by Art Piccio . September 16th, 2014
Taxes are probably some of the least sexy things all entrepreneurs need to deal with. Our US-based readers are all too familiar with just how complex Federal and State tax laws can be. The complexity is mostly the result of tax codes being updated and revised at breakneck speed.
Where there were 400 pages needed to explain Federal tax laws in 1913, 73,954 pages in standard 8-1/2″ x 11″ paper were needed to lay it all out in 2013. And that’s just Federal tax law. State and city tax laws follow roughly the same pattern throughout the country.
Couple that with a decades-long slide of mathematical literacy in the United States compared to other highly developed countries, and you’ve got a situation where many American entreps simply cannot be expected to understand taxes as they are, even if they tried.
Young American adults fare comparatively worse than their counterparts in other developed nations when it comes to basic skills, with those in their 40’s through 60’s faring as well or better than their foreign counterparts, and younger Americans clearly doing much worse. In a recent study of 21 highly industrialized nations, American students came in 21st out of 23 in math skills.
The increasing complexity of tax laws has likewise increased the demand for tax professionals. Northeastern University sent us this infographic that makes a pretty good argument for getting into the tax preparation business.
What do you think?
Of course, as American mathematical fluency is actually dropping, there may be fewer people qualified to prepare taxes domestically than there should be. Also given the relatively higher rates for American tax preparation professionals, it’s not surprising that tax preparation is often outsourced outside of the country, with India being the most commonly cited source of these services.
This practice has raised ethical questions, especially in situations where domestic tax professionals outsource a client’s info to an offshore subcontractor without their knowledge. Would your clients be comfortable about having their tax info processed overseas, especially with all the recent discussion concerning data leaks?Again, depending on what you find out about your particular market, this may very well be an opportunity.
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Arthur Piccio manages YouTheEntrepreneur and has managed content for major players in the online printing industry. He was previously BizSugar's contributor of the week. His work has appeared multiple times on The New York Times' You're the Boss Small Business Blog. He enjoys guitar maintenance and reading up on history and psychology in his spare time.