Accounting
Are remote partners the future for accounting firms?
The remote partner represents a small but growing part of the professional landscape, their rise a reflection of the major changes that accounting firms were forced to make during the lockdowns. But while they’re a distinct minority today, the increasing sophistication of collaboration solutions — combined with the still-unresolved challenges with the talent pipeline — indicates their numbers are likely to rise.
Jennifer Wilson, co-founder of Convergence Coaching, a remote work-focused leadership and management coaching and consulting firm, estimates that remote partners make up about 5% of firm leaders nationwide; adding in those who were already partners and then went remote, her estimate grows to about 10 to 15%. But she predicted this proportion will likely grow over time as more firms realize they’re no longer as bound to geography.
“It’s just going to become more common because firms are getting smarter about hiring based on talent, not geography,” she said. “They’re looking for a certain skill set, a certain cultural fit, a certain leadership set of attributes and they shouldn’t care that it’s local or not. It’s more important that the fit is right than the geography. There is now enough support for cross-geography work and collaborations these days. The technology works. It’s proven. We’ll see more.”
(
Randy Johnston, executive vice president of accounting-centered IT consulting firm K2 Enterprises, estimated that remote partners make up about 5% of the total population of accounting firm leaders, and the number will rise.
“I think we’ll see a lot more,” he said. “It’ll be a long time, the culture has to shift a lot … and won’t shift fast enough for the percentage of change very quickly, but if we had this conversation 20 years from now, I don’t think it would be much of a conversation because you wouldn’t worry about it so much, it would just be kind of natural, so I expect it to well exceed 50%.”
The idea of a partner who spends most of their time out of the office, or works with clients remotely from the office, has been already normalized over the years, especially at large firms. While there may have been a time when a partner saw everyone in person at their headquarters, even the most dedicated office dweller today does at least some of their work online.
“We used to say any multi-office firm has already been working remotely,” said Wilson. “It’s not that far a leap for them to make the jump.”
Another factor is the strong demand for high-quality talent, combined with the diminishing number of accounting professionals. Douglas Slaybaugh, a CPA career coach, noted this issue is exacerbated by the retirement of older experienced accountants with no one to replace them. While pipeline strain is felt mostly in the staff, manager and senior levels, it’s a problem increasingly being felt at the partner level as well.
“Boomers are leaving and there’s not as many coming up the ranks,” said Slaybaugh. “Partners will start to feel a crunch in the ranks, losing some of their most experienced professionals.”
But while necessity does play a large role in the rise of remote partners, it’s not the only factor. Remote partners can serve as a key player in not just a firm’s recruitment strategy, but its growth strategy as well.
“They can expand into other niches more readily,” said Slaybaugh. “They tend to have more geographic coverage because, if you think of the traditional model, you’re a firm, you’re in one location, you’ve got maybe another office, you’re very hyper-local or regional. You start adding remote partners, suddenly you can work all over.”
This is especially advantageous for smaller firms hiring from metro areas with bigger firms. Johnston said that, many times, such remote partners bring with them new processes that the small firm may not have known about, so they can serve to upgrade their workflow.
“Remote workers tend to bring the process from their predecessor firm with them, and they become the process if there is no process at the firm,” he added. “You go into a small firm, discover they have no processes, adopt the ones you’re familiar with and that becomes how they do things. Small firms can become sophisticated since they inherited a larger firm’s processes.”
Wilson noted that even if small firms don’t have as many resources, they can offer a lot to these remote partners in terms of lifestyle. A firm in Lincoln, Nebraska can tell job candidates they don’t need to do an expensive daily commute to the office. “You can go visit clients, but for the most part you don’t need to come into the office every day, and that will save you time and money,” said Wilson. “Now Lincoln will need to pay New York pricing for that talent, and that could be a barrier, but oftentimes it is not.”
