Post Tax Season Introspection Beyond the Obvious Dig
Post Tax Season Introspection Beyond the Obvious Dig Deeper into Your Firm’s Hits & Misses
HOSTS MIKE GOOSSEN, CPA Vice President – Entigrity Remote Staffing SHAWN PARIKH CEO – Entigrity Remote Staffing
Measure Up – Volume of Work | Revenue Change Time Spent on Core Tasks Dig Deeper - AGENDA Learning Objectives Accounting Profession – 10 Years from Now Analysis of Threats Transforming Threats into Opportunities 5 Step Model to be Future Ready
Accounting and Tax has more similarity to Football that any other business or profession Having an objective view of the firm’s performance – During the Season and Outside the Season LET’S BEGIN Take an Objective (Bird Eye) View Now – Using our 5 Step Model of Post Tax Season Introspection Measure Up – Using Do It Yourself Spreadsheets Dig Deeper – Go Beyond the Obvious – Look for Insights Observe – The Challenges and Problems Analyze | Reason | Review Set Goals | Validate | Do it Again
Case Study – Berkshire Tax & Accounting LLP is a small tax firm based out of NY It has 2 CPA partners and 11 staff members doing year round business in excess of $2 M+ The partners are ambitious and plan to increase there business to $5 M+ in a couple of years There key stats for current year are as follows: Volume - Revenue - No. of Hours Worked by Partners - | No. of Hours Worked by Staff - Client Complaints -
Step 1 – Measure Up - Volume Type of Tax Filed 2017 2018 Actual Expected Extensions Changes 2018 Actual 2017 Actual 2018 Expected 2018 Actual Individua 300 l Taxes 400 430 Business 200 Taxes 350 270 Rise/Fall in 2018 Actual Filed Extensions Chart 1 - Volume of Work – Number of Tax Returns Your Firm Worked on
Measure Up - Volume Scenario 1 – Rise in Yo. Y Filing and Extensions Scenario 2 – Rise in Yo. Y Filing and but fall in Extensions (Least Likely) Scenario 3 – Fall in Yo. Y Filing and but Rise in Extensions (Impact of TJCA)
Step 1 – Measure Up - Revenue 2017 2018 Change Average Revenue Average No. of Revenue /Client Revenue Clients Target Achieved Growth /Client Yo. Y in ($) Average Revenue /Client Growth Yo. Y in (%) Individual Tax 1. Filing 1. Planning Business Tax 1. Filing 1. Planning Chart 2 – Revenue Distribution– Correlation between number of Clients and Revenue
Step 1 – Measure Up - Revenue Is there a rise or fall in average revenue per client? Is there a fall in average revenue per client? What could be the reason? New Clients in there 1 st year with you Process or Working Inefficiencies that you might be overlooking How much average revenue per client can be increased? Additional Service to the current clients Higher Price for your current services Higher Efficiency driven by automation and non -traditional methods
Step 1 – Measure Up - Time Type of Work Vs. Time Spent per Tax Return Individual Tax Business Tax Filed Extension No. of Hours Spent by You No. of Hours Spent by Your Staff Chart 3 – Time Distribution – You and Your Staff
Step 1 – Measure Up – Client Complaints Types of Taxes Client Complaints 2017 2018 Individual Taxes Business Taxes Chart 4 – Client Complaints – Rise or Fall
Step 2 – Dig Deeper into the Problems – Client Attrition or Turnover – Year 2017 Clients Added Attrition - No. of Clients through the Clients Lost on Dec 31, 2017 Year during the Year Services No. of Clients on Jan 1, 2017 Individual Tax Business Tax Accounting Bookkeeping Administrative Chart 5 – Client Attrition – Annual Year 2017
Step 2 – Dig Deeper into the Problems – Client Attrition or Turnover – Year 2018 Clients Added Attrition - No. of Clients through the Clients Lost on Dec 31, 2018 Year during the Year Services No. of Clients on Jan 1, 2018 Individual Tax Business Tax Accounting Bookkeeping Administrative Chart 6 – Client Attrition – Annual Year 2018
Step 2 – Dig Deeper into the Problems – Service Execution Challenges – Yo. Y Comparison Pick-ups Drop-offs Online Previous Year Current Year Individual Clients Business Clients Chart 7 – Service Execution Challenges – Document Submission
Step 3 – Observe – The Challenges & Problems 2017 No. of Hours Spent by Staff Core Billable – Service Driven Tasks 2018 Growth/Decline Rise Fall in No. of in Hours Revenue Spent ($) (%) Revenue Generated No. of Hours Spent by Staff Revenue Generated Support Tasks Admin & General Tasks Business Development Tasks Total Chart 7 – Service Execution Challenges – Document Submission Rise Fall in Revenue (%)
Accounting Profession – 10 Years before – Year 2009 Ø Internet was 2 G & extremely slow Ø Everything on Paper Expectations Ø Minimal Communication Ø Drop-Offs and Pick-Ups Common Practice Ø Off the Shelf Software tools Ø Data was Stored Locally Ø Cyber Security Risks - Low Ø Ø TECHNOLOGY Acquisition Referrals & Direct Personal Meetings Pricing - Value based and Need based Reputation – Dependent on Word of Mouth Bound by Geographic Location CLIENT Ø Administrative in Nature Ø Local Staff Only Ø Driven by Compliance Ø Lower Attrition Ø Emphasis on Write Up Ø Increasing Compliance Ø Less Complicated Rules & Regulations ROLE Costs Ø Manual Work STAFFING
