Seeking advice - financial reporting CPA to tax CPA

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#1
ggi999  
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I’m a potential career changer (Financial Reporting to tax) humbly asking for advice or at least things to consider. I have searched the threads and found a couple very helpful, but the other posters situations were quite different.

Me:
-- 49 y/o, CPA.
-- Bored.
-- Fairly solid GAAP preparation and GAAP research experience in different industries. Deep domain expertise in banking
-- I focus on the most complex accounting issues at our organization (derivatives, regulatory capital, troubled-debt restructurings, etc…)
-- large city in Texas
-- Chose non-management (technical expertise) track at current Fortune 500 financial institution. Previously, held financial reporting manager position where I was effectively the controller of smaller organization.
-- $130K Base, + 25% target bonus, top tier benefits
-- I have zero tax experience, minus my own and my mom's 1040's

Why switch?
-- I think I would be good at tax
-- I think I’d find it intellectually challenging. I have browsed the “Taxation” forum and am blown away at the seemingly endless scenarios that arise. OMG
-- I’d like to work part-time or seasonal after retirement in my 60’s, and that seems doable with tax.
-- I like the idea of potentially going back and forth between the private sector and IRS

Concerns:
-- Pay cut for an unknown number of years, especially the first few until I can make myself more valuable.
-- I work a lot of hours now. Do I really want to get into a another position where there is a tax season? I could, but would want to find an arrangement where you rest after sprinting. Then sprint again.
-- Stuff like the recent thread about a client wanting to game compensation as an employee of their S Corp. I haven’t thought through how I’d philosophically approach these, or even how much agency I’d have as an employee, at least at first

Other:
-- No interest in Big 4 (i served my two years hard time already, in audit)
-- No interest in the type of 1040’s that could or should be done for free by VITA or similar
-- I’m open to the wide gulf between these two
-- I am interested in business development


My ask:
-- What does a career path look like for me? Am I even hireable?
-- Is taking the EA exam a reasonable approach to get baseline tax knowledge?
-- Assuming I have some natural ability for tax, how many years before I could strike out on my own or take a leadership role in a local or regional firm?
-- How weird is it for some 49 y/o dude to start what I assume would be an entry level position?
--Anything non-obvious (or even obvious) for me to consider?
 

#2
Coddington  
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Hi. Welcome to our forum from a fellow Texan.

Options:

1. Try something like the H&R Block tax school in the fall. They'll train you on the basics, but the pay is, IDK, maybe in the $20k-30k range.

2. Study for and pass the Special Enrollment Exam to become an EA. It isn't the CPA exam, but it is not an easy test for those inexperienced in tax. Except for the studying, it doesn't add anything for a CPA.

3. Enroll in a Masters of Tax program. They'll get you up to speed, but that will probably take a couple of years.

4. Apply to be a representative at a tax resolution firm. The pay is usually low. The ethics may be questionable. But you'll see a great deal.

5. Try to land as a manager at a CPA firm that specializes in banks/finance. Honestly, the Big 4/Second 6 would provide the softest landing IF you're in a specialty tax group. Most specialist groups don't have traditional tax seasons, but rather have steady work throughout the year. At a large firm you could look into a rotation in different parts of tax, including general tax. If you can go in as a manager, the pay could be comparable to what you're making now.

6. Start a tax side hustle and slowly build it up over the course of a few years until you can quit your day job.

7. Buy a firm that has employees. Tons of Boomers are selling and some tax firm owners don't know a lick of tax (though that is more common among franchise owners).
-Brian

Director of Tax Accounting Methods & Credits
SourceAdvisors.com

Opinions my own.
 

#3
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Geez, where to begin...

First of all, your age alone: are you sure this is not just a midlife crisis? I understand you’re bored, but maybe excitement isn’t something to be derived from one’s professional endeavors. Find an interesting hobby, for example.

Next, of all the things to get involved in, why would you choose tax preparation? Tax preparation is dying. It’s a task that can be automated, and there is absolutely no benefit to not automating it. It’s not like carpentry, for instance, where there is some residual charm to using hand tools versus power tools.

