Provided by Drake Software

Why Employee Evaluations Are Critical To Success

The annual tax season generally takes only one-fourth of the work year, and for all of the preparation required may seem to be over in a few short weeks after it begins.  Temporary staff is let go, the paperwork is all wrapped up and it is time for that well-earned vacation.

All of which makes it difficult to make time for the management responsibility most critical to the success of the firm – the employee performance evaluation.  Which also means that the evaluations that do get done tend to be informal, short, and built on the question of who will stay on after tax season, who will be re-hired for next year, and who will be let go after April 15.  The subject becomes even trickier for those who will not be invited back, since you may not wish to present that information until the season is over.

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IRS Publishes Low Income Housing Credit Audit Technique Guide

New Guide Helps With Low Income Housing Credit

Last Friday the IRS released the Low Income Housing Credit Audit Technique Guide, which – as the article states – “explains examination techniques, as well as unique issues, business practices, and terminology to help tax professionals [report] various items related to the Low Income Housing Credit.” 

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Deducting the Cost of Looking for Work

What You Need to Know When Deducting Job-Hunt Expenses

Last week the IRS released information pertaining to deducting job search costs, including a list of nine “key tax facts” on the subject.

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10 Tedious Tax Office Chores You Should Automate

Tax preparation professionals are fortunate in that they make use of computer hardware and software virtually every day of their working lives.  The complexity of the tax laws, frequent legislative and regulatory changes, and the demands of preparing more than 142 million tax returns all require an atypical level of computer literacy and use not seen in other small businesses.

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Windows 10 is Built for Small Businesses

Were you to look only at its ad campaign and high-resolution screens, one could easily assume that Windows 10 is primarily for home users.  Under the hood, however, the engine is built for small-to-medium businesses, with many attributes that will benefit tax and accounting firms.

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IRS to Notify More Victims of ID Theft

Deep Analysis of “Get Transcript” Incident Finds 220,000 Additional Breaches

Yesterday, the IRS issued a press release detailing new findings related to the “Get Transcript” data breach that was reported in May. The investigation following the initial discovery of the incident targeted the entire 2015 filing season, finding an additional 220,000 potentially compromised taxpayer accounts and another 170,000 accounts exhibiting suspicious activity.

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Tax Preparation Outlook for 2016

A key component of strategic planning for any company is an understanding of the analytics for the industries in which they participate.  For tax preparations services, that can be a problem.

Much of the available industry data is old; the industry is fragmented enough that it is difficult to get specific numbers for specific industry segments; and a series of regulatory and economic conditions have acted on the industry over the past five years, rendering simple forecasts void.  Nonetheless, it is essential to have a quantified view of the industry for purposes of planning, firm valuation, financing of new and existing operations, pricing of services, and salaries for permanent and temporary staff.

To that end, we have gathered the best validated industry definitions, analytics, and forecasts for the tax preparation market in the United States.

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Letters Remind Taxpayers to File Form 8962

Reconcile Premium Tax Credit Before October 15 Deadline for 2016 Eligibility

Some of your clients who received advanced payment of their Premium Tax Credit may have received an IRS Letter 5591 or 5596 regarding the filing status of their Form 8962, the former to taxpayers who haven’t filed the form and the latter to those who requested an extension but haven’t filed. They will need a copy of their Form 1095-A to complete the 8962, which can be downloaded from their Marketplace account at [Read more…]

Succession Planning for Tax Preparers

More than four out of five small businesses – including tax preparation firms and solo-practitioner CPA firms, have no plan for succession should the need arise.  That’s according to a four-year study conducted by Baker and Tilly International, a major business consulting and accounting firm.  The results are outlined in the report, “Succession Reset: Family Business Succession in the 21st Century.”

The report was authored by Dr. Richard Shrapnel, PhD, an Executive Director/Partner of Baker Tilly Pitcher Partners, Melbourne, Australia, and also a Chief Investigator of the Baker Tilly Pitcher Partners/Swinburne University Succession Planning research project, from which the findings and data contained in the report are drawn.

“We’re in a new era of succession. The notion that the eldest child is going to take over the business when the parent is ready to retire is not a viable option for the continuity of family owned businesses,” says Carl Johnson, chairman of the North American Regional Advisory Council of Baker Tilly International.

“Succession today is just as much about the transfer of knowledge and skills as it is about the transfer of wealth. This is because the level of skills required to effectively run a business in today’s environment is far greater than it was in previous generations. If business owners haven’t helped the next generation develop these skills, the capital value of the business is going to be impacted. If a skills gap causes a vacancy in leadership, then it’s going be hard to maintain the desired business continuity,” Johnson adds.

The report includes a review of the existing literature, in-depth interviews with 77 persons across 49 families, and the analysis of survey responses by some 2,650 persons across 56 countries in nine languages.  It focuses specifically on succession planning among those who have completed a plan (16 percent); those who have initiated a planning process (33 percent); and those without a plan (51 percent).   Of the respondents surveyed, 9% were greater than 67 years of age, 35% were less than 49 years with 56% baby boomers between the ages 49 and 67.  Males represented 80% of respondents and 20% were female.

Succession planning is not simply about passing ownership and management of the firm to another family member.  Today, succession can also mean the sale of the business to an outside party; sale of the business to employees; merger with another firm; or simply allowing the business to slide into decline.  What it is not about, author Richard Shrapnel notes, is retirement – succession planning as the owner or principal retires comes too late.

This is especially important in today’s business environment, in which 73 percent of business owners do not see a compelling reasons to pass the business to a family member and would consider an outright sale.  While maintaining family harmony and maintaining jobs is a desired outcome of succession planning, US-based companies report a significantly higher level of conflict within families as succession planning is undertaken.

There are a host of mistakes that companies make when creating a succession plan.  Among these are:

  • A fear of the future. Like funeral planning and wills, there is an inherent feeling that planning for these events will somehow cause them to happen sooner.
  • Choosing to maintain the past rather than foster the future. In many small businesses, it founder/principal knows what must be done today, but not necessarily tomorrow.  This means that the successor may be chosen for his or her ability to carry out the founder’s vision rather than meeting unforeseen challenges in the future.
  • Planning only for the loss of the principal. A succession plan must consider successors for the whole management team or permanent staff.  There are time when the loss of the office manager is as bad – or worse – than losing the principal.
  • Making succession a popularity contest. By playing favorites or pre-selecting a candidate in secret, the process is subverted and will foster only disappointment and ill will.  A good planning process will identify the positions that require a successor, and then identify the skills and experience needed to make that position the most valuable it can be for the firm.
  • Failing to revisit the plan. It is easy to believe that once a plan is printed and bound, the issues have been resolved and requires no further attention.  But with changing market and industry environments, it is critical to review the plan on a regular basis to ensure it is still realistic and viable.

Fortunately, there are a wide range of tools to assist in succession planning.  Workforce magazine, for example, has a roadmap to succession planning online.  It includes a review of software modules from SAP, Oracle, Halogen, Peoplefluent and Silkroad Wingspan.  Cornerstone On Demand likewise has a number of resources that include white papers and planning advice.  More software to assist in planning is reviewed for 2015 here.



IRS Offers College Tax Credits

If your client, her spouse, or one of their dependents are attending college in the fall, the IRS has several back-to-school education tax credits available for families considering higher education. [Read more…]