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Wayfair and the Pandemic: New Scrutiny on SUT Compliance

As we look ahead to the prospect of an economic recovery and reflect on changes that the disruption of the last year set in motion for your business clients, sales and use tax (SUT) compliance looms large as a growing issue.

SUT was already gaining steam before the pandemic struck, following the Supreme Court’s 2018 Wayfair decision, which determined that states can broadly require online retailers to collect sales tax even if they lack a physical presence - expanding nexus. Then, the economic effects of the pandemic created the perfect SUT storm: Consumers ramped up their online spending and cash-strapped states and localities began looking for new sources of revenue. As a result:

  • E-Commerce has reached new heights, and there are few indications that it will retreat to pre-pandemic levels. In fact, according to emarketer.com, e-commerce sales are expected to reach 19.2% of all US retail spending by 2024, surpassing the 14.4% of spending experienced in 2020.
  • States are desperate for revenue – most predict revenue declines in FY2021. In fact, in November 2020, the Congressional Budget OfficeCBO predicted an approximate $400 billion loss through 2022. While this was before subsequent legislation was passed that brought direct relief to states, there are still lingering questions, including whether it is enough to close the revenue gap.

Given the significant increase in online sales, SUT is a natural area of focus for state tax authorities. This means your clients need to get up to speed on the SUT issues facing their businesses – including many who have never before had a reason to pay attention to SUT.

It also means you and your firm need to deepen your understanding of SUT issues fast – in time to help clients avoid noncompliance with SUT regulations as tax authorities sharpen their focus. If you are not seeing an uptick in client demand today, get ready – it’s coming.

Preparing for Success: Where to Start

Being prepared for the greater uptick in client demand isn’t as simple as putting a new “We can help with sales taxes” section in your client newsletter or on your website. It’s a more complex issue that requires preparation. Compared to other tax areas, SUT simply requires more effort given its complexity, extraordinary variance across jurisdictions, and constantly evolving nature.

If your firm is ready to branch out and provide SUT services, we’ve outlined key considerations as you proceed. From determining where to start, to identifying all the foundational resources, tools, and best practices it takes to be a SUT success, we have the right resources to guide you.

Where are YOU on your SUT journey?

Resources: Getting Started

Here’s a useful list of resources we developed to help SUT professionals get started:

  • SUT can be a big deal for your firm and your clients – whether they know it or not. Spend a little time on understanding this issue and opportunity now, and your firm can be well-positioned to realize the benefits in the coming year. Learn more in this article.
  • Want to learn more about the different types of SUT practice development and education that are available to the accounting profession? Our guide, Mastering SUT Services: Plan, invest, network, is the best place to start. It discusses where to focus, which types of education opportunities (workshops included) are most important, and which specific education programs can help most.
  • If you’re exploring how your firm can leverage technology for your services – whether advisory, compliance or even referral – our preferred partner solution offers some suggestions. Learn more here.

For additional resources, insights and expert guidance, visit cpa.com/sut.

4 firms, 4 different reasons to adopt the .CPA domain

Why have thousands of firms, including most in the Top 500, acquired the .CPA domain? What’s driving sole proprietors, mid-size firms and even the Big 4 to replace their .com, .net, and .biz domain names with a unique .CPA URL? And what recommendations can they offer for you and other firms who might be evaluating the benefits of the top-level domain?

WHAT IS .CPA? .cpa is a new, secure domain exclusively available to CPA firms.

We asked several early adopters to share their reasons and experiences. The videos below feature our one-on-one interviews with leaders at these firms. If you’ve been sitting on the sidelines of this opportunity, waiting to see how it’s working for others, now is your chance to hear directly from your profession peers. These firms have updated their websites and emails, notified clients, and are embracing a new, exclusive online identity.

Here’s some of the top reasons these firms have adopted the .CPA domain:

