Ten Tools for Tax Document Automation

When I was approached by the editorial staff at CPA Practice Advisor to write an article on tax document automation, I immediately accepted the assignment. It wasn't until I began to write this that I realized all of the different opportunities that exist for today's tax practitioner to automate their tax documents. To help organize the discussion, I thought a practical way to approach it would be to identify the top 10 things to do to automate your tax documents through the four key stages of their life cycle: capturing, processing, storing and disseminating.

Before we begin our review of the 10 steps to tax document automation, I think this provides a good opportunity to answer one of the most frequently asked questions I receive about tax and accounting technology: "Why should I go paperless?" Well this review of tax document automation goes a long way towards answering that question. In order to take advantage of all the automation techniques we are going to review, you have to have your documents converted to a digital format, aka paperless. So keep that in mind as you review these techniques to improve the efficiency of your tax prep process with document automation.

Top 10 Tax Document Automation Tools

#1 – Online Organizer

One of the best ways to automate tax documents is to eliminate handling as many of them as possible. This can be facilitated by making an organizer available to your clients to enter their tax document information online. Assuming you utilize a tax organizer that is an extension of the tax prep software, you can eliminate the need to capture many of the supporting documents into your workflow. For those that you do need to see, work towards having the client scan the documents on their end and upload them through your client portal (#8.) I realize that many practitioners have a hard time getting clients to use the organizers, but I don't think you should give up on this. With the use of web conferencing (#10) and portal technology, the opportunity to enhance the online organizer experience continues to improve.

#2 – Scan & Organize

One of the most time-consuming aspects of getting a tax return prepared is getting all the supporting documents gathered and organized in order to commence with the preparation process. There are a number of "scan and organize" solutions available to automate the tax document scanning process. The nature of these applications is to allow you to create a scanned file of all of a client's 1040 documents without taking any time to organize them. The scan and organize software is designed to automatically recognize the different types of documents: W-2s, 1099s, brokerage statements, K-1s and more. These documents will be sorted in the appropriate sequence to facilitate the tax prep process. The documents will also be bookmarked automatically in a PDF file, which is a real timesaver and provides an excellent opportunity to establish a methodology for organizing the tax documents consistently across your firm. There are scan and sort software applications that you can install on premise, like traditional software applications, or you can subscribe to a web hosted SaaS (software as a service) solution.

#3 – Print to PDF

As mentioned in the introduction, in order to automate your tax documents, you have to get them into a digital format. There are two ways to accomplish this; convert them from paper via scanning process or capture the original documents electronically. The latter is the more efficient approach, and this can be done by using a PDF print driver. If you're not familiar with this concept, this is a special type of printer option that lets you print from any Windows application directly to a PDF format. That means the document originates in PDF format instead of as a paper document. The most popular PDF print driver software is Adobe Acrobat; however, there are many alternative solutions from which to choose. Many document management systems (#7) include a PDF print driver.