The technological revolution, increased corporate scrutiny and frequent regulatory changes over the past few years have resulted in sweeping changes in business, and the accounting industry is no exception. Not only has the quality of the work product changed with systems and processes, the profession has adjusted the nature of its services and the ways in which they are provided.
Recent evolution
Not too long ago, a business owner would drop off a shoebox of information to his accountant. The box held bank statements check stubs, manual account agings and payroll journals. The CPA spent his time compiling information in order to produce a monthly financial statement, then used it to manually prepare annual income tax returns.
Today, most businesses are computerized and use an accounting software package applicable to their specific operations or financial needs. As a result, the majority of compilations, including the preparation of monthly financial statements, are completed in-house. Changes like this have prompted accountants to become more proactive, strategic and collaborative in their role.
Tax planner
Accountants are synonymous with income tax preparation. While the actual process of preparing tax returns is oftentimes straightforward, there are many complex tax laws that affect businesses and business owners. In addition to tax preparation, the responsibility of an accountant now includes tax planning, specifically with regard to the application of tax law.
Understanding the many intricacies of tax law allows the accountant to carefully review and analyze the business’s financial strengths and recommend strategies to minimize taxes and sustain desired profitability levels. It is necessary for accountants to maintain a high level of knowledge of tax changes in order to provide clients with every potential tax savings strategy and solutions for issues such as growth and retirement.
Business adviser
While it is essential that an accountant be able to review a client’s financial statements and provide sound advice based on the results, the calculation of many financial ratios and comparison to prior periods and budgeted results is a crucial aspect of financial analysis. Financial institutions are a major user of these statements and analyses. Today’s CPA has developed excellent relationships with bankers and can be of great assistance in helping a company’s banker understand financial results through such analyses.
It is becoming increasingly effective for business owners to prepare budgets, which provide a financial plan with targets to better manage financial outcomes as well as to plan for future projects. The accountant has become very versed in this area. Also, understanding a business’s operations can enable the accountant to contribute to a client’s budgeting process.
Additionally, the accountant is more specialized than ever before. CPAs have experience in myriad industries, understanding the nuances of each business inside and out, be it manufacturing and distribution or health care.
Planner
There are numerous areas of planning in which an accountant can provide valuable assistance. Retirement planning is a considerable concern of every business owner, and accountants have become skilled at planning, implementing and administering the appropriate retirement plan.
Addressing how much is needed to retire, mapping out a timeline and assuring that the business continues to be viable are all areas of consideration. A business owner may also be concerned with making available some sort of retirement plan for its employees.
A succession plan is also a cause of substantial apprehension. There are many exit strategies available in today’s market. Whether planning a merger, sale or transfer of control to family members or key employees, an accountant can help to structure a plan that best meets the owner’s goals.
Personal adviser
In any professional relationship, personal service plays an important role. In addition to providing sound, strategic counsel, developing a personal rapport makes for a comfortable working relationship. It supplies an open line of consistent communication that provides ongoing, efficient planning in many financial areas.
Finally, an accountant is a trustworthy advocate, looking out for a client’s best interests, acting as a sounding board for ideas, and generally supporting efforts to successfully manage a business. Bruce Friedman, CPA, is a director in the Entrepreneurial Services Group of Saltz, Shamis & Goldfarb, the tax and accounting division of SS&G Financial Services Inc. (www.SSandG.com). Reach him at [email protected] or (330) 668-9696.
