Management

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.

Running a business is similar to conducting a science experiment. Unsuccessful proprietors use trial and error hoping to find a winning strategy. Gamblers do something similar. Successful business owners do things a bit differently; examine where need exists and then search out a plausible solution.

Success is similar across all industries and business sizes. Whether you are managing a massive international corporation, a regional firm, a small local business or running a side gig to pay the bills while you enjoy all life has to offer, the rules of success are similar from top to bottom.

Today we will focus on the side hustle and small local businesses. The conversation will also focus on the tax preparation industry.

I own and run my own accounting practice which is centered on tax and have been doing so for over three decades. What worked in the 1980s and 1990s would bring you ridicule if you tried the same thing today.

As children we dream. We dream unfettered. We dream of traveling to the stars; we dream of life as a policeman, fireman or even a doctor. Some fall in love with numbers and can’t think of anything else. We dream of great discoveries as scientists or helping people reach their dreams and goals financially.

Then we grow up.

Society tells us we must prepare for retirement as soon as possible. The financial services industry breathes and dies by our willingness to buy into their story.

The news feeds are filled with stories of people who started early, saved hard and retired early. As someone living inside said community I notice a pattern. A large majority of people who

Countdown clocks abound. The most infamous is the doomsday clock counting down to Armageddon. With 26 days to the tax due date here in the States tax professionals are counting down to a less tragic event.

Early retirement was something I dreamed of from high school on. I was attracted to the seasonal nature of the tax profession. The ease at which tax offices can be sold also held my interest. The original goal was to build the business, save like crazy, invest said monies and take an early bow. I decided I should at least enjoy my profession if I’m going to give it my all. The unintended consequence was that I couldn’t unplug as planned.

Tax season is still early in the tooth but patterns are starting to emerge.

My software allows me to use current year data to estimate results based on the Tax Cuts and Jobs Act changes. With a couple hundred returns under the belt already the impact of the changes are mostly expected with a few surprises thrown in.

As tax season approaches I start to fall into a familiar pattern I’ve developed over the years to help focus my attention.

Some people like listening to music while they read; I don’t. I prefer absolute quite, huddled in a dimly lit corner while I devour pages of knowledge or embark on an adventure through space and time.

The world is crazier than it is sane. People complain about having no money and then get rid of what they have as fast as possible. How many people can’t make it until the following week without money issues? A short week and most people are already down to fumes. Thank God, payday is Thursday so you can stop at the bar on the way home. Anything to relieve the stress of money.

Chaos is all around us. Concerns over an overheating stock market and economy are always present in the background. If it isn’t the economy being too good, it’s the bad economy. There is no just right.

Before anyone forgets, there’s plenty of chaos from politics. Talk about a distraction! Best if we all stand alert in case Rex Tillerson, the current Secretary of State, calls us for advice. One never knows.

Two kinds of clients scare me most. The first ask me as they pick up their tax return what they can do to lower their tax bill. The other requires a pry bar to get complete information out of them during the year.

Each of these clients scares me because I can’t give them a good answer. The first client is really asking what they could have done better last year when the answer makes no difference and the second client gives me reasonably accurate information (if I’m lucky) meaning my advice is only “reasonably” accurate.

The worst part is some tax breaks aren’t gentle phase-outs, but cliffs. One additional dollar of income can cost $500 of tax savings! Clients receiving the healthcare credit face several cliffs as their income crosses mile markers of the federal poverty level (100%, 200%, 300% and 400%). A small amount of additional income can result is a significant reduction in the credit causing a seriously higher tax bill.