Businesses Face an Accountant Shortage
Technology Offers Solutions to Age-Old K-1 Problems
The Great Resignation is hitting companies of all sizes and across industries. Business leaders are responding by re-evaluating their compensation packages and employment perks. But for accounting teams that face demanding hours, grueling workloads, and intense scrutiny, a few more vacation days and happy hours will not suffice.
In fact, a recent article from The Wall Street Journal revealed that over the past two years, 300,000 accountants and auditors have left the profession. Columnist Joe Queenan mused that the situation is “so dire” that they’re trying to recover from the accounting deficit by bringing their search for talent overseas.
But this isn’t a new issue. A February 2022 article from Fast Company found that the aftershocks of the pandemic “exacerbated” the CPA turnover rate among small firms, which rested at approximately 20% before 2020. This data was provided by Jeff Phillips, CEO of tax and accounting advisory Padgett Business Services and founder of recruitment firm Accountingfly. He added: “Our industry is set up to burn people out, but over the last decade it had gotten to its max peak—before we even hit the pandemic. Now it’s gone through the roof.”
Accountants are burned out and experts predict that quitting rates will only continue to climb. Based on our research, accounting staff turnover is currently resting at 17%, and many organizations are struggling to find competent replacements and fresh resources to them them keep pace with new and evolving reporting requirements. Through its surveys of 40,000 firms in America, the AICPA found that “finding qualified talent” has been a top concern since 2015.
While the daily tasks and obligations of accounting teams is vast, the processes required to receive and create K-1s are especially abhorrent—and they’re getting more complex every year. Did you know:
- It takes investor firms up to five hours to collect, extract, review, and aggregate each K-1 form using their in-house staff. It costs receiving organizations up to $300 per K-1.
- Many K-1 packets are created using five different rounds of data. That means any time your team gets new information, they need to spend more time making updates. Not only is this incredibly inefficient, it opens your organization up to compliance risk if information is filed incorrectly.
- 31% more investors are requiring a digital transmission and consolidation of their K-1 data if they invest in multiple funds. K-1 producers need to allocate the time and resources to follow these new processes.
- As K-1s are produced and delivered, in-house team members need to be on hand to collect and package data from their investor systems and respond to investor questions as they come in.
Closing the Accounting Talent Gap with Automation
Surveys indicate there are simply not enough people willing to work nights and weekends in a mad scramble to pull in key information from several disparate sources. So two seemingly solutions spring to mind. The first, pay accountants significantly more. The issue here is of course that your costs are now correspondingly higher. Also there is no guarantee that talented people will continue to trade their “free” time and family time even for more pay. The second solution that people consider is to tap into outsourced markets to find scarce talent. The issue here is that outsourcing doesn’t relieve your in-house team from doing the countless hours of data collection, investor management, and responding to questions throughout the process–50% to 80% of the total work spent on K-1s..
You would need employees on hand to collect data from a multitude of disparate sources, manage investors and the sharing of data they need, and of course, respond to questions and updates as accounting partners prep and file the K-1s. Not to mention that the process becomes more complex and disjointed as new data is shared, and still, your firm has 100% of the liability if information is filed incorrectly. Inefficient K-1 processes will not work, especially as organizations navigate the new realities of the workforce.
But technology can come to the rescue, helping K-1 producers and recipients tackle the glaring accountant shortage. K1x delivers an alternative investment data distribution solution built by CPAs that shortens manual, multi-step processes and creates an efficient workflow for 990s, K-1s, K-2s, K-3s. Say goodbye to overly complex tax software and manual processes; say hello to an automated, AI-power solution that makes consuming, managing, processing, and filing easy.
If eliminating more than 90% of manual data entry and helping your tax accounting team save 11 hours each week, then now’s the time to learn how K1x can work for your business.
K1x is the leading data distribution platform for alternative investments. The fintech company’s AI-powered SaaS solution digitizes and distributes data seamlessly–connecting investors, advisors, tax software, portals, accounting firms, IRS and state taxing authorities–simplifying complex processes, accelerating filings, reducing costs, and delivering greater control, transparency, and accessibility.
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