2018 is here. Looking ahead to what will almost certainly be an eventful year, here are 10 trends that, in this author’s opinion, will affect the CPA profession the most.
State Nexus/Sales Tax Complexities Will Increase
More and more businesses are starting to sell and perform services online, which causes nexus and sales tax to become big issues for those businesses. Automating sales tax can be difficult, as each product or service sold might be taxed differently by different states. This complexity will only increase, as the federal government provides less and less support to states, which will have to find new ways to raise revenue.
Artificial Intelligence and Automation Will Take Hold
Minor levels of artificial intelligence and automation already exist in bookkeeping and tax programs, but the profession is still only scratching the surface of using technology to improve efficiency and provide analytical data that help practitioners and clients make better business decisions. In 2018, tax programs will become smarter, starting to link directly to the large payroll companies and some brokerage houses in order to automate parts of the individual tax return.
The Cloud Will Dominate
Less than 30% of small businesses use cloud-based accounting software; most accounting firms still have most of their programs house on an internal or hosted server. Still, every year draws the profession farther away from the server and closer to a completely cloud-based software as a service (SAAS) model. This will accelerate in 2018, as more small businesses migrate to the cloud and the big tax software companies (e.g., CCH, Thomson) hopefully release fully functional cloud-based software. Individual clients will also start to demand to receive their documents electronically.
Compilations and Reviews Will Decline (and Audits Are Next)
With the rise of cloud-based, real-time accounting, the value a traditional compilation or review provides is practically nil. The only reason a client needs a compilation or review these days is to give to a bank or to raise money. Managing a business off of a compilation is dead. Accounting firms are starting to provide real-time data to their clients so they can make quicker decisions. They will start relying much more heavily on nontraditional data points and KPIs to help their businesses make better decisions.
Tax Return Compliance Will Be Commoditized
Clients who only want a tax return prepared with no advice are turning away from CPAs, especially on the low end. The low-end compliance tax return will be commoditized. This will become even more accelerated in 2019, with the doubling of the standard deduction. CPAs will need to become more adept at providing business-based advice and tax planning services.
Tax Planning Will Be King
As the newly passed tax law takes effect, with all of its added complexities, businesses will want significant tax planning for the years ahead. No one knows how long the new provisions will last; depending upon what happens in the 2018 and 2020 elections, it might not be for long.
Traditional CPA Firms Will Increase Nontraditional Acquisitions
CPA firms, feeling pressure to change their core business as compliance continues to become less profitable, will start acquiring non-CPA firms in order to bring on nontraditional services faster. This will include tech companies, investment companies, trust service, insurance, and possibly even lending. The value of a traditional firm that only does tax and audits will continue to decrease.
CPA Firms Will Get Rid of Their CPA Designation
The value of being a “CPA firm” is becoming too costly and burdensome, especially for employers who hire remote workers across multiple states. State CPA boards are slow to change, and most firms are making the choice to call themselves accounting firms and not worry about the CPA designation and the complexities it brings, especially with the rise of nontraditional CPA services.
Crypto-Currency Will Become a Tax Problem
The last six months have seen a rise in people investing in cryptocurrencies, including bitcoin. This will become a nightmare for CPAs in 2018, as there is no tracking or reporting to the IRS for the gains and losses. Practitioners will need to begin asking the question, “Did you buy or sell Bitcoin last year?”
Value-Priced Billing Will Gain Steam
2018 is going to be the tipping year for value-priced billing. Firms are starting to realize that fixed-price fees are a better way to bill clients than the hourly standard. As more and more baby boomers retire and younger generations take over, this shift will only increase. The timesheet is next on the chopping block after billable hours, but the required shift in the mindset of managers will take a lot longer to take catch on in the accounting world.