Read the writing on the wall. Take all the returns currently done by professionals at this time. There’s a sizeable sub segment—mainly 1040 work and individual returns—that will be gone within a decade, if not a couple years.

Remote prep and virtual firms look great for the would-be preparer, sure, but in a virtual market it becomes difficult to distinguish one’s “firm,” and the market stratified into an SEO-powered popularity contest.

Just look at the number of tax-focused preparers and firms looking to add additional services to stay relevant. The number of firms attempting to cobble together advisory services and out-sourced CFO services is no longer trivial.

In short, I wouldn’t look at today’s market and wonder how I could alter my entire life/career to enter it. That’s like strategizing to break into a burning house.
 

#4
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You need at least a couple of seasons with a good firm before striking out on your own. Block will teach you the building blocks, but they are geared towards returns that the rest of us should not want to do.

You are not young, but you easily have a quarter of a century left in you. Perhaps you could find a someone wanting to retire and see if they will do a deal where you get good training from them with a view to taking over the business in the short-medium term. There are several websites listing practices for sale. You'd want one where the client base fits what you want and where the current owner is willing to stay on for a bit longer than normal to transition you fully.

After thirty years as an employee, I opened my own practice two years ago. My former employer and I diverged on professional philosophy, so it was forced on me. I have found myself gravitating as much to the accounting work as to the tax work. I started my tax life in the UK Inland Revenue and tax is my first love. I think you need to be willing and able to take on the non-tax work, but I am not as pessimistic as quietAccountant1.

The SEE is as good as anything to get you a decent grounding in tax. I recommend Gleim and I think many here would. When I became an EA, I took a live course put on by our state association that used Gleim. The live course forced me to prepare as I did not want to look foolish in front of my peers.

I am not a CPA, so this bit may be wrong. Would there be issues using your CPA license if you got multi-state clients? Would being an EA reduce that problem? I suppose it depends on the state.

There is one thing that rings an alarm bell. You say you chose a technical, rather than management, path. I get that. I have that mindset. Remember, though, that a fair bit of your time in your own practice will be management - even as a sole proprietor. I wish it were otherwise but that's how it is.
 

#5
novacpa  
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Start a side tax consulting - planning - preparation and representation office. Not a firm, big difference you will need an attest peer review license. You can do this on a kitchen table with a laptop, printer, scanner and a good tax software package - try CCH ATX - it is forms based tax preparation. Get a PTIN and EFIN number and you are ready to go.
Start reading the IRS Publications, do this daily, read at least one completely, if you can concentrate long enough
to read through a complete pub - tax may well be your new thing.
I worked for a group of Tax Attorneys to learn the Representation side of the Practice, it is invaluable.
You will control your own destiny, who you want to work with and who you desire not to.
I disagree with the previous post - tax is here to stay and will only get more complicated and necessitate
greater tax expertise. And there is a great deal of Risk to appreciate.
Finally, start reading Tax Court cases by area of interest to sharpen you tax advice skills, know
how to find cases that are "On Point".
 

#6
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One one hand... the grass is always greener on the other side. Income tax preparation can be stressful and even toxic.

On the other hand, tax preparation pays well (preparing tax returns is like printing money) and clients are easy to find. I'm very glad to be a tax preparation practitioner.

My route has been:

H&R Block Class.

1 Year as H&R Block preparer.

1 Year as H&R Block office manager and tax preparer

1 Year as both but also an instructor (I taught their classes)

2 years working for/under a busy solo CPA specializing in partnerships, s corporations, and audit representation - while I studied for my EA. He told me, "if you build it, they will come". But he didn't warn me that "it takes nerves of steal"

Passed my EA exams.

Hung my shingle - clients poured in.

Making lots of money
have rewarding relationships
love not having a boss
working hard
stressed out over my own employees and stressed out at tax time

Would I encourage others to take my exact road and to be in my shoes?


Yes I would.
 

#7
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NC
ItDepends wrote:One one hand... the grass is always greener on the other side. Income tax preparation can be stressful and even toxic.

On the other hand, tax preparation pays well (preparing tax returns is like printing money) and clients are easy to find. I'm very glad to be a tax preparation practitioner.

