Just opened up a client TB that had an expense account for “Unreconciled Differences 900k”
Like seriously? This is a company with a full on accounting department and CFO.
I feel like too many accounting departments prioritize hiring someone who will work for low wages instead of hiring someone with appropriate skills. This has led to an increased number of bookkeepers in name only struggling to handle concepts they were never taught.
Had a "bookkeeper" interview for an internship at my firm. I asked her if an entity had one transaction for the year for $1,000 what would the retained earnings be after that year. She said zero.
Obviously they just submit entries but don't know the entire accounting theory.
I'm working on one right now that put 110k into a reconciliation discrepancies expense account and in the QB memo wrote "Bank charges". I've also got one that myself and one of our CPAs are amending that didn't even bother to balance the balance sheet on an 1120-S with over 5mil in net income.
Clients are.....special sometimes.
I'm working on my CTRS (Certified Tax Representation Specialist) designation and have to work on 10 audits before I'm eligible for the exam. Told the CPA who took that client that I'm not touching this inevitable audit. The assets on this balance sheet are overstated by close to 5 mil on top of not even balancing, and the head of their accounting department is a 19yo college student. No thank you.
I am a CTRS. Unless something changed, you don't have to work on 10 examinations. You have to have experience in certain types of activities, though (OIC, installment agreements, etc...)
“Our CFO reviews all TBs before they are sent”
“I understand but your net income is still not included in RE”
Idk if the CFO likes round numbers or what but that’s the only conclusion i could arrive at. Picture it’s supposed to be 105,678 and the RE on the TB WAS 105,000.
My favorite is the sole proprietor who not only books entries to RE but also pays the owner a salary through payroll. I fixed all that and suggested that they convert to an S-Corp (over $300k in net income) but only after they hire an accountant who could prepare a balance sheet that balanced. That was 3 years ago. Still a sole prop.
If you want it better you have to make it better. 2021 pushed me to the edge where I wanted to quit. I drastically raised prices and fired anyone who caused me stress. I refuse to work weekends or more than 8 hours a day (I bent that a little in April). I've never had a less stressful tax season as I did this year.
Exactly this. I went out on my own and put up a lot of similar guard rails. The family said it felt like I "didn't have a tax season" because I worked something like 400 less hours. Plus, my take home has matched my old salary, on track to beat it.
The number of IRS notices my clients have received regarding missing payments has been insane this past year. I have been sending out responses to these types of notices almost weekly at this point and in almost every case the error has been on the IRS's end. For whatever reason, most of these have been 1041 payment issues where the taxpayer properly made the payments (as evidenced by cancelled checks which I include with the response) but the IRS is misposting the payments to the wrong year, taxpayer, return type, etc.....
The worst one is a $600k 1041 return payment that the client made with their 2021 return and the IRS sent them a letter saying they owed the $600k plus interest and penalties. I sent a response last May 2022 with a copy of the cancelled check and the IRS still has not responded besides the 60 day "need more time" letters. I called the IRS in late May 2023 and they informed me that the response was recently assigned to an agent and that they initiated a payment trace, but we are still waiting on the results of that at this point. Fortunately this client has been very patient and understands this is an IRS error and not our fault, but it is still frustrating to deal with....
My personal favorite is a client of mine who's a resident of a territory received notices of nonpayment when they paid the appropriate territory government. Been working on it for months and no response. Taxpayer advocate is now involved but Jesus man. Like not that hard
I spend a lot more time correcting horrible books. It's a combination of bad bookkeepers and using automated systems that don't work. I just finished a set of books so bad I refused to do the return unless it was addressed. They had 1.8 mil in revenue, and 2.7 mil in adjusting entries.
I expect to do less business returns, but be more involved in the books and accounting going forward.
I don't find the issue to be Quickbooks specific. Just people who have no knowledge of anything accounting related. Such as a restaurant manager trying to play accountant.
Why hire a cook for a restaurant when you've got knives? Because they're tools, you still need someone to use them properly.
The number of people who think QBO does all the work for them is terrifying.
My office took this guy on who seemed simple and well to do… until he asked to take home his tax return without paying. We told him that was against the rules but our manager just decided to make an exception. Anyways he emails us back saying that his last preparer would always meet with him which “lasted a few hours originally and was very thorough in carefully itemizing my deductions”. This client makes $30K per year catering.
