A recent poll found that 62 percent of employed Americans worked from home during the coronavirus crisis. As the poll noted, the pandemic may not be an issue forever, but remote work will be.

Security One of the most important things businesses going virtual need to consider is their security measures.  With so many people working from home, hackers have more of a chance to gain access to sensitive company information. 

Taxes Taxes pose a special challenge in a seismic shift to work from home. Employees must coordinate with their employers for reimbursement and we must be careful that sales tax is being charged properly.  On the 2020 returns there should be a drop in business mileage, as well as travel costs and meals.

Dedicated Work Space Another solid piece of advice: your bedroom should never be used as an office, select another small area of the home. Also, more workers are reporting that their employer is offering flextime or remote work options. This may mean that you no longer have a choice and must rely on paperless, virtual processes such as electronic signatures and delivery.

Hiring Another challenge employers may be facing is hiring new employees remotely. Some good questions for hiring candidates for remote companies include:

• What is your history of working remotely?
• How do you stay engaged and motivated over long periods without in-person interaction with co-workers?
• What do you do to minimize miscommunication in emails and instant messages?
• What is your approach to work-life balance when your job is remote?

For more information please visit: https://www.accountingtoday.com/news/tax-pros-advise-biz-clients-on-going-virtual

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There are also many opportunities to save on taxes imposed by local jurisdictions on the business entity. A number of local jurisdictions — and the list is growing — impose local taxes on business entities. In some cases, such as New York City, the tax applies to unincorporated businesses. This would include partnerships, LLCs, and sole proprietorships.

With an unincorporated business tax rate of 4 percent, the amount of the tax is significant. The tax rate “is charged to income allocated to New York City,” meaning that income is not allocated to a business for employees working from a location outside of New York City. You can take away that portion of the work that is not performed in New York City and you don’t have to pay the 4 percent. It can be quite a substantial savings for businesses that make a lot of money. Large companies can save millions in taxes.

This is an ongoing conversation, other jurisdictions are considering this since they are under increasing pressure to find alternative means of raising revenue.

Companies need to take advantage of this if they qualify. Companies thinking about this opportunity should know that all tax jurisdictions are going to be aggressive. States, counties, and cities all have significant deficits, so states are unlikely to assist the local jurisdictions since they have their own issues.

Since local budgets won’t get fixed anytime soon, expect to be audited. To successfully fight the audit, a business should be prepared to prove who is working, from where, and for how long. The burden of proof falls on the taxpayer, so if the local jurisdiction audits the taxpayer, the onus will be on the firm to provide clear and convincing evidence about the position it has taken. But given the amount of tax savings involved, the effort is worth it.

For more information please visit: https://www.accountingtoday.com/news/remote-workers-may-provide-tax-savings-for-employers

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For companies that have gone remote, a new development of work-from-home is state tax nexus. Working in one municipality and living in another is nothing new. But now a large chunk of the workforce is working in one state and living in another.

Typically, tax nexus is based on where employees physically perform services (although other factors can come into play). For example, an employee living and working at a business based in State A will have income tax withheld for State A. 

But if that same State A business now has employees performing working at home in State B, it now has an income tax, payroll tax, and possibly a sales tax nexus in State B, meaning it would technically need to file there as well. 

Managing this situation can get really sticky in states that have similar income tax laws, but tax rates that are different. For example, big cities tend to have a much higher tax rate than their closest neighbors. Larger firms will have more resources to throw behind a comprehensive study to fully understand their state-level tax exposures. But some smaller companies may not want to, or cannot afford to pay for a full nexus study to identify where they should file.

The financial effects can be significant. If a company has nexus in a certain state and doesn’t file tax returns in that state, the state can go after that company indefinitely with no statute of limitations. Why? Because the statute of limitations generally starts on the date a company filed its returns. 

Currently, many states are under financial difficulty having had to deal with health-related issues, business closures and unemployment claims will look for other sources of income and combine that with the virtually unlimited look-back for nexus tax issues, this could be a recipe for future tax headaches for years to come.

Ultimately, there is no way around this without vigilance. CPA firms are going to have to delve deeply into the intricacies of each of their client’s businesses to determine; the states their clients operate in, how many employees work in different jurisdictions, and other important details, are doomed to see complications next reporting season. This is one headache, that if we’re proactive, can be avoided.

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For some CPAs, the transition to remote was fine, and some even thrived. For others, the transition to a remote career has been more of a challenge. To help smooth out the remote process consider these pointers:

Manage projects transparently

Showing clients the progress on their projects or requests can increase the level of trust between the client and the accountant. Project trackers such as Trello or Workfront enable you to easily share a project dashboard with clients. 

Digitize payments

These days there fewer and fewer paper invoices and checks. Some CPAs cling to checks because they’re useful for establishing an audit trail. However, they can create cash management problems for clients and vendors. Sophisticated CPAs enter their payees’ ACH info once and automate the payments from thereon. 

Even more advanced CPAs use AI platforms to digitally parse, allocate, and pay invoices. This results in more time to provide more interesting high-value information to clients.

