Major Differences in US and UK Accounting
Having spent over ten years in the US, Paul shares his observations on how the accounting profession differs across the Atlantic. These differences reveal cultural nuances that American accountants may want to consider for growth and adaptation.
1. A Tax-Driven Focus in the US
In the UK, Paul’s firm focused on business growth, with tax planning as a byproduct of their services. In contrast, he finds the US accounting industry more tax-driven, primarily due to the complexity of the tax code and the variations across 50 states. This tax-centric focus often overshadows business advisory services, which are vital for client growth.
2. The Reality of Tax Season
The concept of “tax season” was new to Paul when he moved to the US. Unlike the UK, where accountants spread their work evenly across the year, US accountants face an intense season leading up to April 15. While it’s a cultural difference that’s unlikely to change, Paul notes that managing work throughout the year could ease the tax season crunch.
3. Cash Accounting vs. Accrual Accounting
Paul expresses frustration with the prevalence of cash accounting in the US, especially among LLCs. While cash accounting may simplify tax reporting, it doesn’t reflect the true financial position of a business. Paul advocates for accrual accounting, which aligns with the matching principle, allowing firms to make better, data-driven decisions.
4. Narrow Entry Requirements for CPAs
In the US, becoming a CPA often requires a specific accounting-focused education, limiting the pool of talent entering the profession. Paul observes that in the UK, many accountants come from diverse educational backgrounds, which brings fresh perspectives to the industry. Broadening entry requirements could help address the talent shortage and make the profession more dynamic.
5. Embracing a Growth Mindset
Paul emphasizes the importance of a growth mindset for US accountants, especially those willing to break away from traditional models. Younger accountants, in particular, recognize the need to adapt, focus on business advisory, and make their firms future-ready.
Conclusion: Lessons from a Decade in the US
Paul’s experiences underscore the value of cultural perspective and adapting to industry norms. For accountants, the key takeaway is to balance tax planning with advisory services and embrace a growth mindset that challenges the status quo.
