2011 Review of Professional Tax Systems (Traditional Workflow)

Maximize Your Tax Prep Efficiency: It’s All About Workflow

From the April/May 2011 Issue

Congratulations on what was hopefully a successful busy season. While you may be thinking about a well-deserved vacation, now is the best time to evaluate how your tax compliance software and workflow processes actually worked. Professional tax compliance has become about much more than just finding a program that offers the right forms and can crunch the numbers; most of the programs on the market are competent at these base elements.

Increasingly important are the workflow patterns and systems for handling client engagements, from first meeting (sometimes even before, in terms of new business outreach) through potential extensions and final filings, as well as proactive planning for future years. And there’s no better time to determine where your firm could be more productive than immediately on the heels of busy season.

As with last year’s review of professional tax compliance systems, we’ve separated the dozen or so major tax packages into two groups: Traditional Workflow and Advanced Workflow (available at www.CPAPracticeAdvisor.com/10254662. This is not a reflection on the size or even necessarily the complexity level of clients, but rather on how firms work internally. In “traditional” practices, nearly all of an engagement is handled by a single preparer. Although there may be an administrative person at the front end (scanning, handling primary basic data entry, etc.) and a manager/partner reviewing the return at the end of the engagement, for the most part the engagement is owned by a single professional who guides all client communication, information gathering, data input and processing. This typically takes place in a single interview with the client, and is the most typical firm workflow method for high-volume 1040 practices with anywhere from one to 10 or more staff, and is how most tax packages are designed.

“Advanced Workflow” programs are typically used at firms where several staff may work on a series of returns for an entity, while also offering support for the most complex tax situations. Click here to see the 2011 review of those programs.

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While workflow complexity is an important factor, even traditional practices can significantly increase efficiency through many of the major advancements of the past few years. Foremost is automated “scan and populate” systems that can pull data directly from client tax documents. For firms with clients who have only a couple W-2s, a 1099 and a mortgage statement, this may only help minimally, but for those with increasingly document-heavy clients with multiple K-1s, 1099s, 1098s and brokerage statements, it can reduce data entry significantly, while helping to enforce a firm’s document storage and management standards, especially when document scanning is one of the first steps in an engagement.

Another feature that reduces data entry is direct integration with financial institutions, which with the client’s permission, allows the tax professional to pull their interest and mortgage statements directly from their banks and brokerage houses. It’s only in a couple tax systems so far, but this all-digital approach is even more paperless, since nothing even needs to be scanned. And yet another technology — client portals — is helping to improve client service and reduce admin time by letting clients access their own returns and other financial data, without taking staff time, and allowing the same staff to perform more, or more profitable, engagements. Other productivity-boosting features such as electronic tax organizers, built-in e-mail, text messaging, client refund alerts and integration with other programs, are helping to make tax engagements more efficient and tax firms more successful.