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Addressing Top 7 Tax Preparation Challenges Faced by CPAs Today
Working environments in CPA firms are undergoing dramatic changes. This has led to the emergence of various challenges related to tax preparation for CPAs. Accounting firms are trying their best to deal with these challenges and find a way to enhance their business capacity. But without properly understanding the challenges, the right initiatives cannot be undertaken to solve them.
Below mentioned are some of the tax preparation challenges faced by CPA firms:
Collection of VAT
The increase in cross-border trade of goods and services makes it challenging to evaluate VAT. Especially in cases where products are purchased from suppliers based abroad. The main reason behind this phenomenon is the increasing popularity of online shopping, which allows people to make purchases without being physically present at the store. This makes it difficult for CPAs to calculate the correct VAT for their clients.
Location Relevant Data Issues
The tax legislation in many countries and states is different. Due to the increasing number of cross-border services, it is becoming difficult for CPAs to prepare tax returns correctly. In cases where the customer and the supplier belong to different jurisdictions, it becomes difficult to interpret the data correctly to produce the desired results.
These challenges are concerned with data and characterization for direct tax returns. They are distinct in nature and often overrun each other. Over-dependence on data collection and analysis and the increasing importance of multidimensional business models make the valuation of data, nexus, and profit attribution difficult. The proper allocation of taxable income among locations is the solution to this problem.
New Business Models
The development of new business models asks questions related to the depiction of income. The emergence of new digital products or methods of delivering services creates difficulties about the assessment of payments made for the new business models. The evolution of 3D printing has further complicated matters.
Changing Relationships with Clients
Handling the client’s demands is proving to be a major challenge for most CPAs. It takes a lot of research and hard work to please the clients. What has worked with one client could also work with another. Success generally depends on the coincidence of two people with similar ideas working together. The CPAs must evolve their marketing methods to meet clients’ expectations.
In a recently conducted business survey, about a third of the CPAs reported that technology was a major challenge for them. The CPAs are finding it difficult to find the right balance between client expectations and changing technologies. Accounting firms must find a way to convert these challenges into business opportunities. Staying in touch with the technology changes and getting timely training is the answer to this problem.
Retaining & Hiring Good Staff
Talent acquisition has become a problem for CPA firms. Tax preparation is a task that requires proper expertise. But due to other more lucrative opportunities arising, CPA Firms are finding it hard to retain and hire good talent. Creating a strong brand image can help solve this problem as people mostly want to be associated with a popular brand that foresees growth in professional and financial terms. Not hiring proficient staff could lead to inaccurate tax preparation services, which can lower the firm’s goodwill.
The Bottom Line
Whatever the challenges are, the factual thing after the research of several years of time is Tax Preparation Services are always going to be in huge demand. In order to succeed, the CPAs should try to find a solution to all the above-stated issues. Firms that will find the answers will have the edge over their competitors.
Outsourcing the tax preparation process can be an answer if the same hinder your business growth. Cogneesol provides the best outsourcing services, ensuring an accurate and efficient tax preparation process. Contact us now at +1646-688-2821 or email us at [email protected].
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