  1. To strengthen brand identity and security
    Widmer Roel PC is a mid-sized firm that moved to .CPA primarily for branding and communications purposes, but quickly realized the benefits of enhanced security. “When our third-party vendors or clients are receiving our emails, they know it’s a legit email with .CPA,” says firm partner Tracee Buethner, CPA. “While firm leaders were most excited about the brand development opportunities, the trust and security that come with the adoption of a .CPA domain has been equally important in practice.” Hear more from Tracee in this video.
  2. To elevate a firm’s digital presence
    Driven Business Solutions is a small, online-only firm that jumped at the opportunity to improve its digital presence. The firm doesn’t have a storefront or even a traditional office, instead relying heavily on digital and one-on-one interactions with clients. When firm owner Jonathan Satterfield, CPA, learned that the new .CPA domain was finally available, he saw a clear link between the market trends shaping the future of his firm and his decision to adopt the domain. “I’m a firm believer that in 5-10 years, a younger generation will search the internet for a CPA, and if your site isn’t verified like .gov or .mil, they’re going to wonder if you’re legitimate,” he says. Hear more from Jonathan in this video.
  3. To enhance credibility with clients
    Good Steward Accounting is a small firm whose leader was looking to clarify his market positioning and reinforce its professional credibility. “My previous url was really long,” says firm owner David Villiotti, CPA. “When I gave out my email it was always a long conversation that was unproductive, so I was excited about the opportunity not only to shorten my domain – but to show that I am a CPA, because that’s one of the questions I get most often.” Villiotti also says that the .CPA domain provides additional credibility for him and his firm. “We didn’t get the [CPA] license to hang on a wall, we got it to use it. This gives me the opportunity to use it without even saying a word, presenting us an authority in the accounting industry before somebody even talks to us.” Hear more from David in this video.
  4. To generate new leads
    Acosta Tax & Advisory was looking to capitalize on common keywords that prospective clients in the Miami area might search when seeking a CPA. The firm secured several location-driven names, including MiamiBeach.cpa. “Today, prospective clients are looking for firms online,” says firm founder Julio Acosta, CPA. “And when they search, many of them search by geography – they’ll add a city name to the search. So when we saw that .CPA domains were finally available, we moved quickly.” Hear more from Julio in this video.

Security. Branding. Trustworthiness. Credibility. These are familiar themes among those who have adopted the .CPA domain, but each firm puts these capabilities to work in different, innovative ways.

Want to learn more about the benefits of a .CPA domain? Visit domains.cpa where you’ll find a host of resources to guide you, including a whitepaper, on-demand webcasts, firm case studies, FAQs and more.

If you’ve already secured your preferred .CPA domain and are looking for recommendations or best practices on how to transition your website, consider joining our weekly onboarding webcast. Our customer excellence team will walk you through the process, including best practices and top tips to ensure a smooth transition to your new .CPA domain. If you’ve purchased a .CPA domain and are looking to activate it, you can do so on this link here.

Saasable Helps Unlock Recurring Revenue Trends

Do your small business clients know what their recurring revenue is? Probably not, yet that’s almost certainly where a large portion of their organization’s value lies.

The problem: Crunching that kind of data can be a headache and most small businesses don’t do it. And if they do, it typically is compiled manually in Excel, with a risk that the information can get rapidly obsolete without routine updates.

This is where Saasable, one of the 2021 companies selected by the CPA.com/Association of International Certified Professional Accountants Startup Accelerator, comes in. The company has developed a tool that integrates into accounting software packages such as QuickBooks and creates real-time data on monthly recurring revenue, annual recurring revenue, customer acquisition costs, and the like.

This data can help companies identify trends, develop metrics, monitor churn rates and have a better overall understanding of their business, according to Michael Ly, one of Saasable’s cofounders, who recently sat down for a LinkedIn Live session with CPA.com Senior Director Kacee Johnson. Identifying strong, recurring revenue streams is also a key to higher valuations for businesses looking to grow and gain access to capital, he said.

More and more companies are turning to subscription-based models because customer acquisition costs can be prohibitive, no matter what a firm’s business model might be. That’s not hard to understand – it’s easier and cheaper to hang on to what you’ve already won. Still, Ly recalled being surprised recently to see car washes in Arizona offering monthly fixed fees to customers. The same applies to other unlikely categories, including professional services.

“How can you incentivize and create an experience or product that a customer always would want to repeat and not have to think about buying one at a time?” Ly said. “That’s the idea.”

Ly said the Startup Accelerator has already given his company deeper insight into different software-buying habits, firm transformation strategies, and diversity of business models within the accounting profession. The lessons Saasable and other startup accelerators have learned will be featured in a showcase session at this year’s AICPA & CIMA ENGAGE conference, which will be held July 26-28 in Las Vegas and virtually.

To learn more about the accelerator program, click here.

 

5 early-stage companies that are disrupting the accounting profession

We recently announced the 2021 cohort for the startup accelerator we run with the Association of International Certified Professional Accountants (AICPA & CIMA). The accelerator will give the five early-stage companies in this year’s program access to senior CPA.com and Association executives, as well as a highly regarded advisory panel with deep roots in accounting, finance and innovation.

The accelerator is important in its own right – it gives us, for example, better insight into the path of disruptive technologies that impact accounting. But it also fits into a broader effort we’ve been at the forefront of for the past decade or more – building an innovation ecosystem, a technological rising tide that lifts all boats.

