For several years, people have claimed that cloud accounting will kill compliance and advised accountants to move away from expanding advisory work.
According to them, clients don’t value compliance anymore because of technology and accountants will lose their jobs or businesses. However, are these true?
It should be noted that people who made these comments have never run an accounting business, thus they are not in a position to know.
They often sell an alternative product like coaching or software services. The comments aim to lure people into buying their products.
Yes, they are trying to promote their products by creating a fear or need and supposedly providing a solution. However, they are trying to scare accountants with wrong information.
Chan & Naylor has been through different business cycles and has experienced various changes the accounting industry has endured for more than 34 years. We want to debunk these myths.
It is not true that cloud accounting will kill compliance.
Cloud accounting is evolution, not revolution. The revolution happened when manual accounting turned to desktop accounting 25 years ago. However, while time spend has decreased because of advanced technology, accountant margins have remained the same. Cloud accounting may save time but won’t reduce compliance to nothing.
It is also not true that clients don’t value tax compliance.
They may not like to pay but it is illegal not to lodge a tax return and pay taxes. ATO actually brings business to accountants. There will always be tax changes and clients will need accountants to explain these changes to them. They also need accountants to comply with their legal obligations.
Compliance is not dying.
Our population is growing and our immigration policy is healthy so there will always have work for tax compliance accountants. Tax laws and workload increase tenfold and a large percentage of our population is getting older.
Superannuation, succession and estate planning come with complicated tax laws. This means tax compliance is growing.
However, smaller tax firms might find it more difficult to compete with the larger ones.
If they don’t get larger, the smaller firms could struggle to stay relevant and come up with a decent profit because client expectations are getting higher every year. Larger firms could continue to get larger in the next five to 10 years.
Firms should not be complacent and should embrace innovation and technology instead to stay ahead of the game.
You should not be concerned about the size of the fee you charge the client but make sure you maintain your margins regardless of your fee or staff salary levels.
Innovation and technology like cloud accounting can allow you to charge lower fees but maintain your margins. Those that do not embrace technology will disappear overnight.
For more information about cloud accounting and compliance in Australia, contact a Specialist to discuss your particular circumstances.
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