Wilson added, though, that the flow goes both ways. Just as there is much a small firm can offer a remote partner who lives in a big city, a large big-city firm has a lot to offer for someone who lives outside the metro area too. That’s especially true for an accountant who is “stuck in a one-horse town where everyone is super-traditional, no one is evolving their firms, technology is not being utilized, and policies are really traditional,” said Wilson.
“You work in this tiny town in Oklahoma and your firm’s options are not great, but you’ll be living there because maybe your family is there so you’re not moving,” she added. “Well, guess what? You could work for a great progressive firm because we don’t care where you live, and you can have this fantastic career working for a firm you love and respect in a bigger city right from your small town. So we see both and they’re both effective.”
Johnston cited changing business models as another reason we’re seeing more remote workers. Many professionals who worked remotely during lockdown found it suited them and did not want to return to the office. This led to a lot of them leaving their more traditional firms (sometimes after being acquired) and founding their own firm, using a remote model.
“Most say, look, we worked remotely during the pandemic,” said Johnston. “I want to start a firm with a remote work style. Then, just as the old saying goes, ‘birds of a feather flock together,’ so they start finding other people like that.”
Firms don’t necessarily have to be new to make this shift, though. Atlanta-based Aprio, a Top 50 firm, was founded in the 1950s but chose to lean heavily into remote work during the lockdowns, according to Larry Sheftel, Aprio’s chief human resources officer.
“Aprio created a remote work model at the onset of the pandemic, and we continue to evolve our approach,” he said. “We currently look for talent located near one of our physical locations or located in an area where we will soon establish an office. If we are seeking a unique, specific skill set we may hire a partner who is fully remote.”
Other firms, like Top 50 firm Schellman, have always been like this. While technically headquartered in Florida, CEO Avani Desai said the firm has always conceived of itself as a remote-first company. All of its partners are remote partners. “We believe talent has no bounds,” she said.
“We wanted to tap into top-tier talent from coast to coast,” Desai added. “It was a strategic move to get the best and brightest to work here, to thrive, and it worked.”
See our entire series on the “
Ernst & Young is leveraging its
EY began using older technology over a decade ago for online detection analytics, but new forms of AI are enabling it to spot unusual outliers in audit data. “We started with Excel and went into business intelligence solutions, but we were dependent on our auditors basically spotting the outliers based on tables and charts,” said Marc Jeschonneck, EY’s global assurance digital leader. “The next frontier that we are now embarking on is really to use AI to detect anomalies.”
EY has been using a general ledger anomaly detector and is now embedding AI capabilities in its GL analyzer. “The one that is most used around the audit, with more than 800 billion line items of general ledger data analyzed per year, is actually the general ledger analyzer that we use in most of our audits,” said Jeschonneck. “In that tool, we’re now embedding online detection with time series regression to really go to the next step.”
Online detection analytics is just one of the ways the Big Four firm is employing AI technology. It’s also using AI for workflow recommendations. “All the firms have their own platforms, and so do we with EY Canvas, with more than 500,000 users in total clients as well as EY professionals,” said Jeschonneck. “We really embed with Canvas AI a recommendation engine into this platform.” It can help when identifying risks, harvesting news alerts and looking into ratios and KPIs of various sectors.
AI in the EY Canvas recommendation engine shows auditors which risks other audit teams have seen with clients in similar sectors with similar profiles. “It really focuses their attention on what we think matters most,” said Jeschonneck. “Instead of starting from scratch based on the broader knowledge of the team just by themselves, it’s really harvesting from all of the other engagements here to spot those risks that matter most to the engagement.”
Another area where AI and machine learning are leveraged is document intelligence. AI is still limited in its mathematical ability, however, so the technology is mostly using older forms of machine learning for right now. “There is research in our pipeline to move the document intelligence to the next level, even using generative AI capabilities,” said Jeschonneck. “But to be fair, currently we don’t do that.”
Instead EY is using machine learning to craft models to identify any deviations from expectations in tables and disclosure notes. “The first thing that we are planning to use generative AI is when we help our people to improve their experience in summarizing comprehensive documents about accounting and auditing and to improve search results,” said Jeschonneck. “We are very much conscious that the quality of the respective results is highly
dependent on the quality of the underlying data.”
