White paper

Mind the gap: Identifying gaps in your software this tax season

Does your firm have the right tax solutions in place for a successful tax season? That is the question many tax professionals should consider as tax time is the ideal time to identify inefficiencies and gaps that may exist in your current tax software and workflow processes.

In today’s tax environment, advancements in technology, ever-changing tax laws and shifts in client demands are the new norm. Firms that continue to operate on outdated software or software that lacks the functionality needed to effectively serve clients will find it challenging to sustain growth and their competitive edge. Don’t let your firm fall victim.

While busy tax season may not be the ideal time to implement new software, it is an ideal time to flag inefficiencies, as well as gaps in workflow and collaboration among both staff and clients that may exist.

To help firms, this white paper explores what they should look for in tax software to help alleviate common tax season grievances and implementation best practices to consider when switching to new tax software.

Common tax grievances

It’s easy to get caught up in the whirlwind of the busy tax season. However, pausing to take stock of issues hampering your tax practice while they’re fresh in the mind can prove beneficial.

The reality is that too often firms fall victim to the following commonly cited grievances:

  • Staff is spending too much time on time-consuming tasks like repetitive data entry or data clean up.
  • There’s a lack of efficient integration across systems and with many third-party applications.
  • Staff is spending too much time on tax research and keeping pace with legislative changes.
  • The software does not automatically download and install subsequent releases and updates.
  • Clients are not providing all documents or requested documents in a timely manner.
  • Too much time is spent communicating with clients requesting documents.

Now throw into the equation the impacts of the COVID-19 pandemic. In addition to keeping pace with tax industry changes and meeting moving deadlines, tax professionals have found themselves giving more support to their clients — albeit virtually.

According to Thomson Reuters research, the biggest change is the shift to remote work for many tax professionals (20 percent), followed by a reduced number of client meetings (15 percent). COVID-19 has increased reliance on technology and decreased the use of paper (14 percent). (Thomson Reuters, 2021, Insights for Tax Professionals 2021: What Does Success Look like in Our New World?)

Furthermore, 89 percent of tax professionals could identify lasting positive impacts as a result of the pandemic. Forty-one percent talked about greater use of technology, and it becoming an urgent requirement for those who hadn’t sufficiently invested until now. (Thomson Reuters, 2021, Insights for Tax Professionals 2021: What Does Success Look like in Our New World?)

The good news is that having the right technologies in place can resolve many of the grievances tax firms face and enables them to effectively serve clients – whether in the office or remote – into today’s environment.

Alleviating pain points

When looking to alleviate pain points and implement new tax software, it is important to consider a holistic approach and – rather than trying to solve for a single, specific pain point – establishing a technology ecosystem. This helps ensure that everything is integrated, and that every step of the workflow and every application complements each other.

As outlined in the Thomson Reuters white paper, “How firms are transforming tax season complexities into opportunity,” it is important to consider a cloud-native platform (i.e., designed and built in a cloud infrastructure) that provides a comprehensive solution to fulfill your firm’s tax compliance and management needs. Having a single source of truth across all integrated applications will help your firm improve efficiencies, increase profitability, and better collaborate with clients from anywhere at any time.

As outlined in the white paper, features to consider when looking for an integrated platform include:

  • Enables easy collaboration between staff and the client to request and review documents and approval tasks, plus provides secure eSignature and online bill pay capability.
  • Creates a customizable folder system to manage documents with full text search and document annotations options.
  • Provides visibility into firm projects and staff assignments to drive productivity and confidence with the client.
  • Provides in-the-moment decision support to your clients.
  • Helps advise clients on tax scenarios to plan for the upcoming tax year.
  • Links to research and guidance tools to provide tailored advice. More specifically, it provides line finder integration with your tax research platform and automatically navigates from the return to the appropriate research area.

