.
  • Quiet the mind and then listen to all the sounds around you. There is a whole new world you have been missing and it is an awesome world, indeed!
  • Eat right. Garbage in, garbage out. Feed your body good fuel and it will serve you well for a century.
  • Lift things, walk, run, jump. Life is too short to sit on your ass all day.
  • Make friends of everyone. We all have a few close friends. Having many acquaintances can provide a fulfilling addition to life. Be a friend to all you meet and share ideas and stories. It makes life all worthwhile.
  • Give thanks. Express gratitude to yourself and others. It is okay to feel smug after completing a good job.

I am sure you can add to my lists. Please do so in the comments below. Remember, it is an awesome day to be alive.