Why do I need to work with an Accountant anymore when popular accounting software like Quickbooks, Xero, Wave, and Freshbooks can connect to my bank account and automatically record transactions? This is a popular question most accountants are facing these days by business owners. After all, companies like Quickbooks and Xero are investing heavily in Artificial Intelligence (AI) in order to automate boring manual tasks like reconciling bank accounts. So, business owners will often say, why do I need an accountant at this point when the software can do it faster and cheaper?
While AI can automate most of your bookkeeping and Tax Preparation it does not analyze your business finances and tax situation that is unique to you, and AI does not offer ways to improve cash flow, grow your business and, reduce your overall taxes. Having “clean” and updated bookkeeping is important, filing your tax returns on time and correctly is also important, but what you do with the financial data contained in your business books and tax returns is the key differentiator. If you are looking to grow your business but don’t have the experience, time and inclination to learn how to analyze financial statements, good bookkeeping becomes irrelevant. This is where accountants will continue to have significant importance in your business. Accountants are trained to take large amounts of data that flows through the financial statements and decipher that information, similar to a medical physician that analyzes the result of a medical test and provides guidance. As accountants we know and understand the information from your financial records, and as a result of working closely with business owners we learned the intricacies and unique challenges that your industry faces. As a result, we have moved away from the typical image of the good old accountant that maintains your business books just to file your tax returns and are moving forward to become a true advisor for your business.
On the tax side a similar argument can be made, AI can take information from a W-2 and report it automatically on your Tax Return, that is great news if you just want to file your tax returns but, what AI is not going to do is evaluate your unique tax situation and identify tax reduction strategies that can help you save tax in the future. That is the reason why our firm has been an early adopter of establishing Tax Planning meetings with clients in order to implement tax reduction strategies well before tax season.
AI will continue to do great work at automating the compliance side of your business, keeping good accounting records and filing tax returns, but that is just one piece of the puzzle. What you do with the information in your accounting records in order to grow your business and what you do with the information in your Tax Returns to reduce your future taxes, is the reason why working with an accountant is so important.