Navigating 2025 Accounting Trends: Insights from Jody Padar
Jody, known as the RadicalCPA, has been a fixture on the Accounting Today Top 100 Influential People List for the past 12 years. She is the author of The Radical CPA: New Rules for the Future-Ready Firm, a book that ignited a movement within the industry. With her new book, Radical Pricing, set to be published this year, Jody continues to push the boundaries of traditional accounting practices.
Changing Tax Laws and Regulations
Question:
With the new year and a new administration, tax law changes are likely on the horizon for 2025. Bills like the Inflation Reduction Act and SECURE 2.0 have already introduced updates to retirement plan and corporate tax rules, requiring time to fully understand their implications.
While accountants can’t fast-track the learning process, what strategies can they use to free up time and manage their workload effectively as they adapt to these changes?
Answer:
One thing is certain - new tax changes will come. It always happens when there is a change in national leadership. President Trump has detailed what he wants. What actually happens will likely be somewhere between where we are now and what he’s stated. That leaves a lot of uncertainty around the details. PPP showed us that we know how to handle rapid-fire changes that have a big impact on our clients so we can handle this, too.
Accountants should be using tech to streamline processes right now. This will give us more time to learn and adapt to any new regulations. Plus, we should be promoting a culture of continuous learning within our firms to stay ahead of the curve.
We have always been valuable advisors to our clients because we know the tax laws and regulations so well. We can be even more valuable by proactively informing our clients about new laws and potential tax savings. This makes us strategic partners, not form filler outers.
Increased IRS Scrutiny and Audits
Question:
Since 2024, when Congress passed the Inflation Reduction Act, the IRS modernized its systems and enhanced its enforcement efforts. Reports indicate that the IRS has recovered $4.7 billion in taxes.
There’s uncertainty around the IRS's future modernization efforts due to potential budget cuts. If funding is significantly reduced, accountants might have to deal with longer processing times. If funding continues, accountants will need to keep adapting to new processes.
What’s your advice for navigating these two very different scenarios?
Answer:
The IRS will continue to innovate its technologies and processes. They too are short on accountants and have lots of information stuck in forms and documents, so they need technology to streamline their processes. The timeline will be based on funding, which will likely tighten up, but we can expect modernization to continue. After all, as accountants use more tech, we’re going to push for the IRS to bridge those tools.
Whether facing budget cuts or continued funding, flexibility is key. Prepare for delays by setting realistic client expectations and enhancing communication. If funding continues, stay agile by keeping up with new processes. Know how you will communicate these potential changes to your clients. Be proactive with whatever happens with the budget!
Question:
Some cryptocurrency regulations are already in place, and more are on the way. Each new requirement adds complexity, requiring accountants to guide clients through compliance while preparing for upcoming changes. How can accountants maintain trust and deliver exceptional client experiences amid this constant evolution?
Answer:
There will be more rules put in place around digital assets and tech used to identify non-compliance. It will be harder to hide those assets from the IRS and we’re going to see more enforcement around under- or non-reported income from digital assets.
Each new requirement adds complexity, but crypto taxes are just like any other tax code you gotta know. Keep learning and use tech to your advantage to stay ahead of the curve.
More of your clients are probably dabbling in crypto than you realize, so be proactive and ask the right questions. Maintain trust by proactively educating clients about changes and demonstrating your expertise. Use technology to provide timely insights and personalized advice, there are lots of tools to help with gain/loss calculations and more.
But we need to remember that our advice is valuable – we should be compensated for it. Giving away advice for free makes it seem less valuable, and we won't be as motivated to keep learning and improving our skills. We need to find a balance between providing awesome insights and getting paid fairly so that we can keep our clients happy and our practices sustainable.
Technological Challenges and Cybersecurity
Question:
AI and automation are changing the game for accountants. What’s your take on leveraging these tools without losing the personal touch clients value?
Answer:
AI and automation will continue to change the game for accountants. We need to embrace them to enhance efficiency, but it’s important to balance tech with empathy. It’s how we will maintain the personal touch clients value. The more tech you use, the more HUMAN you have to be.
When it comes to tech, it’s not just about doing work faster. It's about freeing up time to really connect with clients. By automating the boring stuff, accountants can become trusted advisors, offering personalized advice and building stronger relationships. It's not about replacing the human touch but enhancing it. We need to be ready to have those heart-to-heart conversations with clients, making them feel valued and understood. This means prepping our team, being open to deeper discussions, and showing clients the value of our enhanced services so we can charge what we are truly worth.
