COVID-19 has been a deadly destructive virus that has reached almost all corners of the world. By killing thousands and affecting millions of people, it has significantly disrupted human life. Due to lockdown in the US, many workers are unable to work; businesses are unable to operate, shops are unable to sell, restaurants and hotels are unable to serve, etc.
As all major industries are experiencing downtime and concerned about the effects of this pandemic on their financial health, immense pressure is transferred to their accountants. Paying out debts with less bank balance, handling accounting reports amid marketplace inconsistencies, collecting financial information, ensuring accuracy, preparing financial reports, and many other jobs are no less than a massive burden on accounting firms.
Significant Impacts of COVID-19 on Accounting Firms
- Tax Preparation Becoming Daunting
As the government seeks to support businesses, tax law is changing. One of the key challenges will be staying on top of the changes and updates to tax law and explaining how that impacts their clients.
As the crisis continues, businesses are pushed further and further into financial difficulty. Many business owners are seeking to arrange payment plans with the IRS. Although the filing and payment deadline has been extended to July 15, many companies are already skeptical about being able to pay taxes.
Accounting and tax firms should be prepared to set aside significant time to help clients prioritize their finances and liaise with the IRS to plan for the next few months and how they can keep compliant.
- Increasing Workload
Due to the coronavirus outbreak and its consequences, accountants are now spending a big part of their time managing all the paperwork; however, these major disruptions could cause to embrace and adjust to new accounting standards that are likely to be raised because of this crisis.
Aside from a lot of pending tasks and the assured overtime once the regular operations are resumed, a lot of obstacles might arise, and rescheduling will be required to keep up with the work that is left in the office for a couple of months due to lockdown.
- Delayed Paychecks
Many companies are struggling to operate right now. This problem is incredibly widespread – Businesses for Responsible Tax Reform found COVID-19 has impacted 92 % of small businesses, and nearly 70% of companies have lost at least half of their revenue due to the outbreak.
In fact, some companies are having trouble affording CPA accounting services right now. But, accounting firms that are already having contracts with clients should stand by them as clients need accountants today more than ever. Know that if you be there for them now, they will stick with you once the crisis is over.
- Opportunities Coming at Door
Since the outbreak is growing rapidly, companies are preparing contingency plans, reconsidering objectives, and setting budgets again to tackle potential challenges. Similarly, stakeholders and investors want information on how companies are handling these emerging financial risks.
Amid all of these, SMEs are turning to accounting firms. As businesses and citizens are facing financial problems, accounting firms will get new opportunities to provide services other than just accounting, such as financial reporting, assisting with identifying and applying for the disaster recovery loans and protections offered under the Affordable Care Act.
- The Situation Overturned
The challenges have hit the accounting industry in ways that are entirely different from other sectors. At the beginning of March, companies started experiencing a slowdown due to coronavirus; they were eerily quiet for a few days. Then, government announcements were broadcasted about tax and funding legislation, which overturned the entire situation.
CPAs became the trusted advisor for how businesses should proceed and the translator for new IRS rules. While it might be wonderful working in an industry that is so valued, the burden of tracking daily changes and taking time to communicate with several clients is overwhelming.
- The Wow Time
The biggest obstacle in the industry is the traditional methods of accounting. It is almost impossible to enhance efficiency in accounting firms when clients are insisting on meeting in person and stopping by the office to talk or to drop tax documents.
Finally, it took an epidemic to happen to make the clients feel OK with virtual meetings and sharing scanned documents. Despite the fallout from COVID-19, it’s never better to thrive in the accounting industry.
Accounting firms’ efficiency tremendously increased, and the opportunity to find new clients was never easier. With clients’ willingness to work online with their CPAs also makes tax preparers’ jobs much more manageable.
- The Yet-to-Meet Deadlines
No doubt, COVID-19 is spreading rapidly, and there is a lockdown in almost every country to contain the spread. As a result, most employees are working from home. Due to less communication, it usually gets a little challenging to give productive output. Moreover, clients are reluctant about sharing their credentials or confidential data easily as it is hard for them to trust different communication software for sharing credentials.
Being concerned about data security, clients might also avoid providing their financial information knowing that accounting firms are allowing access to clients’ confidential data to their CPAs working from home. Due to such and many other similar reasons, delay in work is seen.
Though the full effects of the COVID-19 outbreak are yet unknown, the impact is already global. These are some of the impacts that COVID-19 has on accounting firms. With facing adverse effects, accounting firms and businesses were able to find solutions. Many CPA firms never had the opportunity to allow everyone to work and collaborate remotely, but they learned quickly and now leveraging the opportunity to thrive during this uncertain time and helping businesses severely impacted by the coronavirus.
During these stressful and challenging times, the accounting industry needs to consider the changing circumstances and look for smarter options available. Accounting firms, CPAs, EAs, and SMBs can make their business competitive in this pandemic by outsourcing some of the most tiring tasks such as bookkeeping and tax return preparation to third-party or outsourcing service providers. This can even help to save up to 50% of operating costs, and what else could be better than saving amid the COVID-19 crisis.