It is easy to get the impression that many of our business clients don’t really understand the full process, and value, of the accounting work we do for them. However, there is one area in which they fully understand the importance – and that’s tax administration. They assume that we are doing a number of things:
- Minimising their tax liabilities through tax structures, expense claims, allocations of income and the creative application of client and tax knowledge (hopefully not too creative!)
- Preparing and filing their tax returns
- Notifying them of tax payments to make, and when, including sometimes complex provisional calculations, thinking not just about the different permutations, but also the individual taxpayer’s situation
- Keeping on eye on their IRD accounts, correspondence, missed payments or incorrect allocations of payments
They assume that we have systems, processes and the consistent application of our knowledge to these tasks. They assume that we will perfectly traverse this complex arena and communicate with them when needed.
Every accounting business in the world has its own processes, knowledge bases and even risk appetite – and the output in the above areas is variable, to put it mildly.
Overall, our proficiency in tax minimisation is pretty good, yet our performance in effectively communicating the timing and amount of provisional tax payments, as well as monitoring and relaying information about IRD accounts, leaves much to be desired.
We justify this to ourselves by saying “We’ll pick it up at the year-end” which we will (in most cases), but our clients and their businesses deserve better.
Let’s unpack this and find better solutions:
- Notification to our clients of tax payments, of all varieties, should be automated to improve the consistency of the advice
- The notification should be before the tax payment date, with final 2-day reminders for all tax types (who remembers when the letter invariably comes out 3 weeks before the payment date?)
- We should notify our clients if they miss payments, or more likely, post payments to the wrong account or year
- We should do our provisional tax calculations using automated software, not some half remembered conversation 6 months ago, about increasing profits, which you then need to go into the Xero file to check if it’s still relevant. All calculations should take account of tax pooling, installment arrangements and timing issues
- We should automate all those letters from the IRD and perform searches on the important ones and free the tax administrator to do some more valuable (and interesting) work such as tax advisory
- We should integrate all of this to our practice manager system so that we are not going out into clunky excel spreadsheets, and using imports and lists from the IRD
The most progressive accounting businesses are achieving only 60% of these outcomes. All these systems are currently developed now by Plugin Accountant and we want to work with motivated accountants to perfect all the systems.
We know why it’s important to our clients and it will be important to you when you see the cost savings and also the improved communications with your clients.
What’s next? AI in tax administration……
Do you want to join our early adopter group? Reach out to us at [email protected]
Author: Sue de Bievre
An intrepid entrepreneur and feminist with a penchant for disruption; spotting problems and rolling her sleeves up to fix them makes Sue tick.
