MACPA Statement // Winter 2024

STATEMENT MACPA’S

WINTER 2024

GENERAL

ASSEMBLY 2024 Vigilance is key

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ALSO INSIDE Practical application of generative A.I. for accounting and finance Page 20 Turning A.I. into I.A. — intelligence augmented Page 23

What’s on Line 37? …your opportunity to help save a life by making a taxdeductible donation to the Maryland Cancer Fund, which provides cancer prevention, screening, and treatment for low-income Maryland residents.

This tax year, please donate on Line 37.

https://phpa.health.maryland.gov/cancer/Pages/mcf_home.aspx Maryland Department of Health 201 W. Preston St., Baltimore, MD 21201 Phone: 410-767-6213

Wes Moore, Governor | Aruna Miller, Lieutenant Governor | Laura Herrera Scott, Secretary

CONTENTS WINTER 2024 | Maryland Association of Certified Public Accountants, Inc.

CHAIR’S COLUMN.............................................................................. 2 FEATURES

General Assembly 2024: Vigilance is key.............................................................. 6 Support our PAC... and strengthen the CPA’s voice in Annapolis........................ 8

DEPARTMENTS

News & Views........................................................................................................ 9

Business and Industry.......................................................................................... 12 Tax Corner............................................................................................................ 16 Public Practice...................................................................................................... 18 High-Tech Solutions............................................................................................. 20 From Our Partners............................................................................................... 24

MEMBER NOTES................................................................................ 30 CLASSIFIEDS........................................................................................... 31 MEMBER SERVICES Lauren McDonough Justin Chase PEER REVIEW Cora Edwards PROFESSIONAL DEVELOPMENT Natalie Antonakas Kelly Brown Chris Dougherty Emily Trott

2023–2024 BOARD OF DIRECTORS Christine Aspell, CPA Chair Thomas White, CPA, CGMA Vice Chair Maxene M. Bardwell, CPA, CIGA, CIA, CFE, CISA, CITP, CRMA Secretary/Treasurer Herbert J. Geary III, CPA, CGMA Immediate Past Chair Karl Ahlrichs, SHRM-SCP, SPHR, CSP Jackie Cardello, CPA Bo Fitzpatrick, CPA Robert Goldstein, CPA Michael Kimbrough, Ph.D., CPA Gregory Repas, CPA Brett Sanders, CPA Savedra N. Scott, CPA, CGMA, CrFAC, MSA, MBA

SENIOR STAFF Rebekah Olson, CPA CEO Laura Swann, CPA CFO Bill Sheridan, CAE CCO Mary Beth Halpern Director Technical Services/ Regulatory Affairs Dee Sullivan Director of Learning Michelle Brown, M.Ed. Chief Growth & Innovation Officer

WE WANT TO HEAR FROM YOU! See below to submit content

Bill Sheridan | MACPA Dulaney Center II 901 Dulaney Valley Road Suite 800 Towson, MD 21204 FOR CONTENT SUBMISSION: bill@macpa.org feedback@macpa.org TO ADVERTISE IN THE STATEMENT: sponsorship@macpa.org P: 410.296.6250 F: 410.296.8713 Toll free: 800.782.2036 The MACPA reserves the right to edit all submissions for grammatical style and / or length.

Statement of fact and opinion are made by the authors alone and do not imply an opinion on the part of the officers or members of MACPA. The Statement is published four times a year by the Maryland Association of Certified Public Accountants, Inc. Bill Sheridan, Editor Krislyn Suljak, Advertising Sales

WINTER 2024

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CHAIR’S COLUMN CPAs must engage with our elected leaders, educate them on the future of our profession

BY CHRISTINE ASPELL / MANAGING PARTNER, KPMG BALTIMORE OFFICE

Maryland’s General Assembly is back in session, and legislators have a long list of issues with which to grapple this year.

CPA can play. It’s the reason why advocacy is one of the four pillars of the MACPA’s promise to its members.

Topping that list is evaluating the budget.

They will need to weigh all their options given the sizable shortfalls that are expected in the state’s overall budget and within Maryland’s Department of Transportation. Funding challenges in areas throughout the state will have legislators looking closely for any and all opportunities to raise revenue this year. That, in turn, will put many professionals — including the state’s CPAs — on alert.

But the importance of our advocacy efforts go well beyond the issues. Legislators enthusiastically look forward to speaking directly with their constituents about the issues, and CPAs offer lawmakers deep experience, insights, and expertise in matters related to finance and fiscal strategy. It’s a legislative win-win for everyone involved.

Legislative vigilance will be key for our profession in Annapolis this year. The MACPA’s Legislative Executive Committee has compiled an agenda that reflects the need for that vigilance; you’ll find complete details about our 2024 legislative agenda on pages 6-8.

The MACPA’s members put that vigilance on display on Jan. 18, braving the cold and turning out by the score for our annual CPA Day in Annapolis. The event gives CPAs an opportunity to meet in person with their state legislators and discuss issues that impact Maryland CPAs and those with whom they do business. This year, our legislative agenda includes three key issues: • Opposing sales taxes on professional services, including those provided by CPAs. • Opposing efforts to replace Maryland’s contributory negligence standard with a comparative fault rule.

• Supporting proper budget funding for the Maryland Comptroller’s Office.

I can’t overstate the importance of CPA Day. Safeguarding the profession by providing timely advice and insights on issues like these is one of the most important roles a

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William Wivell, a Maryland delegate from District 2A and a CPA, knows this better than most.

“Government is successful only if our citizenry remains actively involved in its proceedings,” he said, pleading with CPAS to “please continue to reach out to your elected officials regarding issues of importance to you and in which you have specialized knowledge.”

With Maryland’s 446th General Assembly now under way, CPAs throughout the state would do well to heed Del. Wivell’s advice.

Our elected officials need us, just as we need them. Any legislation that means anything is happening at the state or local levels. If you’re not paying attention there, things could happen that you might not like ... and that your clients will definitely not like.

Rutherford’s successor, current Lt. Gov. Aruna Miller, agrees. “Probably the most sought-after professionals in the nation are our Certified Public Accountants,” she once posted on Facebook, “and Maryland has the best CPAs.” Our knowledge about business and fiscal issues is vast, and our collaboration with elected officials is incomparable. “CPAs have tremendous political clout in Annapolis,” Sen. Brian Feldman, himself a CPA, once told CPA Day attendees. “Your business expertise gives you credibility that other professions don’t have.”

Now it’s time to put that credibility to use.

For as much influence as we wield, CPAs are routinely out-raised and outspent on the political action front by other professionals like lawyers and engineers.

You can help us turn the tables by making a critical donation to the MACPA’s political action committee. Through contributions from members like you, our PAC is able to work toward favorable outcomes on legislative issues that affect CPAs, educate legislators about matters that are important to the CPA profession, and keep MACPA members informed. Your generous contribution will help ensure Maryland CPAs have a voice in Annapolis and will help ensure a vibrant CPA profession in the future.

On the other side of that coin are the good things that happen when we become active politically, not just for ourselves and our profession, but for our clients and the state as a whole.

Get complete details on how to donate by visiting MACPA.org/advocacy. And be sure to follow the MACPA’s blog for the latest updates and insights from Annapolis.

“You can judge the strength of a state’s economy by the strength of its professional services,” former Maryland Lt. Gov. Boyd Rutherford told CPAs at a previous CPA Day, “and ours is strong indeed.”

This is your wakeup call to pay attention, to get involved, to start now ... and to serve as witness to the history that’s taking place in our own back yard. Join us in our efforts to protect our profession and strengthen the great state of Maryland.

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Give Our Profession a VOICE

P OLITICAL A CTION C OMMITTEE The PAC works toward progressive outcomes on legislative issues affecting CPAs, educates legislators about matters that are important to the CPA profession, and keeps MACPA members informed.

Your contribution will help ensure Maryland CPAs have influence in Annapolis and build a vibrant future for the CPA profession.

SUPPORT OUR PROFESSION AT THE POLICY LEVEL.

