Accountants never really go out of style, but after a year of pandemic, they’re having a moment in the spotlight.
Between federal tax law changes, new programs designed to help small businesses and a crush of people with new complexities in their personal finances, more people are running for professional help in preparing taxes.
More small businesses, whose owners used to make their way through software programs, are also seeking help organizing payroll.
After working with small-business owners on state grant programs, including those that require them to document income and losses in 2020, Melissa Travis, CEO and president of the Rhode Island Society of Certified Public Accountants, said it became clear that many need more professional assistance. She estimated that half of the businesses she worked with this year did not apply for federal or state programs because they didn’t have the accounting support.
“Some of them are using paper receipts,” she said.
“Even on a good day, a lot of these businesses were barely understanding what they needed to do, what they needed to keep reporting,” Travis said. “And the [federal] legislation keeps changing.”
With state programs, including the “pause” grants and others, businesses have to document their losses. “To apply for these programs, at the core of any of these programs, you have to provide the documentation and proof of your losses,” Travis said. Because they didn’t have that professional accounting, “they left money on the table,” she said.
Several accountants contacted recently by PBN said they had more business this season because of increased phone calls from existing clients and new clients.
‘Most of these businesses are so frazzled, they can’t even think.’
MELISSA TRAVIS, Rhode Island Society of Certified Public Accountants CEO and president
Some professionals are turning away new clients because they’re fully booked. But Travis and other professionals said business owners should still seek out help. Travis said the Rhode Island CPA association is offering free CPA service to any small business that needs help obtaining a Paycheck Protection Program forgivable loan or other federal programs related to the pandemic.
“If they call me, I’ll work at 2 o’clock in the morning for them. All they have to do is say they need help,” she said. “Most of these businesses are so frazzled, they can’t even think. I worked with one and she just started crying.”
The volume of changes in tax law and accounting requirements for the various pandemic-related programs have encouraged more businesses to seek help, said Laura Yalanis, a CPA and partner of the tax services group for Kahn, Litwin, Renza & Co. Ltd.
Many individual taxpayers who traditionally have used software programs to file their tax returns are now finding that it’s too complicated, Yalanis said.
“There has been so much new tax law that has come out in the last two to three years, it’s insane,” she said. “I don’t know how a normal person, with a little bit of complexity, how they would be able to prepare their own returns. And forget about businesses because business [taxes] have become a lot more complicated.”
Some of the wrinkles include determining whether the pandemic, which forced many people to work from their homes in other regions, now requires the business to file a return in multiple states. Although many states have waived the requirement, traditionally when a worker lives in another state and works for a business, the business has to file in that state too. “A lot of the states passed emergency measures to waive those rules. Some of them only lasted a certain time frame, so we’re going to be looking at that for our clients too,” Yalanis said.
How to file for PPP forgiveness is a concern for many businesses, as well. And the credit for employee retention is another filing requirement for many businesses.
Patricia A. Thompson, a CPA and partner at Providence-based Piccerelli, Gilstein & Co. LLP, said businesses need help with the family-leave provisions in the Coronavirus Aid, Relief and Economic Security Act, which requires small businesses to pay someone if they stayed home with COVID-19, or to care for someone with the infection. She’s seeing more inquiries from existing clients and more calls from prospective clients.
Software programs serve a purpose, she said, but for anything with complexity, using those programs could be a mistake.
“It would probably be fine for someone who is just an employee,” she said. “But as soon as you switch over to a business, they’re going to follow the software and the software is not going to know everything about you, and it’s not going to give you that much guidance.”
Much of the legislation passed by Congress over the past year is left to interpretation at this point. “It’s grey in some areas,” Thompson said. “That additional guidance is needed from the IRS in order to comply.”
CPAs are typically up to date on that guidance.
The economic impact of the pandemic also will affect whether individual business owners can qualify for more relief. If their income dropped in 2020, they may be eligible for the stimulus payments that they otherwise would not qualify for, Thompson said.
“It is very complicated,” she said.
Mary MacDonald is a PBN staff writer. Contact her at Macdonald@PBN.com.