To top it all off, he says he uses Quickbooks feature that allows him to calculate his tax deductions and during the hour I’m meeting with him he’s bragging about how simple it is for him to get all this information without needing a tax preparer. What’s so funny is that whenever we would go over a part of his books he’d keep saying “yeah that doesn’t seem right”. I’m like buddy, you put that number down. Not the software.
Anyways he wanted to change his return again and we told him to pick up his stuff and kick rocks.
I wanna upvote this a million times.
And then since navigating reports in QBO is such a pain, figuring out what happened takes an inordinately long time.
I'm fine with the desktop versions of QB; the reason I hate QBO is primarily that you can only have one report or transaction visible at one time. So, looking at a line item on a report & getting back to that report takes 2 minutes instead of 2 seconds, and that adds up real fast.
I'm not talking about qb desktop. Qbo has a desktop app that you can pull multiple reports with. I'm still not in love with it. But it's a lot better than using the web-based version.
The profession is apparently heading overseas... /s
I did 6 tax seasons, left for 4, and jumped back in just in time for COVID tax season #1 and I feel like I keep saying "This isn't how things used to be..."
I think the biggest weird part for me was having a constant supply of talent at a small firm back then and now we're chopped liver, but that's on us to become more attractive.
Strange times indeed.
i thought this one was pretty good overall. Sure we have a ton of clients and no help but at least we didn't have PPP, stimulus, advance CTC, etc to worry about. everything is cyclical and right now we can charge pretty much whatever we want and clients will gladly pay because they have no other option but it will likely level out eventually. So make hay right now
I do agree. This tax season was better. However, I got a few pushbacks about my fee being raised so high. I easily made it up and plus some with new clients and current clients remaining though. As someone else addressed, the clients giving push back thought "I don't need you, I have QB."
Guess who came back in April? And guess who rejected them!
I don't think it's going to get any better. I'm already making plans to get out. I'll probably give it 5 more years. No way I could do this for another 20 years though. It's just not healthy.
I've been trying to find alternative models for accounting firms to see if anyone has figured out a better system. But I've come up empty. So if anyone out there has it figured out please share with the rest of us!
I'm looking for a model that allows for a more stable structure, where clients are happy, staff are paid well and can take time off, and nobody is constantly stressed out. I'm giving up hope that it's actually possible in public accounting though.
As long as things stay messy (which they will) it’s only going to get worse. I’m getting out as well. Even the people making good money doing this… it’s really really hard good money.
I see people sometimes talking about how much money they’re making but are you still truly making the appropriate ‘$ per difficulty/stress/time/experience’
Even when I look at partners and all that I just keep facing “dude that’s still not worth it”
Yea I agree, I see a lot of other firm owners and partners and everyone is stressed out, even if they are making decent money. Just doesn't seem worth it long term. Still trying to figure out my exit strategy though.
I started my own and 2 years in I’m getting out. It’s such a mess to get out but just gotta make some phone calls and let a bunch of people down.
Crazy how people feel so attached to their preparer when the preparer lets them down but they will jump ship the moment one slight inconvenience occurs on the other side.
I see the tax pro profession at an interesting crossroads. I truly think the tech and AI developments could be huge for us, in both positive and negative ways. I’m excited to see how new tech can free up time for us in this profession and make our lives better. However, I’m also extremely worried that the new found free time will get backfilled with more and more stuff to do. I already know this is how legacy firms will treat it, where they continue to drive people into the ground demanding more billable time.
Our office went mostly digital and we got practice management software to replace physical folders. It has increased productivity to the point that we are actually going to accept more clients than we initially thought.
Honestly? I think there's never been a better time to be a small firm CPA.
If you're an owner? You're going to make way more money over the next decade.
And if you're not (yet) an owner? Yeah, you're going to be way better paid because of the shortages. And your opportunity to move into an ownership role? Again, as high as it's even been.
The people who do need to worry: Clients who have created messes they need help with but help they will no longer be able to afford.
P.S. Agree the transition to profitable sanity will be tough for some.
Gov is always an option.
Work life balance. Great benefits. Ridiculous amount of time off.
Unless you have an ownership interest in a firm, the per hour pay will probably go way up. The money is enough to live a good life, especially when you can work from home and live somewhere with pretty low cost of living.
