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Accounting

Intuit rolls out new features and capacities for QuickBooks

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Intuit announced a bevy of new and upcoming features and enhancements to its suite of products during its most recent user conference in Las Vegas, most of which center around AI and automation. 

Many of these enhancements are made specifically with accountants in mind. With regards to QuickBooks Online Accountant, the company’s vision is to provide a personalized space for accounting firms with accountant-specific workflows and robust client management capabilities that span multiple clients. This hub may include a client console that provides access to client data to improve decision-making and speed-to-action to better serve clients; advanced role-based access controls and permissions; and a dashboard and file review experience that automatically surfaces anomalies across all clients and tracks and enables closing books at scale.

Accounting firms will also now be able to subscribe their clients to QuickBooks Live offerings through QuickBooks Online Accountant, freeing up time for accountants by connecting businesses to QuickBooks Online-certified experts to educate them on how to set up and manage their business within the platform as well as answer questions on specialized topics such as business tax and payroll tax compliance. Each time a client wraps up a call with a QuickBooks Live expert, the accountant has access to a call summary, providing transparency on topics discussed.

Intuit Bangalore office

Accountants will also be able to use QuickBooks Live Expert Full-Service Bookkeeping, which offers them the ability to outsource ongoing bookkeeping work to a dedicated bookkeeper, who works directly with the client to perform monthly tasks. A dedicated bookkeeper will get to know the business, bring past books up to date, and manage the monthly bookkeeping, complementing a firm’s client engagements beyond scope or if they are tax-only. QuickBooks will also provide access to a QuickBooks-certified bookkeeper to bring a business’s books up-to-date within 30 days, going back to their most recent tax filing. 

Beyond new capacities for QuickBooks Online Accountant, QuickBooks itself  now includes AI-enabled transaction categorization and matching within QuickBooks Online; Intuit Assist, the generative AI assistance in QuickBooks, will soon have the ability to auto-generate invoices, estimates, bills, and expenses, and auto-draft invoice reminders that help get small businesses paid on time. 

Meanwhile, within QuickBooks Online Payroll, the software can now calculate and withdraw payroll tax liabilities as they increase, such as at the time of a payroll run, and pay agencies when taxes are due; the software will inform  businesses which taxes are being filed and paid automatically and which need to be handled manually. The product also now supports the ability to schedule compensation changes in advance and set up employees with multiple different pay types (i.e. salary and hourly). A new History tab also allows employers to easily view historical employee information, including position and compensation data. Users can also make bulk changes to multiple employees at once, saving significant time and clicks, especially for larger customers. Payroll professionals, meanwhile, can now access paycheck corrections, which allows them to fix errors even after payroll has been processed and the quarter is closed. Additionally, a new HR Manager role has been introduced, assigning a user access to all QuickBooks Payroll, QuickBooks Time, and HR functionality without access to the company’s finances in QuickBooks Online.

Also, select QuickBooks customers will soon be able to unlock referrals, reviews, testimonials, and customer growth recommendations with QuickBooks Customer Hub, powered by Mailchimp in the Customers Tab within QuickBooks Online. 

Intuit also brought up its Enterprise Suite for businesses (see previous story), plus its reimagined Pro Advisor Academy (see previous story).

“Intuit and our accounting partners have a shared goal of helping businesses grow,” said Intuit CEO Sasan Goodarzi. “Together, we serve the financial needs of millions of shared customers, and by harnessing the power of AI, we’re delivering a connected platform for accountants and their clients that save them time, drive more informed business decisions with predictive analytics and insights, and help them thrive as they expand.”

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Accounting

In the blogs: Nothing’s perfect

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Mapping the talent hunt; what taxpayers don’t know; new blog on the block; and other highlights from our favorite tax bloggers.

Nothing’s perfect

Validation

Maintaining momentum

  • Boyum & Barenscheer (https://www.myboyum.com/blog/): What helpful suggestions can nonprofit clients mine from their own audit reports?
  • Palm Beach Financial and Accounting Services (https://www.pbafs.com/blog): Half a dozen smart ways for young-adult clients to use their refunds.
  • Institute on Taxation and Economic Policy (https://itep.org/category/blog/): The State of Washington came into the year with strong momentum — the Capital Gains Excise Tax on the state’s highest-income households and the new Working Families Tax Credit, for example. But lawmakers in Olympia now face a $16 billion shortfall, impending federal funding uncertainty and a new governor calling for billions in budget cuts.

New to us

  • Trout CPA (https://www.troutcpa.com/blog): This Pennsylvania firm offers an array of services in various industries (including agriculture, funeral homes and auto dealerships, among many others) and a fine blog. Recent topics include recent IRS revisions to the 6765 and depreciation recapture on real estate sales. Welcome!

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Accounting

How to manage client rental real estate investments

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If financial advisors ask clients the rate of return for their rental real estate investment property, they should expect to hear a number at least 5 percentage points higher than the actual one, according to the founder of The Real Estate Whisperer Financial Planning.

