Tax Season: Looking Back, Looking Forward
The uniquely American tradition known as “Tax Season” is now
(mostly) behind us. Whether you approach it from the perspective of a taxpayer
or a tax return preparer, most of us are relieved by the passing of April 15.
Yet, from the practitioner’s perspective, now is a pivotal time to reflect on
our crucial role, what went well, and what did not with the most recent filing
flurry. By doing so, we can capitalize on the things that worked well and
address those that did not, further enhancing our expertise and the value we
bring to the process.
The Rear View Mirror
With relatively few federal or state tax law changes for 2023 returns, most practitioners did not need to invest copious amounts of time learning the intricacies of new legislation at the federal or state level. This was a welcome reprieve from several of the more recent years, as significant changes in the code typically result in software update issues, training requirements, and taxpayer education, among other issues. Thus, when relatively few changes exist, tax season typically is smoother, allowing practitioners to use the legislative reprieve to focus on internal issues and improve their processes.
Looking Inward
Given the statements above, what can, and should you take away from the recently completed Tax Season if you are a tax practitioner? What processes, people, and workflows should you adjust to prepare for next year?
Assess Your Technology
First, we suggest assessing your technology. More specifically, did your technology create bottlenecks for you during the recent filing season? For instance, were your scanners a source of bottlenecks and frustration? If so, what plans are you making to prevent this from happening? Is there a need to adjust your existing scanner settings? Should you buy newer, faster devices? Would it be beneficial to set up additional scan stations in the firm to alleviate the potential for bottlenecks? These are but a few questions you should ask and obtain answers to before the extended deadline closes in.
Other internal processes that likely require examination include delivering tax returns to clients and timely billing. How much time does your team spend chasing electronic filing authorization signatures in the era of electronic filing? How many phone calls, email messages, and text messages do you receive from clients with questions about providing electronic signatures?
Are Your Billing Practices Sound?
AI technology can bring many benefits and opportunities to the accounting and finance sectors. Still, it also has security and privacy risks that must be managed. Accounting and finance professionals must be aware of these risks. Further, they must use appropriate measures and best practices to reduce them and ensure AI is used responsibly and ethically in accounting and finance. By doing so, they can improve the security and privacy of data and AI systems and build trust and confidence among their clients and stakeholders.
Ancillary Services
Let us not forget ancillary services. Practitioners have
access to copious volumes of client data when preparing returns. Often, you can
use this data as a foundation for tax planning and financial planning services,
assuming your firm offers these options and failing to capitalize here results
in lost profits and, perhaps, disgruntled clients.
External Considerations
In addition to optimizing internal workflows, we should also consider external factors and how we optimize them to improve efficiency, client service, and productivity. One critical issue in this realm is how to ingest client information. Specifically, does your firm take advantage of options to link client data from external sources into the tax software in use? For instance, many external brokerage firms offer tax practitioners options to download interest, dividend, and stock sale data into the appropriate schedules on clients’ tax returns. Given the detailed nature of this data, why would we want to continue to enter the data manually, when we can link it directly from a brokerage account?
Is A Change In Tax Preparation Software Warranted?
An additional — and critical — consideration is your tax software. Do you continue to renew your software licenses out of habit? Or do you renew them because they give you and your team the best cost/benefit ratio?
Transitioning to a new platform is, no doubt, a monumental effort. Converting client data and getting team members comfortable with new software can also appear to be enormous challenges. Nonetheless, continuing to use tax software that is not well suited to your needs or clients can cost dearly in terms of efficiency and client satisfaction. Therefore, you should plan to reassess your tax software annually to ensure that the tools are the best for you and your team and that they maximize your ROI.
Should you determine that changes in your software and workflows are necessary, don’t forget that the extended filing deadlines offer a tremendous opportunity to test your new tools. You can use the extended filing seasons to verify that the tools and workflows function as intended without the stress of completing a large volume of returns during a compressed time frame.
Summary
It is all too easy to fall into the trap of doing things the same way, year after year. In some cases, continuing with the same business practices and tools might be the right solution. However, using the same tools and procedures can harm efficiency and profitability in many situations. Therefore, make plans now to take advantage of the opportunities available to ensure that your firm excels and prospers as it should.
For more information on AI, consider participating in a K2 Enterprises training course.
You can also read reviews of leading tax preparation software tools by accessing this article.