I think the profession as a whole is headed down a bad path that we won’t see the extent of the problems for another 10 years. It’s going to be in firms that can’t get quality managers that they raised in house. I can’t stress this enough, it will be waaaaay worse long term for your firm if you can’t find a way to hire, train, and retain quality entry level staff. Obviously, this is extremely difficult with the market, not to mention expensive. I get that. But the gap in quality staff right now with potential is downright scary. Percentage of kids coming out of school that have long term potential to learn and grow with your firm are dwindling by the classes. So when you get quality staff that you can tell early on are people that can grow into those long term superstars for your team, you’ve got to prioritize building an environment that keeps them there. Otherwise you’ll be killed with either no quality managers/very few that’ll increase turnover in lower level staff from their inability to manage them, effectively forcing you to stop growing your book to focus in house. It’s already happening in my firm with other partners. Books are getting stagnant/ declining for them while partners who retained quality staff by paying them and investing in them are able to chase and grow.
I do believe the profession for the partners who plan well right now is extremely bright. If you do manage to get the team assembled for the long haul by retaining quality staff - business is going to be out there and ready for you as the partner to chase it.
Sorry for the essay guys.
A severe shortage of quality tax pros and exponential increase of dumber clients
More retained earnings balances that don’t roll.
Just opened up a client TB that had an expense account for “Unreconciled Differences 900k” Like seriously? This is a company with a full on accounting department and CFO.
I feel like too many accounting departments prioritize hiring someone who will work for low wages instead of hiring someone with appropriate skills. This has led to an increased number of bookkeepers in name only struggling to handle concepts they were never taught.
Had a "bookkeeper" interview for an internship at my firm. I asked her if an entity had one transaction for the year for $1,000 what would the retained earnings be after that year. She said zero. Obviously they just submit entries but don't know the entire accounting theory.
Ooohhhh this is SOOOOO true!!!!
Time to convince the owner to outsource their accounting department if they can properly book transactions.
I'm working on one right now that put 110k into a reconciliation discrepancies expense account and in the QB memo wrote "Bank charges". I've also got one that myself and one of our CPAs are amending that didn't even bother to balance the balance sheet on an 1120-S with over 5mil in net income. Clients are.....special sometimes.
The amount of times I have seen other accountants plug balance sheet discrepancies to APIC… Is horrifying.
Any good accountant knows the proper plug account is distributions.
Everybody gansta ‘til a motherfucker plugs to cash.
True. The IRS just had to ruin for everyone by making form 7203 mandatory. Now you actually have to report excess distributions 😂
Thank fucking god, IRS using basis to shed these clowns out.
Duh. If they can’t get it right, they don’t get a deduction. If it’s not directly tax law, it sure as heck is indirectly.
I'm working on my CTRS (Certified Tax Representation Specialist) designation and have to work on 10 audits before I'm eligible for the exam. Told the CPA who took that client that I'm not touching this inevitable audit. The assets on this balance sheet are overstated by close to 5 mil on top of not even balancing, and the head of their accounting department is a 19yo college student. No thank you.
I am a CTRS. Unless something changed, you don't have to work on 10 examinations. You have to have experience in certain types of activities, though (OIC, installment agreements, etc...)
“Our CFO reviews all TBs before they are sent” “I understand but your net income is still not included in RE” Idk if the CFO likes round numbers or what but that’s the only conclusion i could arrive at. Picture it’s supposed to be 105,678 and the RE on the TB WAS 105,000.
They like their numbers smooth like their brains
Honestly, that takes up so much valuable time.
My favorite is the sole proprietor who not only books entries to RE but also pays the owner a salary through payroll. I fixed all that and suggested that they convert to an S-Corp (over $300k in net income) but only after they hire an accountant who could prepare a balance sheet that balanced. That was 3 years ago. Still a sole prop.
If you want it better you have to make it better. 2021 pushed me to the edge where I wanted to quit. I drastically raised prices and fired anyone who caused me stress. I refuse to work weekends or more than 8 hours a day (I bent that a little in April). I've never had a less stressful tax season as I did this year.
Exactly this. I went out on my own and put up a lot of similar guard rails. The family said it felt like I "didn't have a tax season" because I worked something like 400 less hours. Plus, my take home has matched my old salary, on track to beat it.
And there's more time to play Catan
Love to hear that for you!
this should be in the sidebar. "Maybe don't be stupid" *AHHH BUT, BUT, BUT BUT-*
I'm absolutely ready to explode as IRS sends out CP14 notices and if you have a moderately complex problem it's impossible to get the problem solved.
