I always look forward to seeing the results of the PCPS CPA Firm Top Issues Survey, a unique benchmark of the challenges facing firms. The results are segmented based on firm size into top five lists for sole practitioners and for firms with two to five, six to 10, 11 to 20, and 21 or more professionals. In this year’s survey, staffing was obviously an important concern for all but sole practitioners. However, there were other both expected and surprising findings that got my attention.
The greatest frustration. The answer, of course, was challenges with working with the IRS. This was one of all firms’ top three this year, and the number one issue for all firms with 10 or fewer professionals. To make matters worse, all firms with 20 or fewer professionals were also struggling with tax law complexity, according to the survey, so the lack of available insights and information from the IRS were magnified.
Earlier this year, the AICPA testified before the Senate Finance Committee on the challenges practitioners are experiencing, including taxpayers receiving erroneous notices, slow processing of returns and correspondence, and excessive time spent on hold when calling with a question or problem (if the call was even answered). Despite this and other AICPA advocacy, it seems that the problems may take a while to resolve. I have heard of one solution that has worked for some practitioners: If possible—perhaps based on your own trial and error—determine if there are times of day when it’s easier to make contact at a service center. Consider having firm members chart their experiences over a period of a week or so to see if you can target the best time to call. For more information on how to reach the IRS, check out the AICPA’s IRS Hotlines Quick Reference Chart and the guide to using IRS e-Services.
What’s missing. Succession planning is one of the hottest topics for firms today. In the survey, though, while firms with six or more professionals did identify developing future leaders as among their top five issues, the broader process of succession planning failed to crack the top five for all firm sizes (though it did rank among the top 10 for all categories except for 21 employees and up). And yet I receive a large volume of calls and emails from practitioners in both solo and multi-partner firms wanting to talk about strategies, market conditions and how to prepare for retirement. CNA, which partners with AON, to operate the AICPA Professional Liability Insurance Program, also received a number of inquiries after tax season from practitioners wanting to talk about tail insurance, or coverage against liabilities after you sell your practice. Also remember that PCPS members receive a 5.5% premium credit for their AICPA professional liability insurance policies.
I believe that there are so many other immediate demands on practitioners this year, as the lists show, that succession simply got pushed aside. Practitioners should be sure not to neglect succession considerations, however. It’s important to start preparing for new ownership as early as possible. Doing so not only can help you maintain the quality and efficiency of your practice, it can also make the firm an attractive prospect for an internal or external buyer.
If you want to eventually sell, one great first step is getting your elevator speech ready. How would you introduce your practice to someone you met in an elevator? The answer to that question can help you identify what you want a buyer to know and how to communicate that message. Think about how you would describe the firm and its people, your areas of expertise and staff competencies, and your client base and what would make it attractive to a buyer. Also, although practitioners regularly help clients get their financial data in order, they often fail to do it for their own firms. Make sure you’re able to tell a story about how well your numbers add up.
The consensus on what’s next. The survey asks practitioners to rank what issues will have the greatest impact on their practices over the next five years. Not too surprisingly, staffing stood out for all but solo practices. CPAs were also thinking about change. All firms chose changes in the regulatory environment as a top issue, with all but the largest firms ranking it first or second. All firms also cited worries about emerging technologies and about a firm’s capability to adapt to changing client needs. Solo firms and those with 11-20 professionals also put competition from other practices or professions on their lists.
I urge practitioners to use the findings to get a sense of current and potential future trends and to confirm their own assumptions about critical concerns for firms like their own and to begin thinking about proactive solutions.
Carl Peterson, CPA, CGMA is the Association’s Vice President of Small Firm Interests. Have questions for Carl? Contact him directly at firstname.lastname@example.org or 651-252-4618. And be sure to sign up for Carl’s Small Firm Update webcasts. The next one will take place on September 22 at 2:00 to 3:00 PM ET.