TrendsAffecting the Industry of Accounting, Tax Preparation,
Bookkeepingand Payroll Services
The Industry ofaccounting, tax preparation, bookkeeping and payroll services isinfluenced by the business environment just like other industries.Most notably, it is affected by economic, social and technologicaltrends as discussed below.
General economic conditions in the US have been on a positive growthof recovery after the 2008/09 financial recession. This has impactedthe price of accounting, tax preparation, bookkeeping and payrollservices. Prohorizons (2015), one of the companies that assistsaccountant through their practice sales indicates that since the endof the financial meltdown, accounting practice sales have gone up inresponse to higher demand. The favorable economic conditions hasincreased business volumes and even made many employees to postponetheir retirements which have all combined to increase demand. From adifferent angle, combining the International Financial ReportingStandards (IFRS) and the American Generally Accepted AccountingPrinciples (GAAP) has impacted how corporations’ financialreporting and bookkeeping is carried out (Pologeorgis2013).
Currency exchange fluctuations also have a huge impact on theaccounting industry. This is because for multinational firms, dealingin different currencies where the value of one affects the value ofthe other has a huge impact on accounting and bookkeeping practices.In August 2015, the Chinese government devalued its currency, theYuan, by about 1.9% in order to stimulate exports to US and Europe(Blackstone 2015). This affected the accounting procedures forAmerican firms operating in China greatly.
Over the years, the taxation trends in the US have changed a lotaffecting the industry in great ways. The tax burden has reduced froma high of 28.8 percent to 25.4% between 2000 and 2012 before the sameincreased by one percentage point in 2013 while in other OECDcountries, the rates have remained above 30% on average (OECD 2015).The changes in tax burden among the US citizens and corporationsaffects accounting procedures. State governments have also beenformulating laws to control the income tax levels usually set by thefederal government.
For many decades, the US has been one of the most desired migrantdestinations. Mexicans have been crossing over to the US in largenumbers in search of employment and better lifestyles. However,following changes in some government policies in the US, more Mexicanimmigrants are leaving the US than entering. In the past, someAmerican employers have been accused of harboring illegal immigrantsas employees who are paid lower than minimum wages. Their bookkeeping practices for these employees have not reflected suchemployees and thus they fail to submit income taxes and otherbenefits for such employees. With the amnesty programs offeringillegal immigrants a chance to return home freely withoutprosecution, accounting and bookkeeping practices for firms involvedin such employed scums will definitely change (Preston 2015).
Since the September 11 attacks in US soil by Muslims extremists, theplace of American Muslims has greatly changed. Muslims as whole areviewed by some as terrorists while Islam is viewed as a religion ofterrorists. This view has led to increased discrimination,segregation and racial tensions in the US. This has been exacerbatedrecently by the declaration by GOP candidate Donald Trump that hewould ban Muslim immigrants as president. The end result has been aloss of trust in the American economy by Muslims (Diamond 2015). Theyare likely to spend less and invest long in the US economy withouttheir future clearly under threat.
In the last one decade, e-commerce has changed the way people andorganizations do business. This has affected of accounting, taxpreparation, bookkeeping and payroll services and practices in manyways. Businesses such as Target, Dell, Wal-Mart have had to adjustand offer their goods and services online as online payments such asPayPal have grown to play a bigger role. Even before firms have hadtime to settle into e-commerce, mobile-based business transactionshave come along. Mobile wallets and smartphone applications haveemerged as the new frontier in business. Firms have been forced toforge new partnerships with other players that develop mobile apps tokeep their businesses in touch with technology. Other businesses suchas Uber have been developed to mainly run on mobile phoneapplications. In response, the accounting industry has to developtechnology to help capture data and transactions made on smartphones. Some of these accounting apps include Xero and mAccounts(Attolini 2014).
Computerized accounting systems such as QuickBooks have beendeveloped to aid in accounting industry. Furthermore, there are newcomputer programs intended to aid bookkeeping and preparation oforganizational financial reports as well as aiding in decision makingin matters pertaining to taxation. Some are web based and can beaccessed on internet enabled devices. Majority of these programs arepatented and optimized to operate with major computer operatingsystems. Competition on this front has seen rapid innovation that hasreplaced older technologies. For instance, while MS excel was widelyrecognized as an accounting, it is hardly used by top professionalaccountants.
Some of the web-based programs are intended in assisting individualsfill out their income returns. The government and especially internalrevenue service has also responded well by adopting technology toallow businesses and individual to file their tax reruns online.Again, the government has also enacted laws to guide the applicationof technology in the financial industry which regulates movement offunds to prevent money laundering and tax evasion. All these changeshave impacted how professionals in the accounting and bookkeepingbusiness do their work and how they employ technology within the lawto enhance their efficiency and services.
From the briefdiscussion above, it is clear that the accounting, tax preparation,bookkeeping and payroll services industry has changed very much overthe last few years. These changes have been occasioned by businessenvironment changes, changes in government policy, lifestyle changesand even technological changes. These changes bring with them newopportunities and challenges that must be managed well to maximizebenefit and minimize detriments.
Attolini, G. (2014).The evolution of an accounting practice: the impact of technology.
Blackstone, B.(2015).China’s Yuan Move Highlights Importance of Exchange Ratesfor Policy
Diamond, J. (2015).Donald Trump: Ban all Muslim travel to U.S.
Khan, M. &Euckland, K. (2012). Attitudes toward Muslim Americans Post-9/11.
OECD (2015). Revenuestatistics and consumption tax trends 2014.
Preston, J. (2015).More Mexican immigrants leaving U.S. than entering, report finds.
ProHorizon (2015).Has the economy affected accounting practice values?
Pologeorgis, N.(2013). The Impact Of Combining The U.S. GAAP And IFRS.<http://www.investopedia.com/articles/economics/12/impact-gaap-ifrs-convergence.asp>