Search and summarization capabilities will bring knowledge from the broader accounting and auditing teams to EY’s people in a more digestible format.
EY is careful to balance the risk that comes with applying new technology compared to using more mature tools.
“Exploring the benefits of the new technology, and making sure that you know about the respective risks, the guardrails that need to be put in place here, is essential for us, and you can expect that regulators and stakeholders around the world carefully observe how auditors explore these new technologies,” said Jeschonneck.
Firms have to be careful about potentially exposing the data received from clients. “That’s one key consideration when using AI, that we not expose anything beyond the respective data privacy agreements with our clients,” said Jeschonneck.
The firm is careful when certifying solutions and working with regulators, making sure it does robust testing and has the documentation at hand, especially with new technology like generative AI.
“We always distinguish between what our teams use to really generate audit evidence and what they use as technology to support the broader process,” said Jeschonneck.
Auditors still have to do many routine administrative tasks, he noted, and they are able to use AI technology like Microsoft Copilot to boost their productivity.
EY works closely with Microsoft, using technology such as Power BI for business intelligence, as well as Microsoft Azure.
The firm can also use AI technology to uncover fraudulent documents. “When we see falsified documents that were manipulated by people, AI is tremendously helpful for us,” said Jeschonneck. “As it gets easier for generative AI technology to potentially manipulate documents, the response here must be more comprehensive than just how these documents were altered.”
Machine learning and AI tools can help spot such anomalies in some cases more easily than a human being. “Even if you go for a monthly or daily time series, and you’ll have people spotting anomalies by comparing it to their expectation in simple line charts, we’re still dependent on things like the resolution of the screen, or people spotting the outlier by manually going and drilling down into tables,” said Jeschonneck. “But when the algorithms help you to detect those, at least your attention is focused on these first. Then we rely on the talent of our professionals here to really deep dive into those and further investigate.”
EY firms across the globe are leveraging such technology. “Many of the innovations that we have are actually harvested from our member firms from around the world,” said Jeschonneck. “Yes, we have a central team developing it, but we always rely on innovation coming also from the ground, from the people that work directly with our clients.”
The general ledger analyzer, for example, came from the U.S. firm, while time series regression analysis comes from a collaboration of people in Europe and the U.S. The general ledger anomaly detector started in Japan.
EY also provides training in AI to its people. “What we have here is the technology enabling our people, in the hands of professionals who are skilled and have access to the right training making the best use of the technology that we have,” said Jeschonneck. “Technology really gives new opportunities to the people.”
“Timing is everything.” We’ve heard this turn of phrase often in all sorts of scenarios. And if you have clients who are starting a new business or transitioning from a sole proprietorship or partnership to an LLC or corporation, it’s absolutely relevant!
Whether someone incorporates their business now as the year comes to a close or waits until the new year can affect their company in various ways. In this article, I’ll discuss those impacts and explain why some clients might find the option to do a delayed filing attractive.
Business formation timing considerations
First things first, let’s discuss the three timing options business owners have when forming an LLC or corporation — midyear, end of year or January 1 (a.k.a., the start of the new year).
Midyear
Registering a business entity with a midyear effective date means the company will be subject to all the tax and reporting requirements associated with their LLC or corporation for that year. And existing businesses that switch to an LLC or corporation mid-year must submit two sets of income tax returns: one for the business structure it operated as during the months before its incorporation date and another set for the remainder of the year when it operated as an LLC or corporation.
End of year
December is an extremely hectic month for Secretary of State offices across the country, which can create a backlog of filings and potentially result in an effective date a month or more into the new year. Typically, states must receive and process an entity’s registration form before it’s considered effective. So, even if someone requests an effective date in December or on January 1, the actual effective date might be later if the state is unable to process the registration before the requested effective date. In other words, states generally do not make effective dates retroactive.