AI is changing everything super fast, and accountants need to keep learning to stay in the game. AI and automation tools can totally transform how we do accounting, but we gotta know how to use them right. If you're not comfy with financial prompts, try using AI for client communication first. Then you can start by figuring out what AI can and can't do with financial stuff.
New SOC 2-certified tools are entering the market almost monthly to help. And AI is most likely embedded in your current providers or will be there soon. Always make sure you're using the enterprise versions of the broader AI tools to keep data safe and sound. Remember, AI isn't just about the tech – it’s about learning how to solve business problems smartly!
Question:
Cybersecurity threats are a growing concern, especially with so much client data stored in the cloud. How can firms ensure they’re protected?
Answer:
This year we will likely read about another large accounting firm being the victim of a cyberattack. Hospitals, government agencies and utility companies may be making the headlines but considering the amount of data we have on our clients, it’s only a matter of time until there is another successful hack. It just takes one person to click on a bad link to be in hot water.
That makes cybersecurity a non-negotiable. Invest in robust security measures and educate your team on best practices. Regularly review and update your protocols to protect client data and maintain trust. Firms should also think about working with trusted third-party providers to make sure they follow cybersecurity rules. These providers can offer specialized know-how and resources to help firms protect client data and keep trust. And don’t forget your cyber insurance policy!
It's important to realize that relying only on old-school practices, like physical storage of data, might not be enough to protect against modern cybersecurity threats. Cloud-based solutions can provide better security features and regular updates to deal with new threats.
Also, firms should look into ways to back up their cloud data regularly. This makes sure that even if there's a data breach or system failure, important client information can be recovered and restored quickly.
Staffing Shortages and Workload Management
Question:
Fewer students are pursuing accounting degrees, with some citing the high workload and stress—particularly during busy seasons—as a deterrent.
How has the industry responded to address these concerns?
What positive changes have you seen in the profession to help manage stress and workloads for accountants?
Answer:
Smart firms will look to fill the labor shortage with tech. Schools are turning out fewer accounting graduates so it’s a problem that can’t be remedied tomorrow. But tech can do the grunt work which builds capacity among the staff you do have. Often, a remote or hybrid work environment gives firms a competitive edge over other employers.
Tech is the answer here. It helps create change and makes things less stressful for team members since it’s doing some of the work for them, etc. Plus, using it to assist in remote work is helping firms find people they might not have been able to find otherwise. Firms should consider this a tool to make things easier on their current team and to fill staffing holes.
Question:
Remote and hybrid work is still evolving for many firms. What’s your advice for maintaining team productivity and communication during tax season?
Answer:
I hear of more firms requiring a return to the office at least in a hybrid capacity. This is actually a win for firms that have mastered the remote model. There are strong team members who don’t want to drive an hour to and from the office each day to sit on Zoom calls and miss their kids' soccer games. Accountants are hard to hire, but firms that are open to remote employees will increase their team size (and likely quality) this year.
Remote and hybrid work is still evolving for many firms. It is not the same as being in the office. You need to be super clear about what you expect from people and what the outcomes are. It's not always easy, but if everyone knows what they're working toward, it's way smoother.
And productivity demands strong communication. Use collaborative tools and regular check-ins to maintain team cohesion. Foster a culture of transparency and trust, ensuring everyone feels connected and engaged.
Don't be afraid to try new things and see how they work for your team. There's no one-size-fits-all solution. Talk to each other – a lot! And remember, most people aren't trying to be difficult in emails or messages, they're just unsure about how much information and context you really need to do your job well.
This is where technology and workflow really make a difference. Make sure you have the correct tools so everyone in the firm knows and understands what their projects are, what needs to still be done and how the client participates in what needs to be delivered. Everyone knows exactly where each project stands and what they need to do to get the tax return or other deliverables out the door.
If everyone's on board, including the partners, you can create a great online work culture. Oh, and don't forget about your global team members – they're part of this too! When things go well with communication, celebrate it!
Changes in Client Expectations
Question:
Clients increasingly expect accountants to act as advisors, not just compliance experts. How can firms balance this demand with routine tax work?
Answer:
Firms will continue to lose good clients because they can’t deliver past the compliance. This isn’t rocket science. Listen to what the market wants and deliver it! We’ll see the start of up firms this year that understand this. They will develop offerings and an approach that has advisory built in. Legacy firms will need to evolve to compete. Some won’t even try, and those firms will have to close or merge, and we’ll continue to see a large number of both again this year.
Firms need to position themselves as strategic partners by offering advisory services. Use technology to automate routine tasks, freeing up time to provide valuable insights and guidance. The advisory is what clients value, and will pay for, so you need to make the time to deliver what the client wants.
Next Steps
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