1978: A small business owner has her bookkeeper log cash transactions in a One-Write manual entry system. Payroll is done on a separate ledger. Invoices are recorded in a journal. At the end of the year, these books are handed off to the accountant who then “writes-up” all of these transactions into a general ledger by re-entering the data and then records manual adjusting journal entries and then types up a financial statement and tax returns. The documents are printed and mailed for signature and filing.
1998: A small business owner has her bookkeeper record her transactions in a software – like QuickBooks, Peachtree or Accpac – which is installed on a computer in the office. Payroll is likely kept separately or outsourced to a service. Checks and invoices are printed and mailed. At the end of the year, the journals are either printed or exported to a floppy disk and given to the accountant who then manually re-enters the data into their own, separate system and, after making adjusting entries, creates financials and tax returns. The documents are printed and mailed for signature.
2018: A small business owner has her bookkeeper record her transactions in accounting software that is now hosted in the cloud. The software is integrated with her bank so that payments and deposits are automatically executed and recorded. Invoices are done not by the bookkeeper but by designated employees as work is performed. Her accountant now accesses this data remotely, where it integrates with a tax preparation software that eliminates duplicate data entry. Financials and returns are then created using the data entered by the small business owner, reviewed by the accountant, and electronically filed.
As little as twenty years ago, accountants were kept busy doing a lot of…well…busy work. Today, that busy work has been delegated to the client. And that’s as it should be. Clients don’t want to pay their accountants to do the work that they could easily be doing themselves. But they will happy pay for advice, strategy and guidance for better managing their businesses, saving taxes, increasing cash flow and putting money away for retirement.
Clients doing not some, but all data entry. Cloud based systems that not only know how to capture all transactions but include bot technology that will ask clients whenever a transaction seems out of the ordinary or suggest ways to do better data entry based on a transaction’s details. Tax research being performed automatically by services using artificial intelligence (see what IBM Watson is doing with H&R Block). Automatic generation of accurate financial information and tax returns. Automatic responses to IRS requests. Software that continuously evaluates and monitors transactions throughout the year that checks for anomalies or irregular items.
This is all the “grunt” work being done by today’s accounting professional that tomorrow’s client will refuse to pay for. But don’t worry. They’ll always pay – a lot – for sound advice from a trusted, experienced human being to discuss the challenges and obstacles they face every day using the most current and accurate information available.
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