January 1
A January 1 effective date has some perks. It gives the LLC or corporation a clean start — e.g., existing businesses only have one set of tax forms for the tax year vs. the two required if switching entity types midyear. Also, in states that levy LLC franchise taxes, an LLC that files with an effective date of January 1 would not have to pay those fees for the previous year. For example, if a business files its LLC formation paperwork in November 2024 but requests an effective date in January 2025, the LLC won’t have to pay a state franchise tax for 2024. Likewise, the LLC or corporation’s other corporate formalities kick in for that year rather than for the year before.
How to ensure a January 1 effective date
Typically, a business registration filing will be effective on the date the state processes the forms. The processing time may vary between just a few days to several weeks, with expedited filings completed in five to ten business days.
A delayed filing, however, gives business owners some control over when their corporation or LLC goes into effect. In states that allow delayed effective dates, business owners can submit their formation paperwork in advance and set a future date for when they want their entity to be officially registered. Different states have different rules for when they’ll accept a delayed filing.
For example, here are several states’ requirements for how far in advance business owners may request a delayed effective date:
- Alabama – Up to 90 days before the requested effective date;
- California – Up to 90 days before the requested effective date (note that in California, LLCs and corporations that submit their formation paperwork after December 18 will be considered to be in business effective January 1 the next year, provided they do not conduct business between December 18 and December 31 of the current year);
- Florida – Up to 90 days before the requested effective date;
- Illinois – Up to 60 days before the requested effective date;
- Pennsylvania – Up to 90 days before the requested effective date;
- Rhode Island – Up to 90 days before the requested effective date;
- Texas – Up to 90 days before the requested effective date;
- Virginia – Up to 15 days before the requested effective date.
The below states do NOT allow delayed effective dates:
- Alaska
- Connecticut
- Delaware
- Hawaii
- Idaho
- Louisiana
- Maryland
- Minnesota
- Nevada
- New Jersey
How can your clients request a delayed filing?
As your client or their representative completes the forms to establish their LLC or corporation, they should consider their desired effective date and make sure they submit their delayed filing within the state’s acceptable time frame. For instance, if someone wants to form an LLC in Rhode Island with an effective date of January 1, 2025, they can submit their delayed filing as early as Oct. 2, 2024. The company’s Articles of Organization (LLC) or Articles of Incorporation (corporation) should reflect the desired effective date. If the state doesn’t have a designated field on its form to request an effective date, your client can add a provision to request a specific date (if the state will allow it).
Is a delayed filing for everyone?
Whether a delayed filing makes sense for a client depends on their situation. As we discussed, submitting business formation paperwork before the end of this year to request a January 1 effective date next year can make tax filing time less cumbersome and potentially avoid some extra compliance fees. But sometimes, a delayed filing won’t be the way to go. For example, some consultants or other professionals may not want to wait that far in the future to get their entity up and running because they need an earlier effective date to secure a significant client.
Final thoughts
Delayed filings provide business owners with control over the official registration date of their business entities. By filing business formation ahead of time and requesting a delayed effective date of January 1, business owners may avoid potential paperwork processing backlogs at the state and eliminate extra paperwork at tax filing time. Moreover, it enables entrepreneurs to file their registration forms before the end of the current year for the following year without being on the hook to pay certain fees (like an LLC franchise tax) and submit certain reports (like annual reports) for the year when the registration forms were filed because the entity was not yet effective then.
As with all business concerns with legal and financial ramifications, your clients should seek expert professional guidance when considering whether a delayed filing will be advantageous for them. That’s where your expertise can make a tremendous difference! And for any questions beyond the scope of the matters you’re licensed to address, please direct your clients to the appropriate resources.
