Four Tips for the New Economic Reality
New opportunities for CPAs from the Obama administration.
January 19, 2010
To combat a once-in-a-generation recession, the federal government is redirecting hundreds of billions of dollars into middle class tax cuts, education, energy, healthcare and the banking system.
These sweeping changes present new opportunities for CPA firms to serve clients.
Here’s a closer look at four areas to consider:
1. Tax planning and compliance
The $787 billion federal stimulus package — called the American Recovery and Reinvestment Act (ARRA) — and the Obama administration’s budget spell big changes in the tax code for individuals and businesses. Their need for tax planning and compliance is immediate.
Explain to your clients how tax code changes are relevant to them. Start by understanding the needs of your existing client base. For example, your construction contractor clients will have different needs than your manufacturing clients. Meanwhile, individuals making less than $250,000 and saving for their children’s college will have different needs than high-wealth empty nesters.
2. Services for state and local government
Firms skilled in audits of state and local governments and the requirements of Office of Management and Budget (OMB) Circular A-133 are well positioned. The ARRA’s reporting requirements go far beyond existing requirements for recipients of federal funds. The OMB has been issuing a stream of guidance on how the funds should be administered.
Many ARRA fund recipients won’t be up-to-speed on the new OMB guidance. These entities need help to properly administer and report their ARRA funds. Recipients will want to know whether the procedures they perform to disburse and report on ARRA funds will be acceptable to their auditors.
3. Services for nonprofit organizations
Many nonprofits are receiving ARRA funding. They’ll face the same administration and reporting issues faced by state and local governments. Moreover, many nonprofits will have to prepare for their first A-133 audit.
Nonprofits receiving more than $500,000 in federal grant money are subject to A-133 audit requirements. Thanks to ARRA funding, many nonprofits that previously didn’t receive $500,000 will now be subject to those requirements.
You can prepare these organizations for their first A-133 audit: Clean up their books and records and respond to auditors’ PBC (provided by client) requests, for example. Alternatively, serve as their independent auditor. However, it’s easier to work with such a nonprofit as an advocate versus an independent auditor.
4. Renewable energy
Keep your eye on wind solar and other forms of renewable energy. The Obama administration has signaled it will make significant investments in the rapidly growing renewable energy sector. Moreover, Congress is considering legislation requiring utilities to generate more electricity from renewable sources by the end of the next decade.
Firms skilled at helping entrepreneurial businesses grow may find significant opportunities to build a renewable energy practice. Aside from traditional financial reporting and tax compliance services, you could offer other services: consulting on issues tied to the Renewable Energy Tax Credit and other tax code provisions; structuring renewable energy deals; or help in securing debt and equity financing.
Before pursuing these areas, however, you’ll want to prepare a well reasoned plan — one which shows clients the services they’ll need for the new economic reality.
Michael Ramos, CPA, works with CPA firms to create and implement business development, communication, and marketing strategies. He is the author of many books, most recently Winning the New Ballgame: Planning for Growth in a Post-Recession Economy.