H&R Block, a nationwide tax preparation firm, announced that it will close 400 locations after accepting that their stores will not be generating as much revenue as they had hoped for in 2018.
- What caused this downturn for H&R Block?
- What does this mean for you?
- What to look for when selecting a tax firm.
1. What caused the downturn for H&R Block?
Although H&R Block has historically closed down stores post-tax season, 400 locations combined with a big hit to their stocks recently has raised some financial expert’s eyebrows.
There are two major factors at play that has caused H&R Block to abruptly call for the closing of 400 locations.
The new 2017 Tax Cuts & Jobs Act.
The new Tax Cuts & Jobs Act has been the first major change to the IRS tax code for a long time. We have detailed in another article what the Top 6 Changes to Individuals and Businesses were. The end result of many of these changes, that take effect for the 2018 year, will aid in the simplification of tax preparation on the individual side.
The new tax law has also made major changes for business, the biggest changes are to expenses and deductions. If you own a business it would be a good idea to look into or ask your CPA what will qualify as a business expense (deduction) in 2018. Because of this major change, we have put together a guide for you to reference at your convenience. It covers the major changes to meals and entertainment expenses for businesses starting for the 2018 tax year.
Do It Yourself (DIY) Tax Software.
With the rise of DIY tax software, such as Intuit’s Turbo Tax and H&R Block’s Tax Software, there have been many people choosing to stay home and do their own taxes. With the addition of the Tax Cuts & Jobs Act making personal taxation simpler, there will be even fewer individuals going into H&R Block offices for tax preparation work.
Unfortunately for H&R Block Franchise Locations, the company is positioning themselves to move into the DIY Tax space. Because of the simplification of the tax code and the advancements in technology, there are fewer new clients seeking out the services of H&R Block Franchise Locations as many individuals will migrate to a DIY online option.
On the other hand, for those individuals who have sophisticated personal finances and need a more advanced tax advisor, they would be hard-pressed to visit an H&R Block office.
The education requirements for a tax preparer at H&R Block is not a matter of education, but age. Their website states “H&R Block requires students to be 18 years of age to attend the Income Tax Course. A GED or diploma, however, is not required.” (Source: H&R Block, Become a Tax Preparer). This is not to say that all H&R Block employees are uneducated, inexperienced and remain so. However, the bar is set low for entry-level tax preparers.
H&R Block uses an in-house course to train individuals, and within as fast as three days they can be a certified tax preparer based on H&R Blocks standards. For those savvy individuals that need proactive tax advice and strategies to manage, mitigate and minimize their tax burdens, they would be in the market for an educated, licensed and certified tax preparer.
The education requirements for an average CPA include a bachelor’s degree in accounting, plus at least 150 additional credit hours or commonly a master’s degree in the areas of accounting, business or taxation fields. They must also have work experience of between 1-2 years in the field of accounting and taxation under a licensed and certified CPA. They must then obtain a license from their state board of accountancy; requirements vary, but all states require passing the 14-hour Uniform CPA Exam. The CPA license is known as one of the most difficult professional licensures to receive.
2. What does this mean for you?
If you are an individual looking for help with your taxes, for the time being, H&R Block may still be a great option if your main concern is cost. Based on the education, training and testing requirements stated above, you may be losing on major tax savings and credits earned by taking that route. You will also run into limited support in regards to proactive tax planning for the following year.
If you own a business, H&R Block is probably not the best choice for you. Business taxation and individual taxation differ greatly and it is always recommended to find a specialist in one area or the other. A business not only requires tax preparation services come tax season but also requires solid bookkeeping and accounting to ensure you have accurate financials as a business owner for decision making as well as to ensure proper tax strategies and an accurate tax outcome.
For example, our firm Green Ledger CPA specializes in and offers our services to Small Businesses and Startups.
3. What to look for when selecting a tax firm.
The first thing you should ask yourself is, ” Am I concerned with proactive services, accuracy in tax preparation and tax planning or am I more concerned about the fee to prepare?”. Everyone has different deciding factors when choosing their tax option, however, it usually boils down to those two things. You are either more worried about the cost of doing your tax return or you are more interested in the quality of the tax services offered.
Those who are deciding based on the cost to prepare option.
Those who are deciding based on the proactive services and accuracy.
Online, In-Person, & Local Options:
A CPA firm is always a good choice. Many CPA firms are based around a small local geographic. Simply search on google for a local CPA firm near you and do your due diligence. Interview them until you find one who stands out as a good fit for you.
Not all firms are cut from the same cloth and specialize or focus on different areas. For example, ProAdvisor CPA only works with individuals to assist tax planning and tax preparation to help Manage, Minimize and Mitigate the tax burden through proactive guidance throughout the year.
We have put together a list of 13 questions you should ask when hiring a CPA for your business. Use this link (Questions to ask when hiring a CPA for your business) to read the article and/or just download the Free Questionnaire that includes all 13 of the questions.