My route has been:

H&R Block Class.

1 Year as H&R Block preparer.

1 Year as H&R Block office manager and tax preparer

1 Year as both but also an instructor (I taught their classes)

2 years working for/under a busy solo CPA specializing in partnerships, s corporations, and audit representation - while I studied for my EA. He told me, "if you build it, they will come". But he didn't warn me that "it takes nerves of steal"

Passed my EA exams.

Hung my shingle - clients poured in.

Making lots of money
have rewarding relationships
love not having a boss
working hard
stressed out over my own employees and stressed out at tax time

Would I encourage others to take my exact road and to be in my shoes?


Yes I would.



That's a great post!!!! Over night success after paying the dues that 95 percent of all people would/could NEVER do!!!!

Take a BOW!!!!
 

#8
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ggi999 wrote:--Anything non-obvious (or even obvious) for me to consider?


If you're not interested in being a 1040 mill, that completely understandable, but you're probably not going to be able to strike out on your own and do 1065s and 1120-S with no prior experience, unless they're very simple and you're taking your time.

For that reason, you're probably going to want to work under someone else as an employee for at least 2 or 3 years. And I don't know that an employer would be able to match

-- $130K Base, + 25% target bonus, top tier benefits


for a no-experience tax associate hire. Salary will probably be 50% of what you're currently making, give or take. Benefits unknown.

Sometimes we have to think of the long-game. Food for thought.

Half of your "whys" are based on *think*. Maybe it's just me, but I wouldn't do a mid-life career change based on hunches. Is there a safe way you can explore whether or not a career change is for you that doesn't involve you submitting your resignation? Side work? Seasonal work? Can you bear a 50% reduction in salary for a few years? Do you have a spouse whose health insurance you could get on?
 

#9
ggi999  
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Texas
Thank you Thank you Thank you for the replies. I have read each multiple times. There are a lot of considerations.

On automation and the one poster's rather pessimistic view of the industry, if tax automation follows a similar path to non-tax accounting and reporting automation efforts I have seen and even been personally involved with, it will be slow. Along these lines, and mind you I'm an informed layperson at best, but outsourcing much of the work to India seems doable, and I know the Big 4 does this already, but what about the locals and regionals? And the pending (presumably) increase in 'virtual only' firms seems likely to put downward pressure on fees.

So much running through my head. I recently took a graduate level Tax Research class. I found it interesting, and pretty challenging in things like figuring out which court cases supersede others, how to evaluate which rabbit holes to go down, and just getting my hands around the overall landscape. But I also felt pretty certain I could do this as a career, and be very good at it, but it would take years And despite checking the math literally hundreds of times, I'll be 50 within the year.
 

#10
ATSMAN  
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but outsourcing much of the work to India seems doable, and I know the Big 4 does this already, but what about the locals and regionals? And the pending (presumably) increase in 'virtual only' firms seems likely to put downward pressure on fees.


People in this country better wake up. Look what happened when USA outsourced almost all manufacturing to China. Now Americans are crying :cry:
 

#11
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Last time I checked, I did hear of a big 4 firm outsourcing prep to India, but they stopped because the work product was shoddy and the process inefficient.

You may have to comply with esoteric legal and regulatory requirements if you're outsourcing prep to foreign individuals. Not to mention client concerns if their sensitive tax data is being processed by low-wage, offshore workers, which I feel that you should absolutely disclose if that's what you're doing.
 

#12
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ggi999, I can tell you my former employer outsourced bookkeeping to India. One manager managed four supervisors who, in turn supervised four bookkeepers. The supervisor was really good - a proper accountant. We never got to "meet" our actual bookkeeper. I sense that we went through three in the few months I was involved. The middle bookkeeper was very good. The replacement booked $300,000 in credit card expenses to Ask Your Accountant. That job got pulled back very quickly.

My former employer asked about pricing for tax returns. The company we worked with is based in the USA and has US-based and foreign preparers. USA-based cost much more. How much of that was premium pricing and how much of it was to cover high wage rates is something I don't know. My former employer was very sensitive about discussing pricing with me. Even the India-based preparers cost more than he was willing to pay. It certainly wasn't the third-third-third model - he did tell me enough for me to form an opinion on that.

