Ignoring technology is not an option in the fast-paced business world of today, and the accounting industry is no different. The level of application, however, should be limited.  Artificial Intelligence (AI) is revolutionizing the accounting industry by helping firms increase efficiency, boost accuracy, and provide greater value to their clients. That said, businesses are still […]

Ignoring technology is not an option in the fast-paced business world of today, and the accounting industry is no different. The level of application, however, should be limited. 

Artificial Intelligence (AI) is revolutionizing the accounting industry by helping firms increase efficiency, boost accuracy, and provide greater value to their clients. That said, businesses are still hesitant to integrate GenAI technology into their workflows. According to the Thompson Reuters Institute’s 2024 Generative AI in Professional Services Report (AI Report), 49% of tax and accounting firms currently have no plans to use GenAI tools, while 30% of them are still debating whether or not to do so. 

Their caution is warranted. You cannot trust AI with your accounting. 

CPA and owner of Go Figure Accounting Rachel Siegel says, “AI is proving to be a great tool and I’ve been having fun with it in my personal life. But professionally? Not yet. While AI can automate many routine tasks and enhance efficiency, it lacks the nuanced understanding of complex financial regulations and the critical thinking required for accurate accounting. Plus, AI can’t replace the judgment and ethical considerations that a real human brings to the table.”

Here are five reasons why you can’t trust AI with your accounting:

Data Security Concerns. Relying on AI for accounting involves sharing sensitive financial information with technology platforms, which can pose security risks. Human accountants are bound by confidentiality and professional standards to protect their clients’ data.

Lack of Nuanced Understanding. AI lacks the deep understanding of complex financial regulations and tax laws. Human accountants are trained to interpret and apply these rules correctly, while AI can only follow predefined algorithms.

Inability to Exercise Judgment. Accounting often requires professional judgment and ethical considerations, which AI cannot replicate. Human accountants can assess context, recognize subtleties, and make informed decisions that go beyond mere number crunching.

Risk of Errors and Oversights. While AI can handle repetitive tasks efficiently, it can also propagate errors if the initial data or programming is flawed. Human oversight is crucial to catch and correct these mistakes before they become significant issues.

Lack of Personalized Advice. AI cannot provide personalized financial advice tailored to an individual or business’s unique circumstances. Accountants offer customized strategies and insights based on their clients’ specific goals and needs.

According to Accounting Today, vice president of Intuit QuickBooks’s partners segment Jeremy Sulzmann pointed out that computers cannot take the place of the close relationship and comprehension that dependable professionals have with their clients. Accounting is still a relationship-based industry, and human oversight is still essential. 

Rachel agrees. “While technology and AI can assist with data processing and routine tasks, the true value of accounting lies in the personal insights, advice, and support that skilled accountants provide to their clients. It’s about understanding the unique needs of each business and individual, and tailoring solutions that technology alone simply can’t offer.”

As of January 1, 2024, millions of U.S. companies are now required to file first-time paperwork with the U.S. Department of the Treasury. Here’s what you need to know about the Corporate Transparency Act [CTA]. What is the CTA exactly? Enacted in 2021, the CTA aims to combat illicit activity including tax fraud, money laundering, and […]

As of January 1, 2024, millions of U.S. companies are now required to file first-time paperwork with the U.S. Department of the Treasury. Here’s what you need to know about the Corporate Transparency Act [CTA].

What is the CTA exactly?

Enacted in 2021, the CTA aims to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market. It impacts millions of small businesses across the U.S. 

Beneficial Ownership Information – What is that and why should I care?

In 2021, as part of the Corporate Transparency Act, the government enacted Beneficial Ownership Information filing.  Beneficial Ownership Information (BOI) Reports must be filed by reporting companies within 30 Days of the company’s formation. If the reporting company already exists as of January 1, 2024, when it went into effect, it must file its initial BOI report by January 1, 2025. The failure to comply penalty with this new law may be up to $500 each day your business is out of compliance. Yes, this means if you are out of compliance for a year, you could incur penalties up to $182,500. There is a list of company types that are exempt from filing which you can find here.

Who is considered a beneficial owner of a company?

According to the CTA, an individual qualifies as a beneficial owner if they directly or indirectly have a significant ownership stake in a company. This person either exercises substantial control on the reporting company’s decisions or operations, owns at least 25% of the company’s shares, or has a similar level of control over the company’s equity.

What is substantial control really?

An individual exercises substantial control over a reporting company if the individual meets any of four general criteria:

The individual is a senior officer.

The individual has authority to appoint or remove certain officers or a majority of directors of the reporting company.

The individual is an important decision-maker.

The individual has any other form of substantial control over the reporting company.

What information must be reported about a company’s beneficial owners?

All reporting companies must provide their legal name and trademarks, as well as their current U.S. address, which could be either the address of its main business site or, for foreign-based companies, their U.S. operational location. They’ll also need to provide a taxpayer identification number and specify the jurisdiction where they were formed or registered.

This sounds complicated. Can you give me an example?

John and Jane formed a limited liability company (“LLC”) to own a rental property. Jane and John each own 50% of the entity and each is in a control position. The LLC has to file as a Reporting Company and both John and Jane have to file as beneficial owners.

Let’s say that Jane transferred her interests to her revocable trust. No biggie. She would still report that trust likely meets the exception as being “wholly revocable” and it would have no impact on her CTA filings.

Let’s say John got fancier and gifted his interests to a trust for his kids. John named his brother Tom as trustee. The trust benefits Tom’s three adult children. Tom and the three children have to file as Beneficial Owners.

If you are still confused by whether or not to file a BOI, we recommend filing the form to be on the safe side.

Can Go Figure file the BOI Report for me?

No. There are some legal issues surrounding CTA compliance as to whether or not  this is deemed as “the practice of law”.  Therefore, CPAs are being told by our insurance carriers not to do it. You can file the form yourself or have a legal professional file it for you. Our recommendation is to protect yourself and your business by hiring an attorney to file your BOI Report. In case you do not have an attorney to handle this for you, we recommend John T. Ankner of Saunders and Ankner, P.A., Attorneys at Law. John and his firm are ready to help you navigate the filing process in a timely and efficient manner. Email John@lawsaunders.com or visit www.lawsaunders.com.