Accounting
Art of Accounting: Accountants’ growing services
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- Small business accounting software: When QuickBooks and its DOS predecessors were introduced, we approached our clients to adopt them with us, leading them into the use of such software. Today it is pretty much universal, but that wasn’t so in the early 1980s when PCs were first made available.
- Client accounting services: CAS services were always available through the smaller accounting firms, but about 10 years ago the larger firms started aggressively promoting these services. Many clients today are abandoning their inhouse bookkeepers for the CAS services provided by accounting firms. This has also grown into outsourced fractional advisory and CFO services. The clients did not come to us with this need; we went to them. This also includes payroll processing and other accounting functions that typically have been performed in-house, although payroll processing was way ahead of this trend.
- Business valuations services as benchmarks to measure growth in value: Clients always ask what we think their business is worth, and we usually reply with some vague comments. Developing a method to initially value the business and then updating it annually can be an effective way of easing clients into a value creation mindset rather than by them only looking at the annual profits or free cash flow.
- Assisting clients with a buy-sell agreement: Many clients with multiple owners either do not have a buy-sell agreement or a current one. This is an important issue, and the absence of such an agreement could cause many problems and consternation if there is a death of one of the owners or a sudden disability. Outdated agreements also should be brought up to current and projected reality. This is a service where you could suggest being engaged to facilitate a series of meetings to have the clients get it done.
- Internal control review: Clients do not lose sleep over taxes but do lose sleep wondering if they have proper controls in place. When an audit is performed, we have myriad checklists and processes to follow and then usually prepare a management letter with comments. Many times the current year’s management letter repeats what was in the previous year’s. A suggestion is to present an engagement proposal to assist in implementing some of the necessary changes. For your non-audit clients, you could use the audit programs and techniques to perform a full accounting control review of their business. These are clients you are familiar with, and it should not be too difficult to come up with a fixed fee. This could be segmented into two stages: an exploratory stage and an implementation stage. The exploratory stage would be similar to what you do on an audit and would include a memo similar to what is included in the management letter. The implementation could be left to the client. If they have no action on it for about six months, you could present your proposal for this implementation stage.
- Attorney trust accounts: These must be maintained carefully and exactly. A suggested service for lawyers is to do a “surprise” reconciliation of the bank account balances and the amounts held for clients, and then to assist in straightening out anything that isn’t fully in order.
- An 11-year profit and loss trend analysis: The P&L analysis can be prepared to assist clients in their long-range planning. This would start with the previous five year’s summary P&L, an annualization of the current year and then using the trends to project the next five years. You should include data such as the number of sales invoices, average sale per invoice, units sold, gross margins and percent of materials purchased to sales for each year, employee headcount and sales per full-time employee, sales from the top five or 10 customers and whatever other data clients use to manage their businesses. I usually start with a freebee of the 11-year P&L and tell clients what else should be done, the benefits to them and my charges. Freebees take time, but if this is an ongoing relationship I believe you should have this information at your fingertips. It is also a way to start a discussion about where the client thinks the business is headed and their efforts in that going forward.
- Succession planning: This is something every business client needs, but most do not want to confront. This service not only helps a client prepare for their exit, but also provides the comfort that the business could continue operating in their absence and their governance documents are in order, that someone could step in to sign checks if they are not available for some reason, and that they could plan an extended vacation trip without worrying the business would collapse. This can also segue into how clients envision their personal future with or without the business, how strong some of their key personnel are in managing and leadership, and their relationships with customers, vendors and personnel.
- Assisting not-for-profit organizations in added services: CAS and audits are typical services provided to NFP clients. However, they usually need many other services, including designing controls; reviewing procurement procedures, grant applications and compliance; managing cash flow; handling tax compliance for unrelated business activities; financial literacy training for board members; and assisting with onboarding a new CEO, CFO or controller.
- Retirement income and estate liquidity for older clients: These are a concern for clients contemplating retiring or those concerned about the disposition of their estates and liquidity for the surviving spouses and others that depend upon the client for their cash flow.
All of the above have been provided by me, and the clients were usually introduced to these services by me. Usually, the proposal was generated because of my concern for the client or because of an opening created by something the client said but wasn’t able to fully articulate their concerns. The above is a small sampling, and there are many other situations where an independent CPA or financial advisor could assist clients. It requires listening, being receptive to tip-offs by the client, and actually proposing to assist in these areas. Waiting for the client to ask for such help could be like waiting for a train that already left the station.
The above suggests ways to grow your practice (and revenue), add interesting specialties, develop staff in a greater variety of services, and really help clients by the added value, personal financial security and wealth management provided by our assistance.
Do not hesitate to contact me at
The House Ways and Means Committee held a hearing Tuesday to mark up the so-called “one, big beautiful bill” extending the expiring provisions of the Tax Cuts and Jobs Act while adding other tax breaks for tip income, overtime pay and Social Security income and eliminating tax credits from the Inflation Reduction Act for renewable energy as well as the Direct File and Free File programs.
“Today, this Committee will move forward on President Trump’s promise of delivering historic tax relief to working families, farmers and small businesses,” said committee chair Jason Smith, R-Missouri, in his opening statement. “The One Big Beautiful Bill is the key to making America great again. This moment has been years in the making. While Democrats were defending IRS audits on the middle class and tax carveouts for the wealthy, Republicans on this Committee got on the road, to hear from real Americans about how the 2017 tax cuts benefited them. This bill wasn’t drafted by special interests or K Street lobbyists. It was drafted by the American people in communities across the country.”
