Last updated on July 15th, 2022
Are you still using pen and paper for tax preparation? If yes, then you are way behind the times.
The accounting industry is changing, but you already know that. The technological and legislative changes are influencing each step of our professional lives. The onset of this transformation has left tax professionals feeling anxious about being left behind and unsure of where to start.
To be the best, tax professionals must outsmart these technological changes which lie ahead before they happen. Technology can play a big role in relieving the tax season stress, and professionals should take advantage of tools at their disposal to make the busy season as smooth as possible.
Tax season has come and gone, and you have officially overcome the deadline – April 15. With the entire experience still fresh in your mind, this is the best time to think about how to make next season less stressful and increase productivity.
Below are the top five tech tools that will help you stay organized and calm in the next tax season.
1. Paperless Documentation
What is the most painful part of tax season? If you are thinking about the moment when your client brings a pile of receipts, you are not alone. The best solution for both you and the client would be to use a cloud-hosted solution.
Every accounting firm should consider migrating their in-house tax solution to the cloud. The cloud technology helps clients to get real-time updates and keep track of their data effortlessly. Additionally, you can also make use of apps where you can snap the photo of important documents and receipts.
Moreover, if you are a part of an accounting firm and not a technology-based company, there’s no need to hire IT staff to manage in-house servers and software updates. There are many competent cloud providers that offer managed services. Moreover, they also offer a pay-as-you-go model so that you pay only for the resources utilized. Thus, even a sole-practitioner can get the same service as the big firms.
2. Attaining Insights with Big Data
The concept of big data isn’t new. Tax professionals and accounting firms have been analyzing tax data to provide their valuable insights since the inception of the tax process. If something has changed, it’s the amount of data available.
Due to increasing complexity and quantity of data, accountants and tax professionals find themselves in information overload. With unstructured data, business owners cannot make well-informed decisions. Most tax professionals fall into the trap of focusing most of their time on tax payments and filling forms, instead of focusing on long-term strategies. This is where tech tools come into play.
With the help of Artificial Intelligence and Big Data analytics, your process can become more accurate, streamlined and efficient. Many tech tools are available which could help professionals connect multiple data points and provide great real-time visuals to help to make important decisions. Helping clients with business intelligence can be a new service offering for your business.
Chasing your clients continuously for payments is the last thing you would want to do during the tax season. You can use tools which integrate with your software to manage client invoices till they are paid.
Additionally, tools can also help you send customizable and recurring reminders. You can also set how frequently they are sent along with a thank you note.
With the help of tech tools, accounting professionals can set up their bills on a monthly basis. The clients can pat from the invoice using their preferred payment gateway. The accounting system will automatically get updated as the payment is received. Thus, the benefits of technology tools go beyond the busy tax season.
4. “Scan and Populate” Tools
One of the most time-consuming processes during and after the tax season is gathering documents and organizing them to commence with the tax preparation process. Technology, however, has made this process easier with the availability of many “scan and populate” solutions. These solutions enable auto-population of a tax return from a simple scanning of required documents.
According to the Small Business Accounting Report, one of the main challenges faced by tax professionals is accounts receivables (51%), followed by cash flow (44%), then handling paperwork and receipts for taxes or annual audits (33%), and then closing the books (28%).
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The tools are designed to automatically recognize different documents: K-1s, 1099s, the 1040s, W-2s, brokerage statements, and more. These documents are sorted in a suitable sequence. The preparer then validates the data which was auto-populated and provide data which fell out of the process.
Such tools can help tax preparers save a lot of time and result in increased realization. You can’t get more automated than that.
5. Mobile Accounting
A smartphone is no longer a simple handheld device used only for communication or entertainment. Working on smartphones has now become a necessity for many tax professionals. Mobile accounting offers numerous benefits for tax professionals.
There are a number of mobile apps which can simplify the tax process and help you do things such as bank reconciliation and invoice creation from anywhere and anytime, with an internet connection. This further makes it easier to process tax returns, monitor cash flow, and advise clients which helps improve profitability.
Real-time access to data allows tax professionals to serve their clients effectively. Increased connectivity via smartphones allows for better relationships with the clients. If your client has any problem which needs immediate attention, you can respond immediately as you have access to data needed, irrespective of your location.
Start Your Tax Preparation Journey with Greater Efficiency
While the technology tools are some ‘quick wins’ which you can implement in the next tax season, they are just the tip of the iceberg. Time is the most valuable asset at your disposal. Consider how these technology tools could help you save more time after tax season so that you can invest it in the most effective way possible.
While most tax professionals are lost in their usual compliance work and spreadsheets, they should rather think about how they can be more valuable for their clients and business. And then consider how these tech tools can help make the next tax season more productive and less stressful.
These tools will help you advance your tax practice, keep organized and be in the right frame of mind to handle even the most difficult situations better. So, don’t be scared of new technology tools and embrace them to see where they lead your business.
If you have a tax preparation tool that wasn’t mentioned here, share with us in the comments.
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