Is it time to exit older accounting firm owners?

After years of talking to Accounting firm business owners, we’re starting to see a trend. Older accounting firm owners are starting to be pushed out of their firms, or just closing shop.

And it’s not just us noticing the trends:

‘The doomsayers are wrong’: Accounting industry younger and thriving

ATO Assistant Commissioner Colin Walker has revealed new demographics for the tax and BAS agent population, with 59.8 per cent of practitioners now aged between 23 to 40 years old, at a 50 per cent male to female gender ratio 

Previous data had shown tax agents to be primarily male, at 80 per cent, with three quarters aged 55 and above. BAS agents were primarily female in the mid-40s range.

While data from the Tax Practitioners Board show that there are 58,199 registered tax and BAS agent as of 30 June 2018, the new ATO data analyses the entire profession providing tax and BAS agent services, including staff, and found that there were 176,000 individuals in the industry.

Odysseys take on the statistics that Australian tax compliance is younger than ever:

There’s more women in the Australian compliance tax arena, and they are younger!

Earlier this week we chatted with a younger accounting firm owner, who mentioned he had exited the other elder partner.

Amongst his comments were “A would spend an extra 3 hours in the evening working on a tax return, then charge an extra $300 – it just wasn’t making any financial sense”; “A continues to use <old computer tax software> that has been around over 40 years. I wanted to take the firm into the cloud”; “I want to spend time looking after clients, not doing compliance work”. The comments went on.

If you consider some of the older accountants started with IBM Systems 36 mainframe with <older computer tax software>, some of which dates back to the 1980’s. Some current Australian desktop tax software has been around for longer than many accounting firm owners.  The software has survived GST and the turn of the century and is now almost 40 years old. It continues to have a loyal but shrinking client base, but they are the accountants who have been in business for decades.

And let’s not even talk about Excel. For some reason accountants just won’t let go of their excel software!

But this blog isn’t about any particular desktop accounting software product. Cloud tax preparation software continues to gain market share, and continues to be preferred by younger accountants.  Certainly more younger accountants flood the industry. These are accountants who grew up with the internet, never did a “T Account”, probably have never used paper to audit or do financial statements.

And these younger accountants don’t want to “do their time” and take 15 years to reach partner in a firm. Younger accounting firm owners are hungry for now, and want immediate change, and that includes using current cloud based tools to support their clients.

And through talking to hundreds of Accounting firm business owners each year, we’re starting to see a trend. We spoke to one younger accounting firm owner earlier this week, and he mentioned some sobering information about a firm that started in the late 1980’s: The first partner of the firm developed an illness and had to leave the business. The second partner of the firm wouldn’t make changes necessary to ensure the continued health of the firm, and was “exited”. The second partner went to work for a bigger accounting firm where his skills were appreciated.

Older accounting firm owners must make a conscious decision on where their firm is going, and at what point in time they want to hand over control to someone else, and what time they want to down tools.

We’re hearing of older accountants heading up (or down) the Coast and supporting retirees. We’ve heard or retired lawyers charging $50 hour, and accountants charging $20 hour.  We expect this is more about keeping busy than earning a decent wage for their skill set.

Every day we’re talking to accounting firm owners, young and old, about how Odyssey can free up your firm’s time to enjoy the better things in life.  Making a change isn’t easy. It’s much easier just to head into the office, turn on the PC, and do a few more tax returns. This mind numbing rut becomes a thing of comfort.  However, making a change is a conscious and worthwhile decision.

If you need help with freeing up your time, then drop Odyssey a line and we’ll show you how Outsourcing your compliance work can assist