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GENERAL ASSEMBLY 2024 Vigilance is key

By Bill Sheridan, CAE

Fiscal concerns throughout the state have CPAs on the watch for legislative consequences. Here are the issues the profession is watching in Annapolis this year.

2024

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STATEMENT

As Maryland’s 2024 General Assembly gathers in Annapolis, fiscal concerns at a number of statewide levels are putting pressure on Maryland regulators and legislators to find new sources of revenue.

That increases the odds that lawmakers might look for creative ways to generate funding during the upcoming legislative session — and that, in turn, is putting the state’s CPAs on alert.

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University of Maryland shock trauma services: The worldrenowned R Adams Cowley Shock Trauma Center at the University of Maryland Medical Center is facing some funding issues as well.

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The bottom line: Funding challenges in many different areas throughout the state will have legislators looking closely for any and all opportunities to raise revenue this year. It’s easy to see why fiscal-related issues are top of mind for CPAs in Annapolis this year.

The message for MACPA members is clear: Vigilance is key as Maryland’s legislative season arrives, and that made CPA Day in Annapolis especially important.

Held for Jan. 18 at the Governor Calvert House in Annapolis, CPA Day gives members an opportunity to meet in person with their state legislators and discuss issues that impact Maryland CPAs and those with whom they do business. The event is immeasurably impactful: Legislators enthusiastically look forward to speaking directly with their constituents about the issues, and CPAs offer lawmakers deep experience, insights and expertise in matters related to finance and fiscal strategy.

With that in mind, the MACPA’s Legislative Executive Committee has compiled a legislative agenda that, while packed with familiar issues, is taking on renewed importance this year. The key issues on the association’s 2024 agenda are:

Those insights are more valuable this year than ever. The issues that may directly impact CPAs and their clients include these high-profile, revenue-related topics:

I. Opposing sales taxes on professional services, including those provided by CPAs

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Transportation funding: Plans to close an estimated $3.3 billion budget shortfall for Maryland’s Department of Transportation with deep cuts to all transportation-related agencies is being questioned by state and county officials throughout Maryland. Many are blaming the shortfall on sagging revenues that traditionally support transportation projects.

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State budget shortfalls: Maryland faces a $322 million budget gap for the upcoming legislative session, and that gap is projected to balloon to $2 billion by fiscal 2029. Part of the issue is the end of COVID-related federal aid that dried up as the pandemic ran its course.

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The Blueprint for Maryland’s Future: Fully funding the plan to advance public education in Maryland brings substantial spending obligations at both the state and county levels.

“If we don’t have a seat at the table...we could end up on the menu. Thanks, MACPA, for giving us that seat.” - MACPA member

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Proposing a sales tax on services to raise revenue would burden the citizens and businesses of Maryland unnecessarily with additional taxes and compliance complexity. It also would negatively impact economic growth and development. CPAs believe any proposal to implement sales taxes on professional services would be bad for small business in Maryland, and the MACPA will work to defeat such legislation if introduced.

II. Opposing efforts to replace Maryland’s contributory negligence standard with a comparative fault rule In many of the past several years’ sessions of the General Assembly, trial lawyers have introduced bills designed to replace Maryland’s current system of determining a defendant’s liability with a system that makes recovery against a defendant easier – even when the person bringing the lawsuit substantially contributed to his own injuries. At present, Maryland courts allow a person sued for negligence or wrongdoing to raise the “contributory negligence” defense — that is, the party sued may claim that the plaintiff contributed to his injury and thus should not be allowed to recover from the defendant. This long-standing rule in Maryland courts prevents a person from shifting his or her responsibility to others.

The contributory negligence standard should be maintained in Maryland because: »

it prevents a flood of suits by plaintiffs who have a disproportionate amount of fault;

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it keeps the lid on insurance premium growth rates;

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it fosters the exercise of due care by all persons; and

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it enhances the predictability of litigation, including its costs.

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The increased cost of conducting business and the decreased productivity associated with the comparative negligence standard would, in the long run, lead to a loss of jobs, increased liability and a deterioration of the economic climate in Maryland. MACPA will again work to retain the contributory negligence rule.

agency’s tax administration operations.

III. Support proper budget funding for the Maryland Comptroller’s Office.

Making connections and having conversations with Maryland’s legislators is a key part of the MACPA’s member promise — to promote the value of the profession and support positive legislative outcomes for our members and the public.

During the 2023 General Assembly session, the MACPA supported the Maryland Comptroller’s Office’ request for additional funding needed to carry out its extensive agenda. The Legislature agreed, and good things have happened during the past year thanks to the additional funds, but the need for expanded funding still exists, particularly when it comes to providing expanded services and paying the salaries needed to attract stellar talent.

Among its many functions, the Comptroller’s Office is responsible for collecting tax revenue and enforcing compliance with the state’s tax laws. As the collector of much of the state’s cash, it is logical that the Office be supported with a proper budget for appropriate personnel levels as well as much needed technology upgrades..

The MACPA supports a properly funded budget that will allow the Comptroller’s Office to retain its current team as well as hire additional qualified personnel by offering competitive salary levels, and also allow for a more modern IT system for efficiency of the

A comprehensive list of position papers and the bills the MACPA is following this year will be found throughout the legislative session at MACPA.org/advocacy.

“If we don’t have a seat at the table,” one MACPA member said, “we could end up on the menu. Thanks, MACPA, for giving us that seat.”

But keeping CPA expertise front and center is crucial for Maryland’s legislative process as well. Maryland’s lieutenant governor, Aruna Miller, said as much in 2018 while representing District 15 in the House of Delegates, says.

“Probably the most sought-after professionals in the nation are our Certified Public Accountants,” Miller posted on Facebook at the time, “and Maryland has the best CPAs.” Bill Sheridan, CAE, is editor of The Statement and chief communications officer of the Maryland Association of CPAs.

Support our PAC … to strengthen the CPA’s voice in Annapolis FROM BILL SHERIDAN, CAE Maryland’s General Assembly meets in Annapolis each year and votes on critical issues that impact your profession, your livelihood, and the businesses you serve.

That’s why we urge you to support the CPA Committee on Political Action. The CPA/ CPA is the only political action committee in Maryland dedicated solely to fighting for CPAs in the legislative arena.

Good relationships with legislators are the core of the MACPA’s legislative advocacy efforts. Your contribution to the CPA/CPA is one of the easiest and most effective ways for CPAs to get involved in the political process and have an impact on the profession.

Contributions to our PAC lag far behind other professional groups. This puts us at a severe disadvantage, especially when certain groups have interests opposed to ours and have far greater PAC participation from the their members.

Through contributions from members like you, the PAC works toward favorable outcomes on legislative issues, educates legislators about matters that are important to the CPA profession, and keeps MACPA members informed. But we can’t do it alone. Your involvement makes a difference and ensures that, together, we make the greatest impact.

Please support the MACPA’s CPA/ CPA today by donating online at MACPA.org/advocacy. Or scan the QR code at the right.

Your contribution to the CPA/CPA will allow us to support legislators from both parties, and help the CPA profession maintain an influential presence in Annapolis. Thanks so much for your support!

PLEASE SUPPORT THE MACPA’S CPA/CPA TODAY

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donate online at macpa.org/advocacy.

STATEMENT Or scan the QR code at the left.

NEWS & VIEWS Maryland’s Board of Public Accountancy OKs new education, licensing regulations

BY MARY BETH HALPERN

Exciting news for CPA candidates in Maryland: Eagerly awaited updates to the state’s CPA exam and licensing regulations have received the green light from the Maryland Board of Public Accountancy, a move strongly supported by the MACPA. The approved changes aim to align Maryland’s CPA educational requirements with the evolving landscape of the accounting profession.

Key modifications include the replacement of managerial cost accounting with a focus on data analytics, specifying subject matter options for ethics courses (business ethics or accounting ethics), and the addition of data analytics along with the recognition of other business-related content areas outlined in the Uniform CPA Examination Blueprints for licensure.

Maryland’s Board of Public Accountancy also granted final approval to change the conditional credit period from 18 months to 30 months, starting from the date of passing the first section.

