Courtesy Hedley & Co. PPLC
By Kevin M. Hedley
An outlook for the coming year comes from two perspectives, one as a CPA firm practicing in the tax arena and the other as a wealth manager.
In both cases, our work is assisting clients to navigate the turbulent world in which we live. One thing has always been clear over the last 30 years being in business. There is always some sort of turbulence. Navigating the turbulence is aided by preparation.
As we look to the 2022, it is obvious that COVID is still with us and is not going away anytime soon. Accountants and finance professionals demonstrated their role as most trusted advisers in many circumstances. We had to pivot to meet the needs of our clients in many facets, the least of which was ever-changing tax law, programs to help our clients like PPP and ERTC, and a myriad of other financial opportunities.
We foresee there will be continuing needs due to tax law changes and other programs designed to aid small businesses. Clients look to us to assist them. We answered that call this past year and will continue to do so in 2022 and beyond. We continue to make necessary technology updates and personnel additions to meet these needs.
We continue to grow as a brick-and-mortar business with our offices here in Saratoga County as well as allow the flexibility for employees to work seamlessly from home. We are proud of the measures we put into place even before the pandemic and are thankful for the ability of our staff to adapt as quickly as they did when it became a necessity.
We, as well as others in the CPA profession, continue to find innovative ways to hire, train, and retain qualified staff during these ever-changing times.
The wealth management side of the business is consistent with the tax side when it comes to technology, work from home, and the ability to pivot to meet the needs of our clients.
The wealth management firm continues to be able to meet the needs of our clients whether in person, by virtual meetings, or just the “old fashioned” phone call. We see 2022 will be no different in that regard.
So, what other issues will impact 2022?
Clearly, there will be changes to the tax law impacting small businesses in 2022 and beyond. We will likely see substantive changes to the rule that currently allows eligible taxpayers to deduct up to 20 percent of their qualified business income (QBI). We may see changes to tax rates, business loss changes, and changes to the Net Investment Income Tax.
What about the wealth management side of the business?
The Federal Reserve (the Fed) is forecasting 3.8 percent in U.S. GDP growth in 2022, down from their 5.9 percent projection for 2021, but still high relative to the prior expansion. This seems in line with many other economists’ forecasts.
While growth is slowing to more sustainable levels, the Fed did raise the forecast for 2022 while lowering the 2021 forecast. Supply-side constraints are delaying growth from this year to next year. Breaking down GDP, consumer spending, which makes up roughly two-thirds of GDP, is projected to rise next year, but at a slower pace.
Spending will be moderated as government stimulus fades.
Business spending should accelerate as businesses try to keep up with demand from economies reopening and building up inventories.
We are ending 2021 on quite the buying spree of new tech and we see that happening in many businesses. Many clients are looking to grow and are trying to get the equipment they need.