Technology will be superlative and accountants will have to live up to the hype sharing the same tenets. It was estimated that 2020 will be the year of new evolutions in the accounting world, and on a good note, this year is actually witnessing certain remarkable changes. But along with successful implementations, the accountants will require to pull up their sleeves and tackle the hurdles that they will be facing with the new technological implementations.
The accountants have heard for long that the emerging technological furtherance like AI and blockchain will be reshaping their profession, but the reality is still vague. Even though the radical challenges are in the game, but proper solutions to deal with them also exist. All in all, to work pragmatically, knowing the right terms are necessary.
Moving further, let’s look at the three major accounting challenges and effective ideas to overcome them.
1. AI, Automation and Accounting
Traditional accounting is now a folk tale and everybody believes in catching up with tech. The major accounting challenge today that actually needs to be tackled is the inculcation of tech boons like AI and automation in the accounting tasks. However, bots are not countable in this area.
The thing that matters in this area is the simplicity of accounting algorithms that are efficient enough to complete a multitude of tasks. Some prevalent ones are like collecting transactions and concluding them into financial statements, using machine learning and automation.
Traditional accounting is a full-time job that uses tools and accounting software to make the work less laborious and time-saving. You can say that the implementation of these technological advancements is helping reduce the level of manual work by considerable benchmarks.
Not all can be done relying on robots, humans will be needed to check and do the last moment changes what machines fail to do. The accountants will still be the first choices to handle accounting tasks. But they can definitely use the already-served advancements to tackle complex accounting tasks.
The accounting automation will help to do the jobs more efficiently, which in turn, will save time spent on repetitive tasks. The accountants and the professionals can use that saved time to execute other tasks and achievements.
According to studies, around 59% of the companies in the UK/US have reported third-party data breaches, and only 35% agreed that their risk management strategies are not strong enough to prevent cyber threats.
The hackers are continuously targeting the organization’s data and confidential accounting information. With lesser-known consequences, the accountants are dealing with cyber threats on a regular basis. But this needs a definite stop, whose attainment is necessary not only for the accounting data but the contact list, clients and the connections.
Something that should be more focused is the security and steps taken to ensure the utmost security of the accounting information and data. If there is a use of accounting software, it should be updated regularly to match up the security requirements. The user must restrict others while sharing specific data and any data that’s no longer in use should be erased and avoided. Most businesses believe that the cloud is the most secure option, thereby for better security, you can move your accounting tasks to the cloud.
3. Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act is the standard for measuring and implementing new tax rules and regulations. The TCJA nearly doubled the standard deduction and eliminated many itemized deductions from 2018 through 2025. Here are some of the takeaways from the TCJA for businesses:
- i. The business-related meals are deductible according to TCJA but not the entertainment expenses.
- ii. Most of the small businesses can use cash accounting which is far easier than accrual accounting.
- iii. The bonus depreciation allows the businesses to have 100% depreciation on business assets such as vehicles, computers and other types of equipment for the next three years (till 2022).
The accountants and business firms need to identify ways to save taxes and be updated with the new tax rules and laws (prefer IRS News). Cutting down on entertainment expenses, investing in new businesses before 2022 and keeping an eye on the virtual currencies are some of the ways you can start planning for better taxation.
Moving into a new decade, the accounting firms would be dealing with hassles like recruiting good employees, retaining new clients, data and IT security and keeping up with the tech terms. To manage all this, you surely need to move ahead of the old wives’ tales and look forward to better options.