Top 10 Cybersecurity Best Practices for Accounting & Tax Firms in Tax Season 

Tax season can be a real headache, especially when scammers trick you into their schemes. It’s no secret that phishing, scamming, breaches, ransomware attacks, and other online frauds tend to skyrocket during tax season, which is why accounting and tax businesses must take security seriously and stay proactive rather than reactive. 

The scale of the threat continues to grow. According to Cybersecurity Ventures, ransomware is projected to cost victims approximately $275 billion annually by 2031, highlighting how damaging and widespread these attacks have become. 

Accounting firms handle large volumes of sensitive data every day, and ransomware has now become a near-daily threat. This reality makes security and compliance during tax season more critical than ever, not just for protecting data, but for maintaining client trust and business continuity. 

Below are 10 security tips to help you avoid cyber threats and protect yourself against identity theft and financial fraud during tax season. 

1. Provide Cybersecurity Training to Employees 

Employees are often the weakest link in a company’s cybersecurity protection, especially the accounting and auditing team, which has many confidential files. And cybercriminals often exploit this vulnerability to gain unauthorized access to a company’s network. 

Therefore, any cybersecurity plan must begin with the employees’ training on identifying potential threats and what to do if they encounter one.  

Firstly, you need to create awareness about the potential cyber threats that exist through regular training sessions, seminars, and workshops. 

Employees should be taught about the different types of cyber threats, such as phishing attacks, malware, ransomware, and social engineering attacks, through training, demos, and webinars, regardless of their role or position in the company. 

Moreover, implementing a WISP plan will help ensure that the organization’s cybersecurity strategies are aligned with regulatory requirements, such as protecting sensitive information.  

2. Encrypt Sensitive Financial Data 

Taxation firms deal with a vast amount of sensitive data, such as income statements, social security numbers, and financial transactions. Encrypting this data ensures that even if unauthorized individuals gain access to it, they won’t be able to decipher the information without the appropriate decryption keys.  

Moreover, encryption is employed to secure communication channels. When taxation firms transmit data over the internet or other networks, encryption protocols such as SSL/TLS create secure connections. It prevents eavesdropping and man-in-the-middle attacks, ensuring the data remains confidential during transmission. 

Also, encryption protects sensitive client information on electronic devices such as laptops, tablets, and smartphones. Many taxation firms are subject to industry-specific regulations and compliance standards. 

Encryption is often a requirement for meeting these standards. For example, the General Data Protection Regulation (GDPR) and the Health Insurance Portability and Accountability Act (HIPAA) mandate encryption to protect sensitive data. 

3. Regular Security Audits for Continuous Improvement 

Proactive security audits are not just a compliance checkbox; they are a strategic initiative for continuous improvement in cybersecurity. Regular security audits of your infrastructure allow your accounting firm to identify and address potential vulnerabilities before they can be exploited. 

It ensures that your firm’s cybersecurity posture remains resilient and adaptive to the evolving threat landscape, providing a solid foundation for secure tax preparation operations. 

4. Opt for Incident Response Planning 

Having a solid Incident Response Plan is like having a proactive shield against the unforeseen. Whether it’s a data breach, a malware attack, or any form of unauthorized access, the consequences can be severe -financial losses, reputational damage, and disruption of business operations. With a well-thought-out plan, you can quickly mitigate the impact of any incident, minimize disruption, and ensure business continuity. 

Every firm needs a comprehensive plan that defines roles, establishes communication protocols, and outlines actions to be taken in a cybersecurity incident. Also, firms should regularly update this plan to keep pace with evolving cyber threats and run simulated incident scenarios to ensure teams can respond quickly and in a coordinated manner during a security breach. 

5. Protect Data with Endpoint Protection and Anti-Malware 

Tax season amplifies the need for resilience. Endpoint Protection and Anti-Malware solutions are not static; they evolve with the tax landscape. Regular updates, infused with the latest threat intelligence, fortify the defense, providing real-time protection during the heightened activity of tax season. 

For accountants and tax firms, client trust is paramount. Endpoint Protection and Anti-Malware solutions, crafted with their specific needs in mind, protect data and serve as tangible assurances of robust cybersecurity practices. They ensure a vigilant watch against malware, ransomware, and other malicious intrusions that could compromise the confidentiality of financial data. 

