If you are like most tax professionals, then your realization rates are being unnecessarily dragged down by the seemingly endless amount of manual data entry required when preparing returns. Since most of this work is packed into a few months out of the year, working long hours and weekends is simply unavoidable. But what if you could eliminate the need to manually enter most, if not all, of this data?
As technology continuously advances, firms should evaluate the options available to improve their practice. Automation is top of mind at nearly every technology company, which is rapidly advancing the ability to prepare tax returns with little to no manual data entry. Here are the areas on which the most progressive firms are focusing:
- Data collection – How do you currently gather information from your clients? Using tax questionnaires or web organizers that are event-driven and mobile-friendly result in exponentially higher completion rates. Taxpayers appreciate the flexibility of completing these online and that they only need to answer questions relevant to them. Using tools that integrate with your tax solution avoids the need to manually transfer any of this information.
- Data extraction – How much time do you spend transferring information from IRS source documents to your tax solution? Several robust scan and populate solutions are available today that use Oculus Character Recognition (OCR) technology to extract information from structured source documents like W-2s. Options that integrate with your tax solution, as well as document management systems, allow for the scanning, organizing, reviewing, and populating of this information while minimizing the number of manual steps involved.
- Standardization – How much time do you spend transferring information from Microsoft® Excel to your tax solution? Implementing standard formatting for information using workpaper management programs or Excel templates provides a means of transferring information from unstructured sources into tax software quickly and easily using existing import options. This extends beyond the most common items such as asset detail to include importing all federal and state information for any number of K-1s using a single Excel file. Some tax software even provides the ability to import information from an Excel file into any input field.
- Integration – How often do you find yourself re-keying information from one program or database to another? Using solutions that speak to each other, whether in a suite of products or using application programming interfaces (API’s), does not necessarily help eliminate manual data entry but does eliminate the need to re-key information. Re-keying items such as client information and K-1 data can eat up large amounts of time during the least opportune times. This is avoided when using programs with integration capabilities.
Some may think these options sound too good to be true. Although each of these serve as great opportunities, they also represent sizable investments in the form of time and/or money. Most success stories of eliminating manual data entry from the tax preparation process involve careful, well thought out transition plans beginning with lean experimentation. It is possible to automate most of the tax preparation process, but not without a strategy for sustainable progress instead of moving too quickly.
Need help finding the right tax preparation tools to automate your processes? Let us help.