Accountants Say: Brace for a Dismal 2021

As if 2020 wasn’t bad enough, next year could get worse.

2020: Better or Worse?

By CPA Trendlines Research

As the pandemic spikes into winter, most accountants haven’t got much good to say about their perpetual busy season, according to the latest readings from The 2020 CPA Trendlines Busy Season Barometer. And they’re decidedly pessimistic about the nation’s economic outlook.

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If you’re finding 2020 somewhat worse or much worse than last year, you aren’t alone. Fifty-three percent of respondents are right down there with you. Only 20 percent dare say it’s about the same.

And if your struggles and caution have been paying off, you’re in the lucky 27 percent who say this year is actually better than last year.

What is contributing to a better year? Respondents offer a few enviable scenarios:

  • “AARP stopped doing returns, so I got some of their customers.”
  • “New clients, larger fees.”
  • “We moved, we streamlined, we got rid of staff.”
  • “Because of stimulus and PPP, a lot of clients who were behind in their taxes came out of the woodwork.”

Covid Woes

The most common concern of contributing respondents is late or unprepared clients, indicated by 61 percent. Tardy clients have always been a problem, but now the delays are being aggravated by the pandemic complications.

Fifty-three percent finger the IRS as a chief concern, probably due to the Service being shut down for several weeks and still trying to operate mostly remotely. And despite Covid, of course, budgetary problems are cutting back the service in the Service.

Grappling with changes to the tax code, including the hastily arranged PPP, EIDL, etc., is almost as prevalent, making life worse for 47 percent of Barometer respondents.

Other prominent probs: the general economic situation (40 percent), staffing issues (29 percent), and office workflows (29 percent), all caused to some extent by the need to reinvent the office.

Benchmarks a bit better

Though everybody has spent most of the year climbing up the learning curve, the bottom-line numbers don’t look so bad. Forty-six percent actually are seeing an expansion of clientele, and a surprising 36 percent see no change. Only five percent are suffering a significant decrease.

Revenue follows suit, with 38 percent seeing bumps of up to ten percent, and another 16 percent raking in double-digit increases.

Net profit looks pretty good, too, with 52 percent pocketing more than last year. Still, with 22 percent experiencing some degree of profit decline, the industry is less than rosy overall.
The number of clients on extension is soaring despite the extended mid-summer deadline. Thirty percent of respondents see no change from last year, but 26 percent see some increase, and another 22 percent see a significant increase.

Respondents give plenty of reasons for changes in the wrong direction.

  • “Delays by clients due to 7/15 deadline.”
  • “Office not open.”
  • “Clients in great difficulty with the shutdown of New York City for four months.”
  • “Everything took longer to do, and that led to write-offs.”
  • “Covid crap.”
  • “Covid.”
  • “Covid!!”

Respondents are more optimistic for themselves, their family, and their clients than with the nation’s economy in general. A quarter think their clients will be better off over the next 12 months, and more than a third say the same for their own firms or companies.

But the nation as a whole? Thirteen percent say the economy will get substantially worse, and a pessimistic 43 percent figure it will get at least a little worse.

We’ll just have to wait to see how that local-national paradox works out as we head into a brave new year.

 

 

 

 

3 Responses to “Accountants Say: Brace for a Dismal 2021”

  1. Arthur Fishman

    My year was extended by the July 15 filing. I also saw new clients who wanted to file for the CARES act. MY CPE is off this year, but the major change was in Retirement. I am not happy with how the IRS is administering the PPP. I think congress needs to address the payrolls and Rents as expenses that reduce the income of the business. 2021, I think the IRS is going to have to address the “gig” workers and the other “independent contractors”.
    Another issue, the new administration needs to address is the “home Office” costs. If your company pays for the “Home Office” IT, the COMPANY can deduct the expense, if you try to deduct it as a individual, you get nada deduction.

    I have discussed with clients, the use of teleconferencing rather than sitting 6 feet apart. I have used it, and many clients see the value and will do this.

    Reply
  2. Joe Tante

    The USA has voted to become a socialist (big government in cahoots with labor and the welfare state) / neo-fascist (big government in cahoots with huge corporations) economy. Small business ($0 to $250 million) is what we (most CPAs) cater to and is what will shrink. The middle class will also shrink and will be increasingly occupied by government workers. Huge corporations and those on the government dole should be OK though.

    Reply
    • Arthur Fishman

      Joe, politics are not our domain and you take too much time with names not in a accounting text.
      I deal with Small Businesses that gross under 2 million dollars.
      I do not think Joe Biden or most of the members of the congress are socialists.There are some fascists and many rascists.All I and you can do is help our clients to succeed, and show compassion and empassy for the people who have lost everything and are essentially in poverty

      Reply

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