These adjustments are a response to the evolving demands of the accounting industry, ensuring that newly licensed CPAs in Maryland possess the relevant knowledge and skills. The overarching goal is to streamline educational requirements in the state, bringing them in line with neighboring states and addressing concerns about the appeal of Maryland as a testing location.

Mary Beth Halpern is director of technical services and regulatory affairs for the Maryland Association of CPAs.

CPA exam applications submitted before July 1, 2026, will be eligible under either the existing course requirements or the recently approved regulations.

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STATEMENT

NEWS & VIEWS AICPA & CIMA register first 100 apprentices, signs 17 employers to Apprenticeship Program in inaugural year

BY THE AICPA apprenticeships at the AICPA and CIMA. ”We are also piloting a youth apprenticeship in Maryland high schools, because we need to attract students into the profession earlier and research shows that high school students in structured earn while you learn apprenticeship programs, such as AICPA & CIMA’s, can be very productive and contribute to the workplace.”

The AICPA and CIMA have announced that they have registered more than 100 apprentices in its Registered Apprenticeship for Finance Business Partners program within the inaugural year of the program. These apprentices represent 17 employers across 15 industries.

Our apprenticeship combines a world-class learning program with mentorship and onthe-job training, which helps employers recruit and grow their own, providing the kind of workplace the 21st century workforce expects – diverse, inclusive, collaborative, and innovative.”

Most recently, CareFirst and Stanley Black & Decker have signed and joined a roster of employers that include AON, HP, Liberty Bank, Hypertherm Associates, and Messer Americas.

“The Registered Apprenticeship for Finance Business Partners program immerses employees in the experience beyond traditional upskilling methods and will help us to develop diverse and skilled finance teams for now and in the future,” said Tom White, CPA, CGMA, director of Accounting at CareFirst.

“We are excited to make this program available to our finance colleagues to help them gain essential skills, earn their CGMA designation, and carve out a path for job training, mentorship, and career growth.”

The Registered Apprenticeship for Finance Business is the nation’s first-of-its-type program for accounting and finance. It is dedicated to establishing a pipeline of highly engaged candidates that allows employers to monitor and develop more skilled, diverse, and long-term employees. The program is built on the globally rigorous CGMA Finance Leadership Program leading to the award of the Chartered Global Management Accountant (CGMA) designation.

“The battle for talent is increasing, making the need for more skilled accounting and finance talent even more pressing,” said Tom Hood, CPA/CITP, CGMA, executive vice president of business engagement and growth at the AICPA and CIMA. “How we address the needs of our finance teams today will better position us for tomorrow.

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Along with growing the participation roster of employers and industries, the AICPA & CIMA are working to increase opportunities for students to have earlier options to benefit from an apprenticeship program.

“Apprentices in the AICPA & CIMA Finance Leadership Program need not have completed their two-or-four-year degree to join an apprenticeship program. They just need to complete their degree by the time they complete the program,” noted Joanne Fiore, vice president of pipeline and

For more than a century, the AICPA and CIMA have focused on driving a robust pipeline of professionals prepared to support and grow organizations worldwide. The Registered Apprenticeship for Finance Business Partners is the latest step in that mission.

For employers, apprenticeship programs: • Are career development programs that establish a pipeline of employees that employers can develop and monitor over time to greatly increase the chance of developing a highly engaged, more skilled, long-term employee.

• Are a talent pipeline management tool, which allows organizations to build, in addition to buy talent, and in doing so take control over how they address ongoing and future needs of their organization and improve recruitment.

• Expand the candidate pool by providing experiences and education that the candidate may not have at the start and allows employers to consider a broader range of candidates.

For apprentices, these programs allow them to earn a paycheck while they learn and benefit from exposure to more career development and mentoring opportunities.

If you are interested in learning more about the Registered Apprenticeship for Finance Business Partners, contact Joanne.Fiore@aicpa-cima.com.

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BUSINESS AND INDUSTRY Navigating an uncertain 2024 – and beyond Editor’s note: The following article originally appeared on Dec. 1, 2023 on the Financial Management website. It is reprinted here with permission.

BY DAVID A. J. AXSON continued global growth, albeit slowing slightly next year to 2.9%, according to the International Monetary Fund.

As 2024 approaches, finance professionals can address the challenges of an uncertain future by building a solid foundation for planning and decision-making focused on four areas: concentrating on what we can control; maintaining agility and flexibility; strategically controlling expenses; and cautiously managing cash and capital.

Finance can stay prepared for a potentially bumpy 2024 by focusing on controllable factors, being agile, and carefully managing cash, capital, and expenses.

A year ago, I wrote for FM about how finance professionals would face challenges forecasting for 2023 and beyond in a time characterized by global supply chain disruptions, war in Ukraine, and surging inflation.

Looking forward to 2024, many of these challenges remain — and new ones are emerging. Globally, emboldened workers are seeking to leverage relatively low unemployment rates in most major economies to secure substantial wage rises, leading to significant increases in labor costs. In the U.S., the United Auto Workers union launched strikes against all three Detroit automakers and secured 25% pay increases spread over four and a half years. Meanwhile, in the UK this year, employees’ average annual total pay

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increased 8.5% between June and August.

In addition, war in the Middle East — and upcoming elections in the U.S. — have further clouded the picture.

Even in China, long the country of choice for low-cost manufacturing, labor costs have been rising rapidly, which, when combined with a desire for shorter and simpler supply chains and increasing political uncertainty, is leading companies to redirect foreign investment. Bloomberg reported in November 2023 that a measure of direct investment into China turned negative for the first time since records began in 1998.

Globally, economic forecasts for 2024 seem to be divided between dire predictions of a significant economic downturn and

CONCENTRATE ON WHAT WE CAN CONTROL The macroeconomic environment is beyond our control. We must be prepared for the world we are given and focus on what we can control. At its simplest, this means answering two questions: What products and services are we going to sell?

How are we going to price them?

Every other decision is a function of how we answer these two questions. Which markets are we going to participate in?

How are we going to go to market? What resources do we need? What capabilities do we need? How much investment is required? And so on.

Over the last two years, we have experienced an unusual set of circumstances: rising interest rates, high inflation, and near full employment. This has allowed many organizations to exert pricing power in the market without materially impacting demand. However, there are signs of stress emerging. UK unemployment rates are ticking up and U.S. consumer spending growth has slowed. The positive news is that inflation rates are slowly falling, signaling that companies are unlikely to be able to continue passing increased costs onto STATEMENT

BUSINESS AND INDUSTRY FOCUS ON STRATEGIC CONTROL OF “As finance professionals, we need to help COSTS our organizations navigate the changing As pricing power diminishes, organizations need to become more disciplined in environment by deploying tools that explicitly will developing improvements in productivity increases in raw material, labor, address variability in the macro environment. ” toandoffset other costs. Historically, organizations customers in 2024. As finance professionals, we need to help our organizations navigate the changing environment by deploying tools that explicitly address variability in the macro environment.

The convergence of global economic (inflation, interest rates), political (Middle East, Ukraine, China, U.S. presidential election), and social (work from home, aging populations) drivers makes it very difficult to forecast confidently. We should accept that and adapt our approaches accordingly.

For example, scenario planning allows finance professionals to model alternate strategies and resource allocations under different sets of macroeconomic assumptions.

A European-based manufacturing company is using scenario planning to determine the optimal balance between in-house manufacturing and contract manufacturing under a range of different economic scenarios. Although contract manufacturing for small batches incurs higher variable costs, it also reduces the risk of carrying excess capacity and its associated fixed costs if demand falls. By providing clear guidance on the optimal mix at different demand levels, the company can improve profitability across a broad range of economic conditions.

Combining well-designed scenario plans with contingency plans that set out actions to address low-probability but highmateriality events can reduce the negative impact of economic volatility.

MAINTAIN AGILITY AND FLEXIBILITY There has been a slow migration over the past 20 years from calendar-driven, backward-looking financial management

and planning processes such as annual budgeting, variance analysis, and periodend reporting to more dynamic, forwardlooking processes such as exception-based reporting, scenario modeling, and predictive forecasting.