Accounting Profession – Now – Year 2019 Ø 4 G Internet Connectivity Expectations Ø Cloud Computing Ø Consistent Communication – Staying Connected Ø Less Paper Ø Online Drop-offs Ø High Cyber Security Risk is a Reality Ø Emergence of Automation Acquisition Ø Social Media and Online Communication Ø Package driven Pricing Ø Reputation – Online Presence – 1 Blog/Week | 1 Video/Month Ø Shift to an Advisory Role Ø Shift to Near Time or Real Time Accounting Ø Emphasis on Insights and Financial Reporting Ø Increasingly Complicated Rules & Regulations CLIENT Teams a Common Practice Ø Increase in Attrition of Local Staff Ø Substantial Compliance Costs Ø Leveraging Automation for Insightful Work Ø Geographic Boundaries Broken TECHNOLOGY Ø Remote Working & Virtual ROLE STAFFING
Accounting Profession – 10 Years from Now – Year 2029 Ø High Speed 5 G Internet Access across the Globe Ø Plausible shift to completely Cloud based tools Ø Ø Entirely Paperless Ø Cyber Security Insurance – Can be Mandatory Ø Dependency on Automation Ø Ø Ø TECHNOLOGY Expectations Real Time Access to Work being done Personalized Service Acquisition Consistent Content Driven Personalized Communication Highly Competitive Pricing – Driven by Automation & High Skill Cost Effective Remote Workforce Reputation – Dependent on Reviews, Knowledge Sharing and Engagement with Clients Small Firms Now will be National 10 Years Later CLIENT Ø Shift to a Strategic Role Ø CPA as Personal CFO Ø Emphasis on Preemptive Planning and Financial Reporting Ø Offshore Remote Working & Virtual Teams across the Globe for Small, Midsize and Regional Accounting Firms Ø Complex & Complicated Rules & Regulations – Globalization – Boundary less World Ø Substantial Rise in Per/Partner Profit Ø Substantial Decline in Local Staff Ø Automation is the new norm ROLE STAFFING
Analysis of Threats – Next 10 Years Larger Firms will Compete Directly with Smaller Firms 02 Acquisitions by Larger Firms 01 03 04 Failure to Attract and Retain Talent Technological Threats
Larger Firms will Compete Directly with It has already started Smaller Firms KPMG Spark Intuit Entering Bookkeeping It Wasn’t Just a Test Pw. C – Accounting and Bookkeeping Division It’s as if Uber Starts its own Cab Service
Acquisitions by Larger Firms Cloud Accounting – HPC merges in Aprio Cloud Prager Metis Adds Beck Villata Rea & Associates merge in Tucker & Tucker PKF O-Connor Davies merges in BFMM
Failure to Attract & Retain Talent AICPA Studies of Accounting Graduates – Students enrolled in accounting degree programs declining steadily from 2013 In-demand jobs always have high attrition Decreasing availability of high quality staff in local locations Millennials, Gen Y and Gen Z prefer freedom to work and higher flexibility Small firms that fail to grow will struggle in keeping local talent onboard
Transforming Threats into Opportunities – Next 10 Y Creating a Niche Effective Succession Planning 02 01 03 04 Early Adoption of Technological Advancements Remote Working Staff – The New Norm of Workplaces
Creating a Niche Industry Niche Marijuana – New and Emerging Real Estate – Large and Complicated Restaurants & Bars – Managerial & Cost Accounting Service Niche Outsourced CFO Accounting & Bookkeeping Individual Taxes Corporate Taxes Execution Niche 01 02 Working Style of Staff 03 04 Virtual Teams – Supporting Strategies | Fourlane Type of Work Real Time or Near Time Accounting Monthly/Quarterly Bookkeeping Write-up, Catch-up & Clean-up Work
Effective Succession Planning Small Firms Internal Succession Planning – Why it can’t happen overnight? Sale to Existing Partners Introduction of New Partners Orderly Winding Up
Early Adoption of Technological Advancements Go Paperless – Now Leverage Digital Marketing for New Business Development Bring your Team to a Project Management System Use Cloud for Collaborative Working
Remote Working Staff – The New Norm of Workplaces Pros: High Quality Talent can be hired from any part of the world Delegation of workload Flexibility of working Scalability is possible Cons: Compliance and Benefits Cost Remains the same as local staff in case of onshore remote staff
Remote Staff with Entigrity A Real Opportunity for Early Adopters 75 % Average Saving on Labor Costs Ø Save 75% on Labor Costs Ø Experienced & Qualified Staff Ø Flexible Hiring Model Ø Easy Scalability 96 % Ø No Draconian Compliances Ø Direct Control & Management Client Retention Ø No Infrastructure Costs Ø Transparent Hiring Model Ø Saving HR Bills & Overheads Ø No Additional Cost on Benefits 500 + Accounting Firms Served
5 Step Model to be Future Ready STEP - 1 Embrace Change STEP - 2 Boost the Bottom Line STEP - 3 Leverage Technology STEP - 4 STEP - 5 Become the Market Leader in Your Niche Grow and have Multiple Partners Onboard
Session Overview Accounting Profession – 10 Year before | Now | 10 Years from Now. Technology Client Role & Tasks of Accountants Staffing Analysis of Threats – From Now to 2029 Transforming Threats into Opportunities 5 Step Model to be Future Ready
Q&A
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