We have all heard it. “Why does it take so long?”, or “Just get it done!”, and “I JUST need something so that I can get the taxes ‘done’ for the year.” What do these statements even mean?
I speak with business owners all day, every day. I have worked in tax preparation offices, small business, medium-sized ones and micro business owners’ homes for my entire adult life. No matter what the dollar amount on the bill is, the owner almost always sees the tax accountant’s bill as too high. Why?
The traditional way of doing bookkeeping and working on tax returns for six months a year is not where business owners see value. They want certainty that they are in compliance, payroll, yes, sales tax, cashflow, notices handled, yes, yes, tax returns done and financial planning, of course. To translate this means answers to questions like, “Is the IRS going to come take all of my money and put me out of business?” “I don’t know if I am paying enough in taxes so I don’t know if this is really my money to spend in my personal life or not.” “Do I have enough money to hire a new guy? Go on vacation? Expand into the market? Sign a lease for office space?” These are the things that keep them up at night and effect them on a deeply personal level.
They do not understand or have the time to learn about the benefits of showing a profit in their financials vs. reducing their tax liability and the effect this will have on their business over the coming years. Why aren’t we asking them the questions that truly help them get to the answers that will have a real positive effect on their lives? Why don’t we make time to sit down with our clients and really ask, “Hey Bob, what are your plans for the business in the next year and how can we assist you in getting there?” Rather than a check box, a task, a to do, of getting the tax return done we, the bookkeepers and tax accountants, must be seen as a vital part of the business that we are working with. Tax accountants are a valuable resource to society, so why are we thought of as quite, standoffish, difficult, expensive and eventually easily replaced by less expensive, more responsive technology?
If the client is trained year after year to see bookkeeping and recordkeeping as unimportant, not of value because the tax accountant will get the tax return “done” off of incomplete and potentially inaccurate books than what hope do we have? In my experience I have seen that some tax accountants sometimes/often handle the lack of record keeping with journal entries. They will ask the client to give them amounts by quarter from an excel spreadsheet. These amounts are then entered as a journal entry per quarter and the tax return is prepared off of these amounts. What is wrong with this? Well, I hope you see that there is a lot wrong with this. The client is missing out on the entire point of having books and by letting them get the all mighty check list done in this way they will have no requirement to change their habits.
Has the business owner done any record keeping over the past 12 months beyond keeping an envelope of wrinkled, faded, and ripped receipts in an envelope, drawer, or purse? No, they have not. Why not? How have they been running their business all year you ask?!
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Now they come to you, the professional to solve their problem. To get them in compliance with the IRS, and save their bacon. So, what do we as bookkeepers and tax accounting firms? We comply, or course, and show them just how fast and correctly we can do it. We are killing ourselves for the (if were being optimistic) payment of an “Atta boy” pat on the back, “You are so smart and quick.” Meanwhile the market is being taken over by corporations that have funding and don’t know them personally, however the computer says it will do it faster, easier and with a smile. There is a road out of this loop, but it takes us as bookkeeping and accounting professionals to join together in advisory and show them our real super power, being a partner and friend to one another and the business owner. That is when the real magic happens.