The current environment provides a compelling reason to take these capabilities to the next level. With advances in digitisation, data science, and artificial intelligence, finance can create richer and more prescriptive analyses much more rapidly. Today, leading companies develop an updated forecast in hours rather than days, have near-continuous visibility of changes in their cash positions, and respond to requests for ad hoc analysis in real time.

While there is hype around A.I., its potential is real. An October FM magazine article, ‘Generative AI — What’s the potential?’, looked at a recent McKinsey report that estimated generative A.I. could add up to $4.4 trillion of value annually across the 63 use cases examined, more than the GDP of the UK. Some of the specific ways AI is applicable to finance include generating future cash flow projections, optimizing credit terms across the customer portfolio, generating more accurate statutory and tax reports with minimal manual effort, identifying and correcting data errors, and optimizing audit and control processes.

To be more flexible, finance must reduce the time spent on routine, repeatable tasks that could otherwise be automated or delegated. This would free up more time to predict, react, and respond to events happening in the market or business.

have been weak at tying increased costs or investments to improvements in productivity.

A simple test is to look at whether your organization has a rigorous process for tracking the actual returns on investments against those projected in the original business case. Did that project with an attractive internal rate of return or net present value actually deliver the predicted returns?

High-performing organizations are becoming much more scientific in their approaches to expense management.

Instead of arbitrary across-the-board budget cuts and spending caps, tools such as zero-based budgeting and dynamic expenditure management help tie expenses to the true drivers of business activity and align them to the realities of the current operating environment.

These capabilities will become even more important if an economic slowdown starts to squeeze profit margins.

CAUTIOUSLY MANAGE CASH AND CAPITAL A high interest rate environment is a double-edged sword. Borrowing costs rise but idle cash can generate useful income.

Unfortunately, inflation reduces the value of that income. As 2024 dawns, many companies (like many homeowners) may have to refinance debt at a cost higher than they have seen for more than 20 years. Debt servicing will eat into cashflow alongside higher input and labor costs.

Finance needs to look at a broad range of cash management options to navigate such an environment. The right mix of working capital optimisation, debt reduction, and expense management can increase management and operational flexibility.

CONTINUED ON PAGE 14

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BUSINESS AND INDUSTRY CONTINUED FROM PAGE 13

Ensuring that your organization’s cash accounting and forecasting processes are timely and accurate is essential. Unlike our accrual accounting processes, which have benefited from significant process and technology change, too often cash forecasting is still a manual process relying on spreadsheets and ad hoc data collection. In times of uncertainty, cash accounting is a better indicator of the immediate health and viability of a business than accrual accounting.

With respect to capital investment, the rising cost of capital increases the hurdle rate that should be used for evaluating capital investment decisions. We need to look at the alternative risk/return of three different

types of capital investment: maintenance or replacement capital that sustains current business operations, such as replacing machinery and maintaining infrastructure; investments that improve productivity, such as adding new automation or digital capabilities, expanding product lines or entering new markets; and speculative investments that take the business into new areas such as research and development and business diversification.

In times of uncertainty, it is tempting to eliminate all but essential investment. That is rarely a successful strategy. Failure to invest in the future of the business all but guarantees that an organization will fall behind competitors who have adopted a

more balanced approach to investment.

Excelling at these four disciplines provides accounting and finance professionals with the tools to help their organizations navigate turbulent waters ahead with agility and confidence.

David A. J. Axson is a former partner with Accenture, cofounder of The Hackett Group, and former head of corporate planning at Bank of America. He currently serves as parttime finance director of Shrap, a start-up focused on the digital reinvention of cash.

To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.

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In Pursuit of a Stronger, More Diverse CPA Profession The MACPA Foundation works to provide resources for future CPAs and educators, supporting diversity, equity and inclusion initiatives, providing training, granting scholarships and facilitating mentorship connections in order to increase growth and engagement.

Where Your Contribution Makes a Difference We believe CPAs are invaluable, and anyone who wants to enter the profession should be able to do so – regardless of socioeconomic background. Everything we do is to build a better profession.

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TAX CORNER MACPA supports extension, expansion in beneficial ownership reporting requirements FROM THE MACPA BLOG

The Maryland Association of CPAs has joined the AICPA and dozens of other state CPA societies to ask the Financial Crimes Enforcement Network (FinCEN) to extend and expand the deadline for beneficial ownership information (BOI) reporting requirements, specifically for reporting companies created or registered in 2024.

In a comment letter sent Oct. 30, 2023, the profession specifically recommends that FinCEN extend the deadline from the proposed 90 days to one year and expand the applicability of the deadline to include not only new entities created in 2024 but all entities created thereafter, as well as entities making updates or corrections to their original filings.

Effective Jan. 1, 2024, existing companies — companies created or registered before Jan. 1, 2024 -- will have one year (through Jan, 1, 2025) to file their initial BOI reports. New companies (companies created or registered on or after Jan. 1, 2024) will have 30 days to file their initial BOI reports. If there are inaccuracies in the initial BOI report filed or companies have a change in information, such as change in residential address or percentage of ownership, they will have 30 days to report changes or correct the inaccuracies.

Lack of awareness is highlighted in the letter, citing that most businesses are not familiar with the new BOI regulation, despite the campaigns put in place to inform them. The time and financial burdens on small businesses were also mentioned as a potential result of not instituting the recommended changes. The comment letter also hopes to avoid the steep taxpayer penalties that could accompany unawareness of the new reporting requirements.

The BOI reporting requirement is an anti-money laundering initiative enacted through the Corporate Transparency Act in 2021, which mandates that BOI information is reported to FinCEN.

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“The MACPA has joined the AICPA and other state societies to call for improving BOI reporting requirements,” said MACPA CEO Rebekah Olson. “We believe that extending and expanding these reporting requirements will have a beneficial impact on taxpayers, small businesses and our members, who are serving as their trusted advisers.”

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PUBLIC PRACTICE The CAS team: 5 steps to elevate the client experience Editor’s note: The following article was originally published on Nov. 28, 2023

by Boomer Consulting, Inc. It is reprinted with permission.

BY L. GARY BOOMER THE MARKETING SPECIALIST Tasked with promoting the firm’s services to the firm’s target market, the marketing specialist creates strategies to reach current and prospective clients and position the firm as a thought leader in the accounting profession.

By leveraging tools like digital marketing, content creation, and branding, the marketing specialist ensures that the firm’s value proposition (message) is communicated effectively to its target audience, leading to an elevated client base.

Today, being a successful firm isn’t just about technical skills; it’s the people responsible for leadership, relationships, and innovation. A firm’s strength lies in its dedicated team of professionals committed to ensuring client satisfaction, regulatory compliance, and streamlined operations.

Leadership and first-class marketing and sales are critical skills and must be integrated with technical accounting and finance skills to create the desired experience for clients and team members.

It takes a unique ability team with welldefined roles. However, many firms lack some of the required skills or have people working outside their unique abilities.

Let’s review some of the critical roles and develop an action plan that will accelerate your success and transformation.

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CLIENT RELATIONSHIP MANAGER A partner often plays the role of the client relationship manager, but is this a sustainable strategy to drive the desired growth and experience? This role is often the first point of contact for a client and acts as the bridge between them and the technical team. The CRM ensures someone addresses client questions promptly, mitigates concerns, and provides a seamless and positive client experience.

The old saying, “What got you to this level won’t get you to the next,” is generally true, especially if the person (partner in this case) isn’t willing to give something up to add value. A CRM with a firm grasp on the tenets of client service can positively transform the client’s experience by keeping clients informed, anticipating their needs, incorporating feedback, and paving the way for long-term relationships.

THE SALES EXECUTIVE The sales executive is often referred to as a business developer because of the accounting profession’s history of distaste for sales. The primary responsibility is converting potential leads into clients in target service areas and industries. They do this through networking, nurturing client relationships, and understanding prospects’ specific wants and needs to tailor the firm’s offerings accordingly.

A deep understanding of the firm’s services and a pulse on market trends allow sales executives to craft proposals that resonate with potential clients and positively impact the firm’s bottom line.