Thomson Reuters, 2021, How Firms Are Transforming Tax Season Complexities into Opportunity

Additional features to consider include, but are not limited to:

  • A user-friendly, central database for staff, clients, and projects that is easy to navigate from a home page and client dashboard.
  • Delivers a client status system to maintain up-to-date statuses on all your clients’ tax returns at any time and track the progress of any event, such as opening, closing, and importing data.
  • A deep, integrated workflow system that enables your firm to move to one-time data entry or even zero-time data entry. For instance, K-1 information automatically flows into the partners’, shareholders’ or beneficiaries’ 1040 returns when you produce your 1065, 1120S, or 1041 returns. And multiple client addresses are shared across returns and you’re prompted to select the appropriate address.
  • A secure, two-way client portal to exchange source documents with clients and provide the final tax return when completed.
  • A web client organizer that enables clients to complete their tax information online via your website using a customizable questionnaire. The completed data then seamlessly flows into your tax software without re-keying.
  • Multi-monitor flexibility across up to four separate monitors.
  • Advanced, timely, and dependable e-filing capabilities.
  • Through the use of optical character recognition (OCR) technology, untrained, non-professional staff can scan, verify, and export 1040 source documents into tax returns. This can help save additional time and costs.
  • Delivers streamlined updates so the tax solution updates itself on its own without requiring staff to exit the system in the middle of a busy tax season.

Making the switch

“Change is never painful. Only the resistance to change is painful.”

The thought of implementing new software can be seem daunting and intimidating, but it doesn’t have to be with the right mindset and approach in place.

As outlined by Greene, some helpful tips to keep in mind include:

Determine why a change needs to happen and define your ideal situation. At the high level, instead of thinking how to maintain your existing firm, think about what kind of firm you would build if you didn’t already have one. How would you design a firm from scratch to best serve your clients? From there, then think backwards to determine how you can get from where you are now to where you want your firm to be.

Share your vision with everyone in the firm. Ensure staff that implementing new technology isn’t meant to replace people but rather will help free-up their time, improve efficiencies, and enable them to shift from mundane tasks to providing greater value to clients. Reinforce that change doesn’t have to be scary and encourage staff to ask questions to help ensure they feel like they are part of the process. Going forward, maintain the positive focus on change for both staff and clients.

Introduce champions within the firm. Implementing new software is a major shift that should be broken down into bite-size pieces. Each bite-size piece, whether you call it projects, work streams, etc., should have a champion who will spearhead that particular effort. For example, one staffer could oversee learning best practices related to state and local taxation in the new software, another staffer could be charged with learning research integration, etc. Each champion would then share their learnings and expertise with the rest of the firm. Doing this helps ensure accountability and improves organization and coordination within the firm.

Set a timeline. To help set your firm up for success, be sure to establish timelines, targets and milestones along the way. This helps ensure the initiative stays on track and also demonstrates the progress made as you embark on your journey. To help stay on track and maintain momentum, consider regular updates like a quick 15-minute get together at the start of each day to discuss what is working, what impediments may need to be addressed, etc.

Celebrate achievements. As your firm achieves goals and milestones, celebrate them as a group. Recognize the particular staff closely associated with those efforts and highlight how they contributed to the overall success.

Look ahead. Make sure everyone is aware of what will happen within the firm post-shift. How will roles be impacted? What types of skills do you expect them to develop? How do you expect them to contribute value in the future state of the firm?

Determine the impact on the efficiency and effectiveness of your firm. This means evaluating your staffing needs given the impact of the new technology. Do you need to reallocate resources? Be sure staff has a clear understanding of the impact and why such change is taking place.

Post-implementation. The work does not end with implementation. Once your firm is up and running with the new software, it important to do post-implementation work to identify areas that need to be adjusted and improved upon to ensure long-term success. This means, for instance, doing bi-weekly check-ins with staff to identify any additional process improvements or changes that need to be made. It is also important to measure and track efficiency savings, impacts to the top and bottom lines, etc.

Identify gaps. Identify the gaps within your firm from a personnel and skill set standpoint. Perhaps there’s a need to further expand a specific team, which could mean, for example, increasing headcount in that area and investing in more soft skills, international skills, or the re-skilling of some staff.

Conclusion

Mind the gap this tax season. Set your tax practice up for greater success and profitability by identifying inefficiencies and gaps that may exist in your current software and workflow processes.

In today’s business environment, firms that continue to operate on outdated software or software that lacks the functionality needed to effectively serve clients will find it challenging to sustain growth and their competitive edge. Take steps now to ensure your firm doesn’t fall victim.

Change can be intimidating but the good news is you’re not alone. Turn to a trusted solution provider, like Thomson Reuters, who can help set your tax practice on the path to greater profitability, a sharper competitive edge, and stronger client loyalty.

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