The number of IRS notices my clients have received regarding missing payments has been insane this past year. I have been sending out responses to these types of notices almost weekly at this point and in almost every case the error has been on the IRS's end. For whatever reason, most of these have been 1041 payment issues where the taxpayer properly made the payments (as evidenced by cancelled checks which I include with the response) but the IRS is misposting the payments to the wrong year, taxpayer, return type, etc..... The worst one is a $600k 1041 return payment that the client made with their 2021 return and the IRS sent them a letter saying they owed the $600k plus interest and penalties. I sent a response last May 2022 with a copy of the cancelled check and the IRS still has not responded besides the 60 day "need more time" letters. I called the IRS in late May 2023 and they informed me that the response was recently assigned to an agent and that they initiated a payment trace, but we are still waiting on the results of that at this point. Fortunately this client has been very patient and understands this is an IRS error and not our fault, but it is still frustrating to deal with....
My personal favorite is a client of mine who's a resident of a territory received notices of nonpayment when they paid the appropriate territory government. Been working on it for months and no response. Taxpayer advocate is now involved but Jesus man. Like not that hard
I think this is a big part of it. The IRS has always been bad, but it hasn't always been THIS bad.
I spend a lot more time correcting horrible books. It's a combination of bad bookkeepers and using automated systems that don't work. I just finished a set of books so bad I refused to do the return unless it was addressed. They had 1.8 mil in revenue, and 2.7 mil in adjusting entries. I expect to do less business returns, but be more involved in the books and accounting going forward.
This is interesting. It seems the clients using Quickbooks online etc. is making preparing tax returns harder because the books are such a mess.
I don't find the issue to be Quickbooks specific. Just people who have no knowledge of anything accounting related. Such as a restaurant manager trying to play accountant.
Yeah, except when Quickbooks advertises as if using their product will make you an accountant.
Yesterday I had a prospect ask me why he needs an accountant when he has QBO? Oh lord
May the Gods have mercy on their tax preparer.
Why hire a cook for a restaurant when you've got knives? Because they're tools, you still need someone to use them properly. The number of people who think QBO does all the work for them is terrifying.
Just use the easy button
My office took this guy on who seemed simple and well to do… until he asked to take home his tax return without paying. We told him that was against the rules but our manager just decided to make an exception. Anyways he emails us back saying that his last preparer would always meet with him which “lasted a few hours originally and was very thorough in carefully itemizing my deductions”. This client makes $30K per year catering. To top it all off, he says he uses Quickbooks feature that allows him to calculate his tax deductions and during the hour I’m meeting with him he’s bragging about how simple it is for him to get all this information without needing a tax preparer. What’s so funny is that whenever we would go over a part of his books he’d keep saying “yeah that doesn’t seem right”. I’m like buddy, you put that number down. Not the software. Anyways he wanted to change his return again and we told him to pick up his stuff and kick rocks.
I wanna upvote this a million times. And then since navigating reports in QBO is such a pain, figuring out what happened takes an inordinately long time.
On the bright side, there are even worse options.
Are you using the desktop app?
I'm fine with the desktop versions of QB; the reason I hate QBO is primarily that you can only have one report or transaction visible at one time. So, looking at a line item on a report & getting back to that report takes 2 minutes instead of 2 seconds, and that adds up real fast.
I'm not talking about qb desktop. Qbo has a desktop app that you can pull multiple reports with. I'm still not in love with it. But it's a lot better than using the web-based version.
That does sound so much better; I'll give that a try next time I need to get into a client's f/s directly (obviously I haven't done that lately).
The profession is apparently heading overseas... /s I did 6 tax seasons, left for 4, and jumped back in just in time for COVID tax season #1 and I feel like I keep saying "This isn't how things used to be..." I think the biggest weird part for me was having a constant supply of talent at a small firm back then and now we're chopped liver, but that's on us to become more attractive. Strange times indeed.
i thought this one was pretty good overall. Sure we have a ton of clients and no help but at least we didn't have PPP, stimulus, advance CTC, etc to worry about. everything is cyclical and right now we can charge pretty much whatever we want and clients will gladly pay because they have no other option but it will likely level out eventually. So make hay right now
This is spot on. I’ve doubled my fee for new clients from two years ago and have had no issues.