THE TECHNICAL TEAM Naturally, accounting firms think of accountants, auditors, tax professionals, and other specialists with a CPA license.

However, today’s business capability model includes leadership, talent, technology, processes, and growth.

Many on the technical team may not often be in the direct line of client interaction, but the quality of their work speaks volumes.

Timely reports, effective tax strategies, and business acumen elevate the client’s trust.

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PUBLIC PRACTICE THE SUPPORT TEAM The support team includes technology, human resources, talent development, administrative staff, and others who ensure smooth firm operations. They are critical in ensuring data security, resource and risk management, legal agreements, and profitability.

the firm’s services, with a team of three or more firm contacts and three or more client contacts.

Their indirect contribution to the client experience is monumental. An integrated technology platform ensures client data privacy and security. At the same time, effective operations mean clients get timely responses, support, and the capacity and capability to sustain success and remain future-ready.

Actively seek feedback. The CRM can accomplish this by asking the right questions and using tools such as the Net Promoter Score.

A 5-STEP ACTION PLAN TO ELEVATE THE CLIENT EXPERIENCE Personalize client interactions. Understand the unique needs and wants of clients who meet the firm’s criteria. Terminate or transform clients who do not meet the filtering criteria. Utilize the 3-by-3-by-3 strategy. Clients utilize three or more of

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Invest in training beyond technical continuing professional education.

People in every role need skills in project management, process management, marketing, sales, and data analytics.

Integrate marketing and sales efforts by ensuring that marketing strategies support sales goals. A unified approach leads to a consistent brand message and more effective lead conversion.

Leverage technology for an enhanced client experience. Cloud-based platforms, integrated applications, automated workflow, machine learning, and 24/7 client support driven by A.I.-driven chatbots optimize operations and enhance the

client’s experience with your brand.

The evolving landscape of advisory services requires a harmonious blend of a competent unique ability team, strategic marketing, and unparalleled client service.

By recognizing the key roles within the team and emphasizing their significance, firms can position themselves for sustained growth while remaining future-ready. Think, plan, grow!

L. Gary Boomer, visionary and strategist of Boomer Consulting, Inc., is recognized in the accounting profession as the leading authority on technology and firm management. He consults and speaks around the globe on several topics including strategic and technology planning; mindset, skillsets and toolsets for the future; change management and developing a training and learning culture.

He also acts as a planning facilitator and coach to some of the accounting profession’s top firms.

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HIGH-TECH SOLUTIONS Practical application of generative A.I. for accounting and finance Editor’s note: The following is an excerpt from CPA.com’s Generative A.I. Toolkit. It is reprinted here with permission.

BY CPA.COM

Organizations can make the most efficient use of generative A.I. if they understand how to ask the right questions. These use cases illustrate the kinds of requests users might make in different situations and examples of how to phrase them to get the best outputs. These examples are referred to as prompts. For each use case, you can watch an explainer video and access swipeable prompts at CPA.com/ GEN-ai.

Note that these use cases can be used with most any GPT system; we have identified specific solutions like Claude, ChatGPT Code Interpreter, etc., due to functionality. There are hundreds, if not thousands, of generative A.I. tools on the market. For these use cases, we have leveraged lowcost / no-cost solutions that anyone can easily access.

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The use cases have been categorized based on the practice area or business subset that would most likely benefit from its implementation.

to take unstructured data in various formats, quickly reformat it into a structured comma-separated values (CSV) file, and validate that the output is correct.

Please note: Any examples that reference uploading data will require all identifiable information to be removed prior to use.

Example prompts:

FINANCE USE CASE: STRUCTURED DATA EXTRACTION In a perfect world, systems would talk to each other and sync data seamlessly.

Unfortunately, working with many systems still requires exporting, importing and reformatting data. Language models are particularly adept at taking unstructured data — either from an export or even simply copied and pasted from a PDF report — and turning it into structured data. Here’s how to use ChatGPT

• The following is an accounts payable detail report. Structure the data into a CSV file with columns for Invoice Date, Vendor, Amount and Currency.

• The following is a bank statement.

Structure the transactional data into a CSV file with columns for Transaction Date, Description, Amount (which is the sum of Debit minus Credit), and Available Balance.

• The following is an audit trail report.

Return all the data from John Smith user into a CSV file with the columns Date, Time, Action and IP Address.

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HIGH-TECH SOLUTIONS TAX USE CASE: LEGISLATION RESEARCH ASSISTANT Navigating large documents like legislation can be difficult when relying solely on textbased search. While Ctrl+F may get you to the right section, it will only work if you use the exact keywords. Large language models, however, enable a more general semantic form of search that can surface relevant sections more flexibly. By prompting the model to return verbatim excerpts, you can mimic the way a human researcher gathers information in order to reach conclusions more efficiently. This leverages an LLM called Claude for its ability to handle large documents up to 75,000 words. This human-in-the-loop approach combines the breadth of AI with human judgment.

Example prompts: • Attached is the text of Secure Act 2.0. I’m researching the impact it has specifically on 401(k) plans. In a bullet point list, provide the most relevant verbatim excerpts from the document, with a citation at the end of each quote to the exact section to find the excerpt in the bill.

• Attached is proposed legislation HR3937. I’m researching the impact it has specifically on 1099 reporting.

In a bullet point list, provide the most relevant verbatim excerpts from the document, with a citation at the end of each quote to the exact section to find the excerpt in the bill.

• Attached is the text of IRS Revenue Procedure 2023-8. I’m researching whether there is any guidance surrounding audit protection in the rev proc. In a bullet point list, provide the most relevant verbatim excerpts from the document, with a citation at the end of each quote to the exact section to find the excerpt in the bill.

ADVISORY USE CASE: A.I.-ENRICHED KPI ANALYSIS The programming capabilities of ChatGPT’s Code Interpreter model make it wellsuited for analyzing large volumes of data.

This can be particularly useful in advisory contexts when evaluating a dataset against key performance indicators (KPIs). Code Interpreter can help ensure nothing gets

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overlooked by thoroughly examining the full breadth of the data, even aspects that may not be directly captured by the predetermined KPIs. Specifically, Code Interpreter could be prompted to review the complete dataset and identify any notable trends, patterns or insights that the existing KPIs fail to highlight. Based on this analysis, Code Interpreter could then suggest potential new KPIs to better encapsulate these additional findings. Taking advantage of ChatGPT in this way enables the development of KPIs that more fully and accurately reflect the meaningful results within a dataset.

Example prompts: • Attached are several accounts receivable reports. The company has two accounts receivable KPIs: Days Sales Outstanding, which was 41 this month, and Average Days Delinquent, which was 6. Review the data to identify any advisory insights that these two KPIs may not take into account and, if there are any omissions, how these KPIs could be improved.

• Attached is the general ledger detail from last month. I would like you to analyze three KPIs: Salaries as a percentage of revenue, which was 20% this month, Asset Turnover, which was 0.79, and Operating Cash Flow, which was 1.29. Review the data to identify any advisory insights that these three KPIs may not take into account, and if there are any omissions, how these KPIs could be improved.

• Attached is a set of sales reports. The sales team has two KPIs: Average Purchase Value, which was $19,582 this month, and LeadTo-Close %, which was 17.52. Review the data to identify any advisory insights that these two KPIs may not take into account, and if there are any omissions, how these KPIs could be improved.

AUDIT USE CASE: INTERVIEW TRANSCRIPT ASSISTANT Audit software centralizes workpaper documentation, but important client conversations often are not captured for the workpaper file. Now, AI meeting assistants can provide near real-time, accurate meet-

ing transcriptions. By leveraging interview transcripts and using large language models to search them, audit teams can quickly find specific information across extensive transcripts.

Example prompts: • In this transcript, was anything discussed surrounding inventory receiving procedures?

• In this transcript, was an update provided on the confirmation letter from National Bank?

• In this transcript, were user permissions for the accounts receivable module discussed?

INTERNAL BUSINESS USE CASE: RECRUITING AGENT AI agents use LLMs to reason through tasks.

