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It’s no secret that tax season often brings a whirlwind of stress, last-minute scrambles, and the tedious task of chasing down missing documents. Many firms operate reactively during tax season, which can lead to a cascade of problems as tax deadlines approach. There’s the endless pursuit of documents,categorization of transactions, constant back-and-forths with clients for clarification, inevitable delays in tax filings, and limited opportunity for effective tax planning. All of which consumes time and can increase stress for your firm's staff during peak season.
However, harnessing financial operations automation to implement a proactive, year-round approach to preparing for tax season and to cut down on your team’s manual work during tax season, you can transform this annual challenge into a streamlined and efficient process.
Use these insights from Brad Ebenhoeh, Cofounder of Accountfully, and Questian Telka, EA, CPB, Founder of ReQoncile Financials, to explore key strategies for mastering year-round tax preparation.
Building a Proactive Foundation: Monthly and Quarterly Prep
The key to a successful tax season starts with ongoing efforts throughout the entire year. Here are some habits you can start building now and throughout the year to help ease the burden when February comes around
Monthly habits
- Be consistent with bookkeeping: Utilize bookkeeping best practices to ensure your clients’ books are always ready to be passed off to the tax preparation team
- Require documentation before paying bills: Use the BILL Accountant Console to make sure that clients attach proper documentation to all invoices needing to be paid.
- Document everything that will be on tax returns: From R&D to fixed asset expenditures, make sure all relevant items are documented.
- Know what your tax preparers need: Keep a checklist of things that could affect your clients’ taxes, and check it regularly. Flag anything missing.
Quarterly habits
- Keep up-to-date, organized records: Keep organized records so you can regularly review financials to ensure you’ll be ready as deadlines hit.
- Check in with clients' tax preparers: Regular communication helps keep you up-to-date on any changes to their processes and keeps you ahead of their deadlines.
- Identify tax-related action items: In client conversations, keep track of tax-related tasks that come up, such as paying estimated taxes.
- Review W9s proactively: Vendors are also busy at EOY—so get W9s as your client works with them throughout the year. Plus, this will also make 1099 filing smoother!
Year-round habits
- Track tax write-offs consistently: Make this a regular agenda item during client calls to maintain accurate records.
- Maintain backup documentation outside the GL: This provides clarity for expenses and ensures all necessary information is readily available.
- Communicate regularly with tax preparers: Know their checklist for the upcoming tax season, their preferred file delivery methods, and how your team can best prepare files for handoff.
- Guide clients to a consistent tech stack: This streamlines processes and enhances efficiency.
The transformative role of automation
Automation is a game-changer for tax preparation, moving firms away from manual, time-consuming processes.
Top benefits during tax season:
- Compliance: Helps ensure adherence to tax regulations.
- Efficiency: Enables more reliable work with fewer employees and reduces training on multiple systems.
- Cost Reduction: Limits time spent on manual processes, allowing firms to minimize client fees and focus on higher-value tax advisory.
- Documentation Management: Automatically manages receipt documentation, approvals, and more for quicker tax return turnaround.
- Standardized Workflows: Increases efficiency when all clients are on a standardized tech stack, leading to increased client satisfaction.
- System Integration: Provides at-a-glance views of what's missing or what needs to be done for each client.
Beyond tax season, Your financial operations automation platform can provide historical financial data for major business events like loan applications or audits and help ensure continuous compliance. With real-time data and custom workflows, you can work with your clients to quickly approve payments and prevent year-end bottlenecks.
By embracing proactive habits, leveraging automation, and guiding clients to a consistent tech stack, accounting firms can transform their tax season from a period of high stress to one of efficiency, accuracy, and client satisfaction.
If you’re a BILL customer and want to learn more, send us an email, and we’ll connect you with your account manager.
You can also visit https://www.bill.com/product/1099-filing to read more about automation for AP and 1099s and request a demonstration.