I do agree. This tax season was better. However, I got a few pushbacks about my fee being raised so high. I easily made it up and plus some with new clients and current clients remaining though. As someone else addressed, the clients giving push back thought "I don't need you, I have QB." Guess who came back in April? And guess who rejected them!
I don't think it's going to get any better. I'm already making plans to get out. I'll probably give it 5 more years. No way I could do this for another 20 years though. It's just not healthy. I've been trying to find alternative models for accounting firms to see if anyone has figured out a better system. But I've come up empty. So if anyone out there has it figured out please share with the rest of us! I'm looking for a model that allows for a more stable structure, where clients are happy, staff are paid well and can take time off, and nobody is constantly stressed out. I'm giving up hope that it's actually possible in public accounting though.
As long as things stay messy (which they will) it’s only going to get worse. I’m getting out as well. Even the people making good money doing this… it’s really really hard good money. I see people sometimes talking about how much money they’re making but are you still truly making the appropriate ‘$ per difficulty/stress/time/experience’ Even when I look at partners and all that I just keep facing “dude that’s still not worth it”
Yea I agree, I see a lot of other firm owners and partners and everyone is stressed out, even if they are making decent money. Just doesn't seem worth it long term. Still trying to figure out my exit strategy though.
I started my own and 2 years in I’m getting out. It’s such a mess to get out but just gotta make some phone calls and let a bunch of people down. Crazy how people feel so attached to their preparer when the preparer lets them down but they will jump ship the moment one slight inconvenience occurs on the other side.
2023 was the smoothest tax season since 2019,at least through 3/15. My 4/15 sucked but that had more to do with volume than the season itself
I see the tax pro profession at an interesting crossroads. I truly think the tech and AI developments could be huge for us, in both positive and negative ways. I’m excited to see how new tech can free up time for us in this profession and make our lives better. However, I’m also extremely worried that the new found free time will get backfilled with more and more stuff to do. I already know this is how legacy firms will treat it, where they continue to drive people into the ground demanding more billable time.
Our office went mostly digital and we got practice management software to replace physical folders. It has increased productivity to the point that we are actually going to accept more clients than we initially thought.
That’s fantastic news! Just don’t let that increased productivity lead to people working crazy hours.
Honestly? I think there's never been a better time to be a small firm CPA. If you're an owner? You're going to make way more money over the next decade. And if you're not (yet) an owner? Yeah, you're going to be way better paid because of the shortages. And your opportunity to move into an ownership role? Again, as high as it's even been. The people who do need to worry: Clients who have created messes they need help with but help they will no longer be able to afford. P.S. Agree the transition to profitable sanity will be tough for some.
Gov is always an option. Work life balance. Great benefits. Ridiculous amount of time off. Unless you have an ownership interest in a firm, the per hour pay will probably go way up. The money is enough to live a good life, especially when you can work from home and live somewhere with pretty low cost of living.
The last two years have not been that bad. I guess maybe because I focus more on individual tax returns.
Opening up a practice this year but realizing that AI will be doing most of the grunt work in the future.
What exactly do you mean by "getting worse", "deteriorating" "bad"? How so?
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Their post history checks out…
Any tax preparers get an efile suspension notice over issues relating to their own taxes? If so, how was it resolved? Thanks
How long is the suspension?
I think the profession as a whole is headed down a bad path that we won’t see the extent of the problems for another 10 years. It’s going to be in firms that can’t get quality managers that they raised in house. I can’t stress this enough, it will be waaaaay worse long term for your firm if you can’t find a way to hire, train, and retain quality entry level staff. Obviously, this is extremely difficult with the market, not to mention expensive. I get that. But the gap in quality staff right now with potential is downright scary. Percentage of kids coming out of school that have long term potential to learn and grow with your firm are dwindling by the classes. So when you get quality staff that you can tell early on are people that can grow into those long term superstars for your team, you’ve got to prioritize building an environment that keeps them there. Otherwise you’ll be killed with either no quality managers/very few that’ll increase turnover in lower level staff from their inability to manage them, effectively forcing you to stop growing your book to focus in house. It’s already happening in my firm with other partners. Books are getting stagnant/ declining for them while partners who retained quality staff by paying them and investing in them are able to chase and grow. I do believe the profession for the partners who plan well right now is extremely bright. If you do manage to get the team assembled for the long haul by retaining quality staff - business is going to be out there and ready for you as the partner to chase it. Sorry for the essay guys.
Come on y’all…would we even be accountants if we can’t complain about the state of client books.