Some are even capable of navigating applications. Human users prompt the agent to perform a task, and the agent plans out how to complete it, critiques its own plan and continuously course-corrects until the task is complete. This use case leverages Hyperwrite’s Personal Assistant agent (a Chrome browser extension) to navigate hiring websites to identify qualified candidates for an open role at the organization.

Example prompts: • Navigate this job board and find me 10 applicants whose qualifications are similar to those of Jane Smith. They must be CPAs with a minimum of 5 years experience.

• Review John Smith’s connections on LinkedIn to identify any potential candidates for the position I’m hiring for. I’m looking for junior- and senioryear students studying accounting within 50 miles of Austin. Prioritize candidates who actively engage on LinkedIn. Once you’ve found the three best candidates, draft a message to John for me to review, asking John to make an introduction.

• Locate the following individuals on LinkedIn: [list]. Identify if they’re connected with anyone in my network.

If so, provide a couple people in my network who could make an introduction to each individual.

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HIGH-TECH SOLUTIONS Turning A.I. into I.A.

BY BILL SHERIDAN, CAE

Artificial intelligence becomes ‘intelligence augmented’ with a few key steps. Here’s a guidebook for CPAs, courtesy of CPA.com The end of 2023 ushered in milestone after milestone in artificial intelligence’s relentless effort to change our world.

It started on Nov. 30, 2023, which marked the one-year anniversary of the launch of ChatGPT, the OpenAI-powered platform that set this wild ride in motion. A.I. was founded as an academic discipline in 1956, but its exponential growth has kicked in only recently, and ChatGPT set the world on fire just a little more than a year ago.

Then, on Dec. 6, Google launched an A.I. model called Gemini. Long considered a leader in A.I. research, Google and its

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parent company Alphabet lost the spotlight with the advent of ChatGPT. But Gemini ushers in Google’s attempt to overtake GPT-4, the latest version of OpenAI’s technology. Some experts believe Gemini marks a new era in the generative A.I. boom, because it brings fresh competition for OpenAI. That competition should usher in some incredible advances as the rivals try to outdo one another.

Two days after Gemini arrived, lawmakers in the European Union approved what they’re calling the A.I. Act, which sets a new global benchmark for countries seeking to harness

the potential benefits of A.I. while trying to protect against its possible risks, like automating jobs, spreading misinformation online and endangering national security.

Regulators have long struggled to keep up with the exponential rate of technological change, and the EU is doing its best to draw a regulatory line in the sand.

A.I. STARTING POINTS FOR CPAS Amid all of these groundbreaking developments, the American Institute of CPAs and CPA.com, the AICPA’s technology arm, held their 2023 DigitalCPA Conference in Las Vegas, where a couple of different sources offered up some great tips for how CPAs can get started in using artificial intelligence in meaningful and productive ways.

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HIGH-TECH SOLUTIONS The first was keynote speaker Pascal Finette, co-founder at Be Radical, where he and his colleagues “enable leaders and learners to seize the future.” Finette offered DigitalCPA attendees three steps for starting our A.I. journeys.

1. Learn about it.

2. Start small and build projects quickly to learn what’s possible with this technology.

3. Use those smaller projects to inform larger projects.

And the time to start, Finette said, is now.

“Companies and individuals that use A.I. won’t just outperform those that don’t use it — they will exponentially outperform them,” he claimed.

SEVEN STEPS FOR A.I. STRATEGY In the same vein, the folks at CPA.com offered each DigitalCPA attendee a copy of their released their Generative A.I. Toolkit, which includes these seven steps for building an A.I. strategy. These might be helpful to any CPA or organization that is just starting down the path toward embracing A.I. in a strategic way.

Step 1: Experiment “Tools like ChatGPT and Bard are very easily accessible, so pick one, create an account and start experimenting to understand the technology’s potential,” the Toolkit reads. “Considering the rapid pace of change in this space, it’s a good idea for firms to get their feet wet as soon as possible.”

Step 2: Focus on the near-term “Given the accelerated advancement in this space, attempting to create a fiveyear plan for generative A.I. use is futile,” the Toolkit reads. “At least at first, a twoyear strategic plan may be optimal.”

Step 3: Consider client expectations “On the one hand, many companies are

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likely still in the learning phase themselves, so firms should not shortchange their learning curves because they worry about staying ahead of client expectations,” the Toolkit reads. “However, firms should expect that generative A.I. will quickly become clients’ user interface of choice.

Get a sense of where clients are, then plot out where the firm needs to be and how generative A.I. can address both firm and client needs.”

Step 4: Research what solution providers are building “Before building your own generative A.I. tools, ask current and potential vendors about their existing offerings or plans,” the Toolkit reads. “ ‘I can guarantee that nearly every solution provider has something in the hopper regarding the use of A.I. in the accounting, tax or audit software space,’ Finette said. Determine how new or emerging tools can be incorporated into the firm’s strategic planning.”

Step 5: Define acceptable use “Some organizations have questioned whether it’s best to ban generative A.I. use to limit the associated risks to privacy and confidentiality,” the Toolkit reads. “Unfortunately, prohibitions may backfire if staff members are accessing the technology on their own unsecure devices. In addition, firms should want to promote staff capabilities with artificial intelligence. To establish guardrails, circulate an acceptable use policy as early as possible in the process.

“Among other things, the policy should prohibit uploading or asking questions about client data within a public generative A.I. tool. Exposing sensitive client or firm information is a risk because anything entered in ChatGPT, for example, becomes public domain and is used in the system’s continuous training of its machine learning model.

“To address staff research questions related to client data, a better ultimate choice might be to develop an internal-use bot that can provide answers based on reliable authoritative or locally stored data.”

Step 6: Put the technology’s best feature to work “Since the systems available right now work well with text, identify the ways that the organization is spending time and energy on text-based work, such as responses to clients, business development and marketing emails,” the Toolkit reads. “Then determine how generative A.I. can reduce current effort and costs. Revisit this step regularly as the technology’s capabilities mature.”

Step 7: Ensure that humans maintain a key role in the process “Because generative A.I. output may include biases, errors or hallucinations, a human should review and ensure the appropriateness and accuracy of any content that is being used in decisionmaking or shared with clients,” the Toolkit reads. “As an example, the system could be asked to identify emails that are marked as urgent and to analyze and report on the content. The user can then ask the system to create responses, stipulating their length and tone. The final, and most important, step would be for someone to review the emails before they are sent to ensure they have the right tone and accurate content for each recipient.”

For more advice and resources related to the use of generative A.I. tools, download CPA.com’s Generative A.I. Toolkit in its entirety at CPA.com/gen-ai.

Bill Sheridan, CAE, is editor of The Statement and chief communications officer for the Maryland Association of CPAs.

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FROM OUR PARTNERS How to prepare your business for the 1099-K changes

BY GAIL COLE

They’re bound to take effect eventually.

The 1099-K reporting threshold was scheduled to plummet from $20,000 and 200 transactions to $600 and any number of transactions for tax year 2022 — but in the final hour, the threshold changes were pushed back to tax year 2023. Now, in a stunning display of déjà vu, the threshold changes have again been delayed.

According to an IRS announcement from November 21, 2023, the 1099-K reporting threshold will not drop to $600 for tax year 2023 after all.

Read on to learn: • What is a 1099 form?

• What happened to the 1099-K under the American Rescue Plan of 2021?

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• Are businesses prepared for the 1099K changes?

• How can companies be ready to send out all these 1099 forms (once they have to)?

WHAT IS A 1099 FORM? An IRS 1099 form is a tax form that documents payments to a business, individual, or entity that isn’t an actual employee.

The payer is responsible for filling out the appropriate 1099 form and sending copies to the payee, the IRS, and where required, the state taxing authority.

There are different 1099 forms for different types of payments. The IRS currently lists 21 different 1099 forms, from the Form 1099-A (Acquisition or Abandonment of Secured Property), to the Form

1099-SB (Seller’s Investment in Life Insurance Contract). Most forms must be sent to all necessary parties by January 31 of each year.

