As the tax season approaches, CPA and accounting firms in the United States face an immense challenge. According to the Internal Revenue Service (IRS), more than 262.8 million federal tax returns during FY 2022, with more than 80% of taxpayers seeking professional help. Journal Of Accountancy reports practitioners still work anywhere from 50–80 hours a week during the busy season.
From not being prepared enough before the season arrives to having an inadequate number of resources in hand – the reasons for a stressful tax season are plenty. But when you have a checklist of what to prepare for and what to do well in advance, this could be easier. CPA firms and accountants would spend less time chasing what they do not have control over.
So how can the teams be prepared? Here’s a comprehensive list of what they can do:
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Review and Update Client Information
For a seamless tax season, one of the basic steps to follow is to ensure that we have impeccable client records. They should be up-to-date and should not have any missing fields. Professionals need to verify client contact information, including email addresses, phone numbers, and physical addresses. While these details are important, there is a chance that these have changed over some time. Professionals need to double-check Social Security numbers, employer identification numbers, and other personal data. Cross-checking the personal data also includes confirming any major life changes that might impact their tax situation – marriage, divorce, and birth of a child are some of these. Keeping this information updated helps ensure a smooth processing and fewer delays when gathering the documents.
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Staffing and Training
Analyzing the status of your resources before the tax season can go a long way in ensuring a seamless tax season. This time brings an increased workload, hence, you should make amendments if any ahead of time. Decide if you need temporary staff or your current team can do away with some additional support. Besides assessing your staffing needs, you also need to provide training on new tax laws, regulations, and software updates. Your team members should be constantly made aware of their roles and responsibilities. Training and education should be a constant part of your system around the year. It helps reduce complexities and errors.
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Technology and Software Updates
Just like other parts of the accounting industry, technology is also a crucial part of the modern tax preparation system. Keeping tax software updated can help avoid compatibility and compliance issues. You cannot afford to have a technical issue when you are preparing hundreds of files. Conducting routine maintenance to fix bugs or glitches can help avoid this. Staying ahead on technology can help with client management, data security, and overall efficiency.
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Tax Law and Regulation Review
One of the most critical aspects in ensuring a stress-free tax season is keeping up with the ever-evolving regulations. Reviewing the current tax laws, such as Act 2.0 and IRS regulations is essential. Firm leaders should conduct and attend webinars, conferences, or workshops to ensure everyone in the firm is up-to-date. It is not enough just for the leaders to have the knowledge; the entire team should be aware of how these ongoing changes impact the clients and their tax liabilities. This allows the firms to provide proactive tax planning advice, ensuring that clients are well-prepared for any new requirements or opportunities.
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Client Communication
Developing a foolproof communication plan can help clients be informed about tax season deadlines, requirements, and changes can help ensure a smooth process. Firms should send out reminders about deadlines, documents, and law changes that may impact the clients. Newsletters, emails or messages through dedicated channels can help ensure that clients do not miss out. Submitting documents or making estimated tax payments are some of the key areas that clients should not miss out on. Clear, timely communication fosters trust and prepares clients for tax season.
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Document Management
Efficient document management is key to accurate and timely tax preparation and filing. Organizing and digitizing client records, including prior-year tax returns, W-2s, 1099 and supporting documents can make the process seamless. Implement a secure document management system that allows easy access while ensuring client confidentiality. Streamlining document handling will also reduce the time spent searching for records and minimize the chance of missing critical information. Fims may also consider adopting cloud-based systems for better accessibility and collaboration across your team. This step will also enable faster response times when clients or the IRS request additional documentation.
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Quality Control Processes
Establishing quality control processes help prevent errors, ensure accuracy and compliance. Fims must set up checks and balances, such as double-checking client information, reviewing tax return calculations, and ensuring that all required forms are completed accurately. It is best to have a designated resources who can conduct final reviews of returns before submission. Conducting regular internal audits can help catch potential mistakes early. This proactive approach helps avoid costly errors and ensure that your firm maintains a reputation for accuracy and reliability during tax season.
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Security and Data Protection
It is easy for firms, dealing with critical financial information, easily fall prey to fraudulent activities. And hence, protecting this data must be made a top priority, especially with the current security measures. From firewalls, using encryption and two-factor authentication, constant checks and audits must be made a part of the process. It is important to ensure that your firm complies with IRS, AICPA, and other relevant guidelines for safeguarding personal information. Put cybersecurity protocols in place as it is not just about protecting client data, it is also about safeguarding your firm’s reputation.
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Workflow and Project Management
Managing workload effectively during tax season is essential for maximizing efficiency. Firms should consider using project management tools to streamline workflow, assign tasks, set deadlines, and track progress in real-time. Divide the workload by creating task-specific teams, such as those handling client document collection, data entry, and tax return reviews. Clear task delegation will ensure that responsibilities are understood, and that there is accountability for meeting deadlines. Additionally, tracking progress through a central dashboard allows for easy identification of bottlenecks or areas that need attention, ensuring smoother operations.
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Review and Refine Your Firm’s Processes
Before the tax season kicks off, conduct a thorough review of your firm’s processes, identify any inefficiencies or bottlenecks from the previous tax season and implement changes to improve overall productivity. Whether it’s revising client intake procedures, enhancing communication channels, or improving document management systems, refining your firm’s processes will enhance both client satisfaction and internal operations. Engage your staff in these discussions to gain insights on potential improvements, and consider piloting new technologies or workflows that could make tax season smoother for everyone involved.
How Finsmart Accounting Can Support You
At Finsmart Accounting, we understand the challenges CPA and accounting firms face during tax season. To ease the process, our expert team provides:
- Outsourced accounting services to alleviate workload
- Tax preparation and review support
- Accounting software and technology solutions
- Staff training and support
- Quality control and compliance review
Partner with Finsmart Accounting to:
- Increase efficiency and productivity
- Enhance client satisfaction
- Reduce stress and burnout
- Focus on high-value services
Don’t let tax season sneak up on you. Get ready for the season and reduce the stress that impacts your productivity, mental and physical health. Write to us at connect@finsmartaccounting.com to stay ahead of the game!
Maanoj is Co-founder & Director of Growth Strategy & Alliance at Finsmart Accounting. He is an Outsourcing Expert, a People Champion, and a Dynamic Leader with strong Business Strategy and Scaling-up experience. He has incubated businesses, sold & exited ventures; helped build strong enterprises in very diversified verticals like Fintech, HR & Consulting spaces in various CXO capacities over the last 20 years.