Examples of this include our work with the Wall Street Blockchain Alliance and our signature Executive Roundtable, which gathers top executives, entrepreneurs and influencers in the accounting technology space for networking, mutual problem-solving and support. All these efforts create synergy.

This year’s accelerator lineup is part of that push:

  • ByteChek – The Miami-based company’s platform and unique integrations create an automated experience for service organizations working toward a System and Organization Controls (SOC) 2 report. Organizations license the product and CPAs review the results.
  • ElectroNeek – Robotic Process Automation (RPA) removes the headache of repetitive, rule-based tasks that consume too much time for accounting firms and finance teams in companies of all sizes. ElectroNeek empowers its partners to deliver automation to accounting clients free of any software charges, making RPA more accessible.
  • Guardd, Inc. – The Denver-based company provides critical support for secondary market trading of private company securities. GUARDD is a financial disclosure tool that collects, verifies, and disseminates private company information, including financial data, facilitating transparency for investors and allowing private companies to compliantly trade on Alternative Trading Systems.
  • Saasable – Recurring revenue is a key metric for businesses but is difficult to capture and benchmark. Saasable, based in Burlington, Vt., allows clients to automate daily recurring revenue data, customize it and share it with users. Results can be measured against SaasIQ, the company’s artificial intelligence-driven benchmarking tool for small and medium-sized businesses.
  • Valid8 Financial – The company, based in Boulder, Colo., is reimagining financial audits and investigations. Valid8 extracts evidence from multiple types of systems and documents to create a fully integrated transaction database to dramatically reduce sample risk and help accounting service professionals deliver "forensic-grade" financial audits with 80 percent less time spent on data preparation.

What do these companies illustrate?

ByteChek’s co-founders are an information assurance and accounting professional who serves on AICPA technology panels and a military veteran with a background in cybersecurity who has worked with some of the biggest cloud hosting companies. Fusing complementary skills and competencies is a key for successful companies – and the profession.

Guardd incorporates RIVIO, our private company information clearinghouse, into its solution, which offers enhanced disclosure to ease the trading of private company securities. This demonstrates how innovation can be incremental and interlocking.

The other three companies on our list help solve pain points for many practitioners and their clients. By attacking a problem from a unique perspective, startups can help reset how we view a variety of approaches, sparking other innovations. This is the way we move forward.

To learn more about the accelerator program and the 2021 cohort, view this LinkedIn Live video or visit cpa.com/accelerator.

CNBC sounds the alarm for clients on Virtual Currency reporting, emphasizes CPAs’ role [VIDEO]

Wondering when or if your clients will start asking about virtual currency reporting? With this issue finally making its way to mainstream financial media, get ready to start fielding questions about this increasingly visible, important issue.

In a recent segment on CNBC’s Squawk Box, co-anchor Andrew Ross Sorkin said, “If you’ve owned or used Bitcoin, you may owe taxes no matter how you acquired or used it.” That will surely get the attention of clients with crypto assets – along with these other highlights noted in the CNBC report:

IRS on Virtual Currency

  • “You need to check ‘Yes’ if you were involved in any transaction with virtual currency.” (These types of transactions include sales, receipts or transfers, and exchanges of goods.)
  • “Like stocks, any gain or loss from the sale or exchange of a crypto asset is taxed as a capital gain or loss.”
  • “Working with a tax professional is key here [...] having a CPA or tax professional who has experience with crypto assets is very important, so ask that question as you pick a professional to work with.”

The CNBC reporters also strongly emphasized the pivotal role accounting firms should play in helping clients navigate new IRS guidance on virtual currency reporting to ensure compliance.

Are you confident that your firm will be ready to respond as this issue continues to gain visibility among your clients? The AICPA and CPA.com have assembled a wealth of educational content and resources specific to virtual currency reporting that can inform your planning for the 2020 tax season. Leverage these practical tools to ensure your staff understands crypto asset transactions and their reporting implications:

AICPA Learning Resources:

CPA.com Resources:

  • LukkaTax for Professionals – Tax preparation software designed specifically for the accounting profession
  • Lukka Library - Access year-round content on the virtual currency ecosystem written by industry experts

For other valuable resources on this issue, visit www.cpa.com/crypto. Meanwhile, the AICPA continues to advocate for additional guidance from Treasury and the IRS. We’ve also included information on crypto asset reporting solutions that can help you this upcoming tax season.

A Closer Look at Our Startup Accelerator Companies

The CPA.com/Association of International Certified Professional Accountants Startup Accelerator is an annual program that finds, invests in, and guides early-stage tech companies with solutions that support accounting and finance professionals. This blog series provides a deeper look at the five companies in the 2021 cohort.