The Form 1099-K reports non-W-2 income received during the year from one of two types of reportable payment transactions: 1. Payment card transactions (credit, debit, or stored value cards such as a gift card) 2. Third-party network transactions (payment apps or online marketplaces, including third-party payment settlement organizations) This includes payments for personal items sold, goods sold, services provided, or property rented through online marketplaces, auction sites, ticket exchange or

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FROM OUR PARTNERS “According to an IRS announcement from November 21, 2023, the 1099-K reporting threshold will not drop to $600 for tax year 2023 after all.” resale sites, peer-to-peer payment platforms or digital wallets, and more.

Form 1099-K has been in the headlines since the enactment of the American Rescue Plan Act of 2021, which significantly impacted its reporting requirements. Or will eventually.

WHAT HAPPENED TO THE 1099-K UNDER THE AMERICAN RESCUE PLAN? The American Rescue Plan (ARP) dramatically lowered the 1099-K reporting threshold for third-party payment apps, also known as third-party settlement organizations (TPSO).

Prior to the enactment of the ARP, online marketplaces, payment apps, and payment card companies were required to file a Form 1099-K with the IRS and provide a copy to any business, individual, or entity that earned over $20,000 in aggregate payments and 200 transactions in a calendar year. The ARP drastically cut that threshold to more than $600, period.

The ARP called for the lower threshold to take effect for the 2022 tax year. However, on December 23, 2022, the IRS announced that the threshold would not drop to $600 for the 2022 tax year. Instead, the $600 threshold would apply to “transactions that occur after calendar year 2022.” Affected businesses breathed a sigh of relief and set about preparing to implement the new threshold for the 2023 tax year.

Then, on Nov. 21, 2023, the IRS pushed back the threshold change for the second time. The agency announced they will treat 2023 as another transition year to

“reduce the potential confusion caused by the distribution of an estimated 44 million Forms 1099-K sent to many taxpayers who wouldn’t expect one and may not have a tax obligation.”

Thus, for tax year 2023 as for previous years, a 1099-K form will not be required unless a taxpayer receives over $20,00 and has more than 200 transactions in 2023. The IRS now plans to phase in the lower threshold, instituting a threshold of $5,000 for tax year 2024. It has yet to provide a new effective date for the $600 threshold, but unless Congress passes a new law, the 1099-K threshold will likely drop to $600 eventually.

Once it does, the impact will be huge.

ARE BUSINESSES PREPARED FOR THE 1099-K CHANGES? SURVEY FINDS MIXED RESULTS. When the interim $5,000 threshold takes effect, millions of marketplace sellers, gig workers, and occasional sellers who have never seen a 1099-K will receive a 1099-K from a payment app like PayPal, Square, and Venmo or an online marketplace like Amazon, eBay, and Etsy. Millions more taxpayers will receive a 1099-K whenever the threshold drops to $600.

Are businesses ready for the 1099-K changes? To find out, Avalara commissioned Censuswide to survey gig workers, marketplace sellers, and decision makers at online marketplaces. The survey was conducted in late October 2023, when the $600 threshold was still imminent.

Nearly 90% of the marketplaces surveyed said their sellers are prepared for the 1099 changes.

Are your sellers prepared for then 1099-K threshold change?

• Yes (net): 90% • Yes, very prepared: 60% • Yes, somewhat prepared: 29% • Not sure: 3% Most of the polled marketplaces have taken steps to help their sellers with the new reporting requirements. Three-quarters (75%) of respondents have “informed and advised sellers,” and 59% have “informed sellers.”

What steps, if any, have you taken to help your sellers with the new reporting requirements? (Tick all that apply.)

• Informed and advised sellers: 75% • Informed sellers: 59% • No actions taken: 2% • Not sure: 2% Yet while 87% of the online marketplace sellers and gig economy workers surveyed said they’re aware of the upcoming changes to IRS Form 1099-K reporting of digital payments, including the new income threshold of $600, just 51% of those surveyed say they’re “aware and prepared” for the upcoming changes. Another 19% are “aware but not prepared.”

Are you aware of and prepared for upcoming changes to IRS Form 1099-K reporting of digital payments, including the new income threshold of $500?

• Aware: (net): 87% • Aware but not prepared: 19% • Aware and prepared: 51% • Somewhat aware / prepared: 16% • Not aware or prepared: 12% • Not sure: 2% Perhaps that’s why 78% of marketplace sellers and gig workers surveyed are concerned about the upcoming changes to the 1099-K reporting requirements. Of those, about 49% are “very concerned” and 29% are “somewhat concerned.”

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FROM OUR PARTNERS CONTINUED FROM PAGE 27

Though marketplace facilitators have worked to educate their sellers about the upcoming 1099 form changes, the $600 threshold will likely take a toll. About 83% of the surveyed marketplaces anticipate sellers to drop from the platform as a result of the 1099-K compliance issues.

For their part, 55% of marketplace sellers and gig economy workers surveyed said these new 1099-K rules will impact their decision to continue on-demand work or selling on marketplaces.

Indeed, 64% of marketplace sellers and gig economy workers surveyed are considering alternatives to gig work/online selling as a result of the compliance requirements and tax implications of the new 1099-K rules. Another 16% said it’s “too early to determine.” Only about 21% of the surveyed marketplace sellers and gig economy workers said the upcoming changes will not impact their decision to continue on-demand work or marketplace selling.

Are you considering alternatives to gig work/online selling as the result of compliance requirements and tax implications of new 1099-K rules?

• Yes: 64% • No: 21% • Too early to determine: 16% Whether feeling prepared or unprepared at this time, marketplace facilitators, marketplace sellers, gig workers, and other taxpayers who will be affected by the threshold change now have more time to put their ducks in the proverbial row.

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That’s a good thing, because the number of 1099-K forms submitted to the IRS is expected to jump from 14 million to 44 million once the threshold drops to $600.

How can companies get ready to send out all these 1099 forms?

Cloud-based automation solutions that scale with a business’s needs can help online marketplaces and third-party payment processors comply with the additional reporting requirements that will result from the lower 1099-K threshold.

And indeed, a majority of online marketplaces (65%) surveyed by Censuswide plan to deliver 1099-Ks via a “1099 automated solution.” However, about 47% plan to send them out “manually, using internal teams,” and close to 42% plan on “outsourcing to a firm.” Respondents could select more than one answer and so may be planning to use more than one delivery method.

How do you plan to deliver 1099-Ks to all sellers that meet the new threshold in 2024? (Tick all that apply.)

• 1099 automated solution: 65% • Manually, using internal teams: 47% • Outsourcing to a firm: 42% • Not sure: 5% • Other, please specify: 1% Avalara 1099 & W-9 can help both businesses and accounting professionals streamline management of 1099-K forms. It allows you to store vendor and freelancer information, import 1099 payee data, and transfer

vendor details for a quick turnaround, while automatically checking for errors.

“Our survey reveals the need for proactive measures on the part of marketplace sellers, on-demand workers, and online marketplaces to determine how best to comply with a revised 1099-K digital payments threshold,” says Scott Peterson, VP of Government Relations at Avalara. He suggests affected businesses seek advice from a bookkeeper or a tax or accounting professional before making big decisions related to 1099 compliance.

SURVEY METHODOLOGY Marketplaces: The research was conducted by Censuswide, with 106 decision makers over the age 18 in online marketplaces (eBay, Etsy, Amazon, etc.) in the U.S. (job titles: Accountant, Bookkeeper, Vendor manager, Controller) between 10.20.2023 – 11.1.2023. Censuswide abides by and employes members of the Market Research Society, which is based on the ESOMAR principles.

Marketplace sellers and gig economy workers: The research was conducted by Censuswide, with 501 sellers on online marketplaces and gig economy workers (freelancers, contractors, side hustles, etc.) in the U.S. The research was run between 10.20.2023 –11.1.2023.

Censuswide abides by and employs members of the Market Research Society, which is based on the ESOMAR principles.

Gail Cole is a senior writer at Avalara.

STATEMENT

Tech that backs you.

Data that guides you.

The best accounting firms know it’s all about the data — and what you do with it.