So, to answer your question, I imagine regionals and some locals do outsource to India. How long-lived that is, is something that firms will probably not talk about. It's not exactly a Unique Selling Point is it?
 

#13
novacpa  
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I recall the IRS requires a waiver from the Taxpayer to allow his tax data to be sent off-shore - that in its self
is enough to kill the deal.
I know of no-one doing this successfully - outsourcing tax preparation to India - to get cheaper labor rates.
Think your insurance carrier would like that idea?
 

#14
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ManVsTax wrote:Last time I checked, I did hear of a big 4 firm outsourcing prep to India, but they stopped because the work product was shoddy and the process inefficient.

You may have to comply with esoteric legal and regulatory requirements if you're outsourcing prep to foreign individuals. Not to mention client concerns if their sensitive tax data is being processed by low-wage, offshore workers, which I feel that you should absolutely disclose if that's what you're doing.


Wouldn't the outsourcing bit just be part of their engagement letter?

Pretty much all of the larger firms use delivery centers. Audit is in India and isn't coming back, because nobody cares about audit quality, and the more interesting gamble is to figure out which cheaper country audit will go to. It seems like right now the delivery centers for tax are generally in the US and while I think they want to move it, it's probably not as doable for the types of returns the larger firms do. The smaller firms won't get the same benefits from outsourcing, and you can't outsource the face time (whether in person or virtual) that clients typically value.

ggi999 wrote:-- What does a career path look like for me? Am I even hireable?
-- Is taking the EA exam a reasonable approach to get baseline tax knowledge?
-- Assuming I have some natural ability for tax, how many years before I could strike out on my own or take a leadership role in a local or regional firm?
-- How weird is it for some 49 y/o dude to start what I assume would be an entry level position?
--Anything non-obvious (or even obvious) for me to consider?


The H&R Block is probably not the worst idea in the world, and you can do that part time to your current job. Also, being your age should not be too big of a hindrance in the tax world for the small firm arena, and even might be a plus with some firms. The three letters "CPA" are the greatest marketing tool in this business but (not to downplay the EA) with your three letters the only thing you need is experience. You do need to be someone that clients feel comfortable with, as that's the part that can't be outsourced.

One thing that hasn't come up in this thread is that at your age in corporate finance, you have a massive target on your back. I don't know or need to know anything about your financial situation, but you brought up your pay as a concern. You'd take a pay cut moving to public, but it is less of a pay cut than what comes after the totally-not-age-discrimination RIF with severance package. So I would think about the H&R Block or other small firm experience angle if for no reason other than to keep your options open. If you get three years' experience before that happens, you'd be in a really strong position to end your career in public.
 

#15
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I'd chime in that the GLEIM EA program was extremely helpful for me, even with 10 years of tax experience.
I highly recommend it to get your up to speed on the tax side of things.
I certainly see you taking a step back as far as pay goes, but relatively quickly getting back to where you were, plus hopefully less hours.
If I were you...
I would try to get side work for a couple tax seasons to make sure this is something you really like and not just grass is greener.
If you do decide that this switch is what you need, try to find a boomer that is 6-8 years away from hanging it up.
Grind for a few years to get some experience, then implement a transition plan to slowly move them out, and you in as the point of contact for all of the clients.
Absolutely need to get any kind of deal in writing because there is a nasty side to this industry of people having a change of heart after you've put in your time.
 

#16
ATSMAN  
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All good recommendations but the bottom line is most likely going to be financial when you switch careers. I know it was for me and I had to take a serious paycut the first couple of years, but my happiness in a new profession made up for the loss of income. But I was only 36 at that time!
 

#17
FLAcct  
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You would likely be bored preparing 90% of the tax returns that sole practitioners prepare. To avoid that boredom, you would need to specialize in complex tax returns. I don't know how you would go from what you are doing now to a practice of complex tax returns that would support you financially in a relatively short period of time. Easy, boring tax returns may "pour in", but not the complex, interesting returns.
 


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