By Maureen Werther
The federal tax bill that passed the House and Senate in the final weeks of 2017 had accounting firms of all sizes scrambling to read, understand and interpret the new legislation for clients, with most working long hours through the holiday season to ensure their clients would be in compliance with the new law.
Dan Kumlander, of Kumlander, Donofrio, Hay, Pehl CPAs, LLP, on Route 9 in Malta, said that the passage of the new tax laws caused what he referred to as a “scramble” to ensure that planning for clients was being done correctly and in keeping with those new laws.
“We’ve tried to lessen the tax liability as much as possible for our clients and make sure they take advantage of every possible tax savings. When the IRS makes these announcements, we all scramble,” said Kumlander.
He said fortunately, the new changes did not affect 2017. However, they will have a big impact on 2018-2025. He said his clients are all, understandably, looking for clarity.
One big question that arose for clients was whether to pay their 2018 real estate taxes in advance. Kumlander said that making the pre-payment would not have benefitted all their clients. He also added that the IRS mandate that taxes had to be assessed in the same year they were being paid set off an even bigger scramble.
“All of this happened in a 10-day business period,” said Kumlander.
Publicly held corporations were required to report the effects of the new law in their statements to shareholders in the same quarter that the law is enacted, even if the measure themselves do not go into effect until later. This was also true for companies whose fiscal year ended on Dec. 31 or Jan. 31, according to the Deloitte Tax Group.
What this will most likely mean for accounting firms in 2018 and beyond is an uptick in revenue generated from compliance, tax accounting and advisory services. Kumlander said that, on average, the revenue his firm generates is usually a 50/50 split between tax work and financial statements on one side and consulting and advisory services on the other, with 95 percent of tax business being generated during tax season. During the rest of the year, work is more skewed toward advisory services.
With the volumes of tax changes to absorb, interpret and implement, the accounting profession, as a whole, is grateful for the integrated software programs being used for accounting, consulting, tax planning and preparation.
Kumlander said that while technology has afforded his firm “to pretty much go paperless,” making their jobs easier, “at same time, all tax laws and filings are becoming more complicated. So, it’s an offset.
Kumlander has been in business for 29 years and recalls that he started job “with paper, pencil and eraser. Now, it’s all tax software. We don’t do too much with paper anymore. There’s not even that much left to be filed – everything is filed electronically, and all our software is commingled. The write-up software flows into our financial software.
“We hold seminars regularly to make sure our staff understands how tax laws work.”
Regarding the role of social media in the world of accounting, Kumlander said they are not currently using it too much for marketing. “At this point, we are looking for controlled growth.” But they are considering using Facebook and other social media platforms for the “civic side of things,” referring to how his firm gives back to the community.
The firm of Buchnam and Rodecker CPAs, in Saratoga Springs, has a somewhat different view of the role of social media in its marketing and business development efforts.
According to Melinda Buchnam, who has been a CPA for over 20 years, “social media is a big part of generating new business,” though the majority of her firm’s clients come from referrals.
Buchnam said while the firm has a presence on Facebook and LinkedIn, they do not currently have a Twitter account. However, they have a new accountant on their team who is a “millennial,” and Buchnam said that she is “twice as fast and good at using social media” than some of the other members of the firm, something she hopes to capitalize on after the end of this year’s tax season.
“With the upcoming new client base, I believe it is going to be super important,” said Buchnam, referring to the growing number of entrepreneurial millennials who are opening their own businesses.
Buchnam said they have already attracted new, younger businesses to their firm by offering both QuickBooks and Xero, another office suite that she said is popular with younger clients.
“Xero is the biggest online account program in Europe, and we’ve had clients from other countries who wanted Xero. We were the only ones in the area who offer it and it’s really growing rapidly in the U.S. Our clients 40 and under are really loving it, and it turns out that it’s a great program. We like it better than anything else out there.”
She also said that, by offering bookkeeping services in addition to tax planning, compliance and consulting, they have differentiated themselves.
“We are offering an all-in-one service that fits with businesses and individual returns, payroll and books. After all, in order to give someone a good return, the books must be right. If we take just the numbers, and they’re wrong, we don’t have a good product.”
Buchnam also appreciates the increased productivity and efficiency that has been a result of increasingly sophisticated software technology, adding that the firm’s entire tax program is in the Cloud.
Like all firms, that data is secured by layers of protection and multi-step authentication. They also use a highly sophisticated password protection service . She said it is a process to go through all those layers, but it is worth the extra effort in the long run.
She added that they have multiple back-ups to ensure the safety and integrity of their data.