Democrats blasted the bill. “In 2017, Republicans passed a tax law that was supposed to pay for itself, raise wages, and help working families,” said ranking member Richard Neal, D-Massachusetts. “None of that happened. Instead, it exploded the deficit, worsened inequality, and left everyday Americans behind. Now they want to double down on the same failed playbook. One that rigs the system for billionaires and big corporations while everyone else pays the price.”
Among the provisions, the bill would make the expiring rate and bracket changes of the TCJA permanent and increase the inflation adjustment for all brackets excluding the 37% threshold, according to a
Other changes and limitations to itemized deductions would be made permanent, including the limitation on personal casualty losses and wagering losses and termination of miscellaneous itemized deductions, Pease limitation on itemized deductions, and certain moving expenses.
The bill is likely to go through some changes when it goes to the Senate. “Politically, we’ve been talking about the process for the last couple months,” said Mark Baran, managing director at CBIZ’s national tax office. “Congress is finally able to pass a concurrent resolution to unlock the budget reconciliation process.”
“The House and the Senate have completely different instructions on what they’re going to cut and how they’re going to score,” he added. “Some of that’s very controversial, and that needs to be worked out. But now we’re getting into the actual crafting of provisions and legislation.”
According to a
The bill would also allow businesses to include amortization and depreciation when figuring the business interest limitation through Dec. 31, 2029, while making permanent the excess business loss limitation.
In addition, the bill would retroactively terminate the Employee Retention Tax Credit for taxpayers who filed refund claims after Jan. 31, 2024.
In keeping with Trump campaign promises, the bill would eliminate taxes on tips for employees in certain defined industries where tipping has been a traditional form of compensation. There would be a new $4,000 deduction for seniors that phases out starting at $75,000 of income. The bill would also eliminate taxes on overtime pay.
The bill would give individuals an above-the-line deduction for interest on loans used to purchase American-made cars, but that would be capped at $10,000 with income phaseouts starting at $100,000 (single) and $200,000 (married filing jointly).
The bill would also increase taxes on certain private college investment income up to a maximum of 21% on universities with a student-adjusted endowment above $2 million.
It would also roll back some of the renewable energy provisions from the Inflation Reduction, including a phaseout and restrictions on clean energy facilities starting in 2029, while also limiting or eliminating clean housing energy and vehicle credits. The bill would sunset major IRA clean electricity tax credits, including the clean electricity production tax credit (45Y), clean electricity investment tax credit (48E), and nuclear electricity production tax credit (45U) begin phasing out after 2028 and finish phasing out by the end of 2031; repeal hydrogen production credit (45V) for facilities beginning construction after 2025, according to the Tax Foundation. It would also phase out advanced manufacturing production credit (45X) for wind energy components after 2027, for all other eligible components after 2031. Across several IRA clean energy credits, the bill would repeal transferability after the end of 2027 and further limit credits based on involvement of foreign entities of concern. On the other hand, it would expand the clean fuel production credit (45K), and tighten rules on the 126(m) limitation for executive compensation.
The bill would terminate the current Direct File program at the Internal Revenue Service and establish a public-private partnership between the IRS and private sector tax preparation services to offer free tax filing, replacing both the existing Direct File and Free File programs.
The Federal Accounting Standards Advisory Board is asking for input on emerging accounting issues and questions related to reporting entity reorganizations and abolishments as the federal government endures wide-ranging layoffs and reductions in force, including the elimination of entire agencies by the Elon Musk-led Department of Government Efficiency.
“Federal agencies and their functions, from time to time, have been reorganized and abolished,” said FASAB in its
Reorganization refers to a transfer, consolidation, coordination, authorization or abolition of one (or more) agency or agencies or a part of their functions. Abolition is a type of reorganization and refers to the whole or part of an agency that does not have, upon the effective date of the reorganization, any functions.
The Trump administration has recently moved to all but eliminate parts of the federal government such as the U.S. Agency for International Development and the Consumer Financial Protection Bureau, and earlier this month, Republicans on the House Financial Services Committee
FASAB issues federal financial accounting standards and provides timely guidance. Practitioner responses to the request for information will support its efforts to identify, research and respond to emerging accounting and reporting issues related to reorganization and abolishment activities, such as transfers of assets and liabilities among federal reporting entities. The input will be used to help inform any potential staff recommendations and alternatives for FASAB to consider regarding short- and long-term actions and updates to federal accounting standards and guidance in this area.
The questions include:
- Have any recent or ongoing reorganization activities or events affected the scope of functions, assets, liabilities, net position, revenues, and expenses assigned to your reporting entity (or, for auditors, your auditees)? If so, please describe.
- What accounting issues have you (or your auditees) encountered (or do you anticipate) in connection with recent or potential reorganization activities and events?
- Please describe the sources of standards and guidance that you (or your auditees) are applying to recent, ongoing, or pending reorganization activities and events.
- Have you experienced any difficulties or identified gaps in the accounting and disclosure standards for reorganization activities and events? What potential improvements would you recommend, if any?
FASAB is asking for responses by July 15, 2025, but acknowledged that late or follow-up submissions may be necessary given the provisional nature of the request. Responses should be emailed to [email protected] with “RERA RFI response” on the subject line.
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