ADP’s data-driven technology in Accountant ConnectSM puts key client data front and center, prompting you on opportunities to add value and share actionable advice your clients can’t get anywhere else.

The business world moves fast, and so do we. Stay ahead with ADP.

9 out of 10

Accounting professionals say ADP® makes their job easier.

Source: 2023 ADP survey of 248 Accountant Connect users.

Visit adp.com/MACPA to learn more.

ADP is proud to be the preferred Payroll Provider to the MACPA.

ADP, the ADP logo and Always Designing for People are trademarks of ADP, Inc. Accountant Connect is a service mark of ADP, Inc. Copyright © 2023 ADP, Inc. All rights reserved.

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STATEMENT

FROM OUR PARTNERS Clients judge your firm by its website.

Here are 4 ways to make it great.

BY CHRIS CROMER

How often do you think about your firm’s website? For leaders at many firms, the answer is “rarely.” Once your site is up and running, there are a million other priorities competing for your attention. This can be especially true for smaller firms – if you don’t have a dedicated web team or even an IT person, you may only think about your web site when it goes down.

But your website plays a central role in the relationship between your firm and your existing clients, as well as prospects who are looking for a CPA they can trust. It’s often their first point of contact – who among us doesn’t visit a service provider’s website when we’re assessing whether we should work with them? In a matter of moments, potential clients will judge your firm based on what they find on your site. For existing clients, your firm’s website can serve as a hub for service delivery – the place where they download forms, upload data, check on the status of your work and more.

If your firm’s website isn’t a priority, it should be – clients and prospects are paying closer attention than you might expect.

FOUR AT THE CORE Entire books have been written about what makes a great website – but you probably don’t have time for that. So here are four fundamental features that make for a great firm website: 1. Short, memorable URL. Your URL is your web address – like CPA.com. The best ones are short, which makes them easy to remember and advertise. But as websites have proliferated over the years, it’s become more difficult to secure short URLs in familiar domains such as .com and .net.

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2. Clean design, simple structure. How quickly can a visitor make sense of your site? The answer depends on the combination of simple, straightforward design elements, easy navigation and concise copywriting. Seasoned web developers know from experience that it’s usually quite difficult to achieve simplicity – but it’s worth it.

3. Strong call to action. You know what you want visitors to do, so say it clearly and prominently. Don’t make them hunt for your call to action.

4. Clear contact information. How many times have you tried to find a restaurant’s phone number on their site, only to get lost deep in the “about us” section? Sometimes visitors just want to know how to call or email you. Make it easy.

A SIMPLE NEW TOOL FOR BUILDING YOUR FIRM’S SITE (AND IT’S FREE) Maybe your firm hasn’t launched its website yet. Or maybe it has an outdated website, making it easier to start from scratch rather than overhaul it to embrace these principles.

If either describes your current situation, CPA.com has developed a simple, practical

tool to help you get up and running with a basic site that embraces best practices in web design for accounting firms. Our free .cpa Starter Site the simplest way to launch your own professional website.

The Starter Site is: • Easy to use: Just fill out a simple onepage template • Professionally designed: No need to find your own web designer • Commitment-free: You can turn it off at any time.

The Starter Site is only available to owners of a .cpa domain, the only secure, verified, top-level domain exclusive to the accounting profession.

There’s never been a better time to make a fresh start, building on the proven principles above to improve web traffic and conversions – and we’ve made it easy to get going. It’s just one more benefit of being a licensed CPA. To learn more, visit http://domains.cpa.

Chris Cromer is director of operations for CPA.com.

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MEMBER NOTES William F. Fritts, II, CPA, CVA, a member of SEC, CPAs & Advisors, has been named Best Accountant in the Tri-State Best Awards for 2023, awarded by Herald Mail Media. Fritts previously served as member-in-charge for the firm’s Hagerstown office for 15 years.

Robert Gauthier has been named principal, higher education at the Baltimore office of CliftonLarsonAllen LLP. Justin Measley has been named principal, state and local government at the Baltimore office of CliftonLarsonAllen LLP.

SEK, CPAs and Advisors celebrates 60th anniversary The staff at SEK, CPAs and Advisors celebrate the firm’s 60th anniversary in November. A full-service CPA and consulting firm, SEK first opened its doors in 1963. Over the next 60 years, a group of entrepreneurial-minded CPAs grew a small three-partner firm in Maryland into one of the premier CPA and advisory firms in the region. Today, SEK has five offices in Pennsylvania and one in Maryland, employing a total of 200 team members.Accounting.

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STATEMENT

CLASSIFIEDS mergers & acquisitions ACCOUNTING BIZ BROKERS READY TO SELL YOUR FIRM? CONTACT US TODAY! Selling your firm is complex. We can make it simple! We have been assisting CPA sellers for over 19 years and can help you achieve the win-win deal you are seeking. We are experienced, professional and confidential!

Current Listing: Chevy Chase CPA Firm Gross $1.4M

Contact: Kathy Brents, CPA, CBI 866.260.2793 AccountingBizBrokers.com Kathy@AccountingBizBrokers.com

MARYLAND PRACTICES FOR SALE Gross Revenues Shown:Southern Howard Coutny, MD Bookkeeping $300K; Owings Mills, MD CPA $825K; Bethesda, Gatithersburg, and Frederick Area CPA $93K; Essex, MD CPA $624K; For additional information or to see nationwide listings and register for free email updates visit us at www.

APS.net.

THINKING OF SELLING YOUR PRACTICE? Accounting Practice Sales is the leading marketer of tax and accounting practices in North America. We have a large pool of buyers,

job openings CPA FIRM SEEKING MOTIVATED PROFESSIONAL High Quality Mid-size Towson CPA Firm seeks tax season professionals with experience in individual or business income tax preparation (or review). Flexible schedule, challenging work and excellent compensation.

Experience with ProSystem FX Tax is a plus.

Contact: Kenneally & Company 660 Kenilworth Drive, Suite 104 Towson, MD 21204 410-321-9558 E-mail: dmiller@jlkcpas.com

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both individuals and firms, looking for practices to purchase.

We also have the experience to help you find the right fit for your firm, negotiate the best price and terms and get the deal done. We welcome the opportunity to talk to you about our risk-free and confidential services. For more information please call Bradley Holmes with the APS Holmes Group at 1-800-397-0249 or email Bradley@apsholmesgroup.com.

INTERESTED IN BUYING A PRACTICE? See local and nationwide listings at www.APS.net and register for free email updates or call us at 1-800-397-0249.

CPA FIRM FOR SALE A Service-first CPA firm is available with an exceptional reputation located in Montgomery County, Maryland, just outside of Washington D.C. The practice has a balanced mix of services.

This office is mostly paperless and has excellent technology and great systems and processes – enabling remote working.

The office building is in a great location for visibility and client access in an attractive community with great schools.

Owner hours are just over 2,000 and cashflow -to-owner is $300,000. The annual Gross is $760,000 and the asking price is $760,000.

Contact Carol Poe with Poe Group Advisors at cpoe@poegroupadvisors.com or visit poegroupadvisors. com/practice/md2007/ to learn more.

HOW TO SUBMIT A CLASSIFIED AD To submit a classified ad, contact the MACPA at sponsorship@macpa.org or visit macpa.org/classifieds.

REPLIES TO ADS WITH FILE NUMBER: Email sponsorship@macpa.org, or reply via mail: MACPA, Classified Ads 901 Dulaney Valley Road, Suite 800, Towson, MD 21204

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MACPA COULDN’T DO EVERYTHING THAT WE DO FOR OUR MEMBERS WITHOUT OUR

PREFERRED PROVIDERS

L E AR N M O R E AT

www.macpa.org/preferred-provider-futureready-resources For information about sponsoring MACPA programs or to learn more about advertising with the MACPA please email sponsorship@macpa.org.

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STATEMENT

MARYLAND ASSOCIATION OF CERTIFIED PUBLIC ACCOUNTANTS 901 Dulaney Valley Road, Suite 800 Towson, MD 21204 410.296.6250 | www.macpa.org