6. Update Your Systems and Software 

Keeping systems and software up to date remains one of the most important yet frequently neglected cybersecurity measures. Regular updates address security vulnerabilities and strengthen overall system protection. They act as the first line of defense against cyber threats that could compromise sensitive tax data. 

These updates fix bugs and ensure compatibility with the latest technologies, fostering operational efficiency. For tax professionals, staying current is not just a best practice; it’s a proactive measure to secure digital assets, operating systems, and regular updates during tax season. 

Timely updates contribute to a resilient defense, reducing the risk of security breaches and safeguarding the integrity of financial information. 

7. Keep Your Client’s Data Backed Up 

Daily data backups protect against potential data loss due to unforeseen circumstances such as hardware failures, cyber threats, or accidental deletions. With a daily backup routine, accounting and tax firms can swiftly recover the most recent and accurate financial information in case of data corruption or system malfunctions. 

In addition to performing daily backups independently, you may consider utilizing managed backup services. These services allow you to outsource the responsibility of data backups to a third-party provider, who will handle the backup process for you. 

Managed backup services can be particularly useful for small businesses or those without dedicated IT staff, as they provide a cost-effective and reliable solution for ensuring data protection. 

Additionally, many managed backup services offer features like automated backups, remote monitoring, and data recovery support, further streamlining your backup process and providing added peace of mind. 

8. Move to Cloud-based Accounting  

Moving to cloud-based accounting and tax software provides stronger security than traditional on-premises solutions. It uses advanced encryption and multi-factor authentication to protect sensitive financial data from cyber threats. 

The cloud’s centralized system allows real-time monitoring and quick response to security incidents. Providers handle continuous updates and patches, reducing vulnerabilities and keeping defenses strong. This lets accounting and tax teams focus on their core work while leaving data protection to specialized cloud providers. 

Cloud-based accounting software also offers convenience, flexibility, scalability, and enhanced security, making it a preferred choice for businesses and individuals who want to simplify financial processes while keeping data safe. 

9. Partner with an Accounting-Focused MSSP 

Consider working with a Managed Security Service Provider (MSSP) like Ace Cloud Hosting that specializes in the accounting industry. Evaluate whether the provider has experience supporting widely used accounting and tax applications such as QuickBooks, Drake, and Lacerte.  

Verify if they are SOC 2 certified and capable of helping your firm stay compliant with regulatory requirements, including the FTC Safeguards Rule and IRS security guidelines. 

A reliable MSSP should also provide a Written Information Security Program (WISP) and update it regularly. Confirm that they maintain proper permissions and documentation to comply with IRS Section 7216 requirements.  

Additionally, ensure they offer robust security tools such as 24/7 monitoring and encryption that integrate seamlessly with your systems, along with ongoing cybersecurity awareness training for your team. 

10. Implement Multi-Factor Authentication (MFA) Across All Systems 

Multi-Factor Authentication (MFA) adds an essential layer of security by requiring users to provide two or more verification factors before accessing systems or sensitive data. This simple step can drastically reduce the risk of unauthorized access, even if login credentials are compromised. 

For accounting and tax firms, MFA should be enabled on all critical platforms, including email, accounting software, cloud storage, and remote access tools. It’s particularly crucial during tax season, when cybercriminals target busy periods to exploit vulnerabilities. 

MFA options can include a combination of passwords, one-time codes sent to mobile devices, biometrics, or hardware security keys. By enforcing MFA, firms protect client data, maintain regulatory compliance, and strengthen overall cybersecurity posture. 

Protect Your Accounting and Tax Data with Ace Cloud Hosting  

Tax season increases cybersecurity risks for accounting and tax firms, making robust protection essential to safeguard sensitive client data. Ace Cloud Hosting has over 15+ years of experience in providing cloud hosting solutions for QuickBooks, Sage, UltraTax, ATX, and more, combining advanced encryption, 24/7 monitoring, and seamless integration with 200+ tools to keep your operations secure and uninterrupted. 

We also provide free cybersecurity training for your team, helping staff stay vigilant against evolving threats. With a 99.99% uptime guarantee and a proven record of protecting millions of financial transactions, Ace Cloud ensures your firm meets and exceeds industry security standards while you focus on core accounting work. Start your free trial or get in touch with our solutions consultant today.