Within SAP Fieldglass, Joule can recommend best-fit templates to generate job postings and statements of work with prefilled information such as the start date and the number of skilled workers needed. Joule embedded across the SAP Business Network can analyze, categorize and transform unstructured invoice rejection errors into structured, actionable insights to reduce the cost of resolving exceptions. Further planned capacities will eventually help match suppliers with new business opportunities. Within SAP Ariba, Joule will enable users to create RFPs and request help with routine inquiries and surface risks. These capabilities will also provide buying recommendations along with supplier summaries from different data sources. In addition, a sustainability scorecard from SAP Ariba helps customers make decisions that align with their organizations’ environmental, social and governance objectives.
Overall, Joule will manage 80% of the most frequently performed tasks in the SAP Ariba portfolio of intelligent spend management and business network solutions.
Krisztian Bocsi/Bloomberg
During his presentation yesterday at SAP Spend Connect Live, Manoj Swaminathan, president and chief product officer for intelligent spend and business network at SAP, noted that the company has accounted for people’s concerns regarding security and privacy.
“SAP is dedicated to delivering best-in-class solutions infused with AI, empowering you to prioritize strategic initiatives over mundane tasks,” he said during his keynote. “We understand and hear the concerns surrounding data security when implementing AI, which is why we have made no compromises in ensuring our AI capabilities set the standard for compliance. From third-party advisory boards to adhering to the
Beyond Joule’s integration into the wider portfolio of SAP products, he also announced the upcoming release of the SAP Ariba Intake Management solution, designed to address how businesses handle employee requests and process orchestration, starting with procurement. It provides employees with a single place to go for procurement inquiries and visibility on their status. The solution collects employee requests, orchestrates processes across landscapes and applications, and provides visibility on status while shielding employees from process complexity. SAP plans to make SAP Ariba Intake Management available in the first quarter of 2025.
Swaminathan also announced that SAP Business Network will launch a new promote subscription in the first quarter with value-added features to help suppliers differentiate themselves, attract new buyers and grow their businesses. Swaminathan said the subscription will give suppliers recommendations to improve discoverability, advanced search results, supplier profile verification and network catalog APIs. With the help of generative AI tools, suppliers can load their full suite of offerings into the network catalog faster and with enhanced product descriptions and summaries. The new promote subscription will help suppliers identify sales opportunities based on regional search data and use advanced insights to track business growth on the network.
He also announced a new analytics add-on with AI capabilities for SAP Fieldglass solutions, which helps procurement, vendor management and HR professionals to implement agile multichannel talent strategies. The analytics add-on for SAP Fieldglass solutions lets users review performance against over 50 external workforce key performance indicators; access global market intelligence including rates, talent supply and demand, and time-to-hire trends; and track sustainability initiatives such as spend with diverse suppliers and worker health and safety, while observing cost overruns, worker fatigue, and on- and offboarding compliance.
“With SAP Business AI as the foundation of our intelligent products, customers can improve productivity and gain insights from their spend data no matter where it sits,” said Swaminathan. “Whether it is managing cost, mitigating risk or supporting scope three emission reduction, SAP empowers companies with the right solutions for agile and effective spend management and supply chain functions.”
ETFs that buy Chinese stocks struggle lately amid ‘lost faith’ in China stimulus
EY beefs up use of AI amid $1B investment
There’s a key change coming to 401(k) catch-up contributions in 2025
Are American progressives making themselves sad?
U.S. Beneficial Ownership Information Registry Now Accepting Reports
CPA licensure program off to ‘promising’ start
-
Personal Finance5 days agoInvestors face delays moving certain assets from TreasuryDirect
-
Economics6 days agoInflation rate at 2.4%, topping expectations
-
Stock News6 days agoBeleaguered Stellantis ousts CFO, other top execs in bid to ‘redouble’ its focus
-
Economics6 days agoHurricane Milton inundates Florida
-
Finance5 days agoWells Fargo WFC Q3 2024 earnings
-
Economics6 days agoThe Democrats will struggle to retain the Senate
-
Economics5 days agoProducer price index September 2024:
-
Personal Finance5 days agoOzempic drives up health-care costs, whether you can get it or not