That’s because of calculations based on “optimistic assumptions, untracked costs and the absence of formal benchmarking” among many owners, said Rich Arzaga, founder of the Monument, Colorado-based firm, in a presentation at this week’s Financial Planning Association Retreat in Oak Brook, Illinois.

“It’s where ownership bias meets the reality of returns,” Arzaga added. “Whatever they say, knock out at least 5%.”

Despite the substantial role of real estate in wealth, the asset class may sometimes get overlooked by planners who leave an often-emotional decision that is critical to clients’ retirements to professionals from other fields who work more closely on investment properties. 

READ MORE: The tax benefits of real estate investing

A void in the profession?

Instead, more planners should maximize their value to clients by taking them through a realistic cash-flow estimate incorporating every expense that they can then apply to a long-term forecast of their assets in retirement, Arzaga said. Even for high net worth clients in particular who generate tens of thousands of dollars in rental income each year, the risks and costs of a property that isn’t meeting their investment expectations can eat up their holdings over time.

“I want to propose that this is an idea that you can use that will expand your thinking about the way we approach this business,” Arzaga said. “I think the way we approach it now is great, but I still don’t see it in any of the curriculum — whether it be the licensing certifications, none of the designations — none of them focus directly on real estate investments.”

Arzaga shared the case study of two 58-year-old clients from San Francisco he called Kevin and Lynn who had a net worth of $3.6 million and rental income of $75,000 per year through a property that was separate from their residence. Through debt service payments and other expenses, however, their costs on the property amounted to $76,000. If the couple followed through on their plan to retire when they turned 65 while keeping the same quality of life that cost them $312,000 a year, they would run out of their assets by age 84, Arzaga estimated.

“Somebody with a $3.6 million net worth, this is kind of not what they expect, right?” he said. “So that’s why they come to us. And luckily, they came to us.”

READ MORE: Ask an advisor: When is real estate an investment?

A better course of action

If the couple were to sell the property in a tax-advantaged 1031 exchange for a better-performing asset or simply spin off their rental holding, absorb the taxes and reinvest the holdings into their long-term portfolio strategy, their assets could amass value hundreds of thousands of dollars or even millions higher than their current scenario.

One of the main misunderstandings stems from the cost of maintaining rental properties, according to Arzaga. In his example, the clients mentioned their amount of income and told him that the number included their expenses. He saw that they had miscalculated when he examined their itemized deductions on Schedule A of their tax returns.

Operating expenses include taxes and the preparation of them, insurance premiums, legal fees related to entity filings and other matters and two major areas — maintenance reserves and property management. In terms of maintenance, the owners should build in costs of about $30,000 to $40,000 every decade for concrete, foundation work, a roof replacement or similar upkeep, Arzaga said. Property management poses difficulty as well.

“Most people like to do that on their own. Most people aren’t capable of that,” he said. “It’s important, and it’s a big asset. And some decisions they’re making are because they’re not professionals in this area.”

READ MORE: The top 20 real estate funds of the decade  

Providing value outside investment portfolios

These realities may be tough for the clients to hear, but they usually come around after planners lay out the cold calculation of the costs and risks involved with a lot of small-scale rental properties. Assisting clients in making smarter choices about their real estate is “more significant than beating the S&P 500” and a “much more noble cause,” Arzaga said.

“Understanding how real estate can impact a family’s finances, I think, is essential to being a comprehensive advisor,” he said. “You’ve got to be comfortable talking about these things. You don’t have to be an expert, but addressing them, to do a service for your clients.

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Accounting

Citrin Cooperman cofounder leaves firm

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Joel Cooperman, cofounder and former CEO of Citrin Cooperman, left the firm on March 31 after over 40 years.

Cooperman founded the firm, alongside Niles Citrin, in 1979 when two English rock bands provided the seed money needed to open shop in a small New York apartment. Now, the Top 25 Firm reports over $870 million in revenue, with 27 offices, 455 partners and 3,190 employees.

“I can assure you that Niles Citrin and I never had any plans to build a firm larger than the two of us and maybe a couple of others,” Cooperman said in a statement. “In the early years, accounting was still viewed primarily as a profession and not as a full business – this never really made sense to me. We felt that for long-term success it was critical to create a culture and environment that our partners and employees would enjoy as we all worked to build a thriving sustainable business.”

Joel Cooperman
Joel Cooperman

Citrin Cooperman

Citrin Cooperman was one of the first instances of a major accounting firm accepting a private equity investment, from New Mountain Capital, in October 2021. Then in January of this year, Blackstone acquired a majority stake in the firm from New Mountain, making it the first instance of an accounting firm to transfer private equity ownership from one group to another. And since its founding, the firm has acquired or merged over 65 professional services firms and added other lateral partners.

Cooperman offered advice to those early in their career: “I have always been surprised that so many people do not really understand how much they have to offer, how much potential they have.  If I could offer any advice, it would be to figure out what you are good at and what you love to do, make a plan, write it down, and then go after it every day.”

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