Ok so what are some ways that blockchain can be used in the accounting and tax industry.
Ways blockchain will be implemented in the accounting industry
- Tax Compliance
I think that taxing agencies will move to the blockchain one day. I think state taxing agencies in the united states will be some of the the first to adopt because they are greedy. States will likely mandate that taxpayers join their blockchain in order to transact business in their state. Why do I believe this?
I believe this because states will be able to assess whether taxes have been paid properly instantaneously if they can see all the transactions on the blockchain. They wouldn’t have to wait for companies to fill out tax returns or forms. The blockchain would essentially be one giant tax form.
I believe this is especially true when it comes to simple taxes like sales tax, vat, premium tax and excise tax. I do think the IRS and other global taxing agencies will also adopt the blockchain because it reduces the amount of compliance. The big 4 should be thinking about this and taking the idea to government agencies today as a consulting idea. They could help implement blockchains for taxing authorities. Those projects would be huge revenue wins in the 10’s of millions of dollars.
2. Accounting transactions
Ok so how would blockchain actually work in accounting transactions. It is kind of weird and a logistical nightmare for accounting because the notion of a blockchain means it’s a decentralized network. This means that a company would have to allow other agents onto their network to see and verify all of their financial transactions.
Well what company would allow that? Many people think this can be accomplished through a consortium or private network. People still would not want their competitors and other companies to see their information. For example, who would Facebook have on their network, GE, IBM, Snapchat? Who would they trust to see their information.
3. Accounting Consortiums
In order to form a consortium you’d have to know who you are forming it with unless the big 4 formed blind consortiums for these companies. Which is another huge service offering that the big 4 could provide.
4. Blockchain Node
Another way for accountants and the big 4 could get involved in blockchain is to volunteer to become a node on a network. The companies that are adopting or will adopt blockcahin don’t trust the networks and nodes attached to large scale solutions like ethereum, so they set up private blockchains. The problem is you need a number of nodes to keep the network safe, but who can large companies trust? That is where CPAs and the big 4 firms come in and offer to be a node for companies in any of their blockchain networks. Whether they be related to smart contracts or accounting blockchains. CPA’s have brands of protecting client information and access to important data. This gives them the edge against other competitors in the marketplace. This can be a recurring services as well. This is where accountants and the big 4 can really make a killing. They can offer their trustworthiness and their ability to audit to be members of blockchain networks and blockchain consortiums.