Stay collaborative

CPAs are used to sitting with their clients (or company executives) in a conference room where everyone has a copy of the financial statements. It can be hard to understand the numbers without context. Consider doing introductions and catch up with video conferences, and then use screen-sharing to share spreadsheets, navigate clients through their QuickBooks, or show invoices from an AR or AP automation platform. This approach will streamline approvals and slow the slew of emails and questions you would receive later if clients were to review the numbers on their own.

Be proactive, but not annoying

CPAs need to find a balance between being proactive and annoying. Yes, clients want your help surviving the shutdown, but they don’t want to hear from you daily or weekly. Most would prefer a short and relevant email once a month that provides actionable information.

Be concise or call

Use one introductory sentence, two at most. Deliver the details in bullets, then be done. If a client opens your email on their smartphone and has to thumb-scroll more than once to reach the end, that email won’t be read for days. If you find yourself overwriting, pause, and schedule a call instead. Fifteen minutes on the phone is more productive than a chain of 15 distracting emails.

Offer clients an automated scheduler

Don’t waste your time emailing time back and forth instead offer your clients an automated scheduler (e.g., Calendly, Appointlet or GigaBook) where they can pick times within parameters that can be pre-set.

Conclusion

Working with clients and coworkers remotely can be challenging, but new technology advancements are improving efficiency daily. These new and improved methods will ensure a more resilient, secure, transparent, and convenient future for the accounting world, whatever the future may hold.

For more information please visit: https://www.accountingtoday.com/list/6-productivity-hacks-for-the-remote-cpa

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Major Findings of the Survey:

Just under a third of large accounting firms reported plans to downsize their office space in the aftermath of the pandemic. Over two-thirds of respondents felt “very positive” about their firm’s response to the pandemic. Regardless of firm size, two-thirds of leaders at practices reported that the greater number of employees working from home had led to a decrease in productivity. Overall, 82 percent of accounting firms were “very” or “somewhat” likely to allow employees to work remotely even after the pandemic, compared to 73 percent of businesses in the broader survey.

Note from Ferrone & Associates CPAs

Like many other firms across the country, Ferrone and Associates CPAs has also made the decision to permanently change our work environment to a hybrid in-person and remote situation.  Luckily, we were already prepared when the decision to work remotely was made.  We have continually been investing in new technology out of curiosity and in search of benefits for increased functionality and flexibility. Although the decrease in in-person communication has required some adjustments, we are proud of our preparedness and adaptability. 

As we enter a new era, we will now have a presence in an executive office suite.  Our contact information will remain the same, with the exception of our address which is now 3001 South 700 East, Suite 500, Salt Lake City, UT 84107. 

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A video conferencing solution such as Zoom is brilliant for replacing in-person meetings, and instant messaging tools like Slack or Microsoft Teams can be useful for hashing something out quickly or as a virtual ‘water-cooler’. However, these tools alone do not equip your firm to work remotely. If this is what your firm is relying on, it is extremely likely that you are now emailing more than ever, having more frequent emails, feeling stressed, and worrying about things slipping through the cracks. To work effectively as a distributed firm without creating more stress and work for everyone, you need fewer tools, no siloing of communication, and better team behavior.

Communication is at the core of remote work

For all the discussion about changes and the right tools for working remotely, your primary focus needs to be on how you communicate. You’ve likely already been using cloud tools for account reconciliation and email which have not changed. You are also likely already using video chat on occasion.  The crucial challenge in remote work for your business is effective collaboration within your team. 

Instant messaging and the illusion of communication

An instant messaging app such as Slack or Microsoft Teams makes a lot of sense at first glance. In reality, most of the time, messaging is not the best communication tool. Some of the pitfalls of messaging include: 

• Constant interrupting. The constant blink of notifications can be disruptive and most simply can’t ignore a new notification and look into it immediately. This leads to decreased productivity as well as confusion when it comes to priorities.
• Out of context from the actual work. Instant chat is a whole new system, completely separate from the tools your team uses to get their work done. It is hard to discuss something when the critical details aren’t front of mind. Or to talk about the response to a difficult client email when that email isn’t right there. Or to draw on a colleague’s comment from last week that you just can’t locate right now.
• It’s exhausting. Following a group conversation with no clear direction is tiring, inefficiency, and stressful.
• Chopped?up thoughts. Just because everyone is typing a lot and multiple messages are being sent doesn’t mean that everyone is communicating or even on the same page. The nature of instant messaging isn’t conducive to sharing complete thoughts.

A better way to work together when you’re apart

Instant messaging may not be the answer, but asynchronous communication could be. Asynchronous communication is when you communicate without the expectation of an immediate response. The shift to a more asynchronous type of communication results in employees having control over when they reply back and increases chances for uninterrupted deep work. 

Context is critical for collaboration

Even with all the fundamental elements to communicate, no one can function at 100% without the proper context. Using multiple tools and forms of communication must be easily organized and seen in the context of the broad plans and projects of your company.

Communicating about work on the same platform your team does the work is exactly how remote teams gain context. 

Opportunity for Change

We do not know how long the current situation will last, but all indications show that this is going to be the new normal for some time. Don’t introduce tools or practices as a stopgap. The smartest firms will be treating this period as an opportunity. Use this as an impetus to make some proper change. Add the right systems that will benefit you in the long term. Introduce positive work habits. Keep your staff happy. And allow them to do their best work.

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