How accounting firms are overcoming challenges with AI

The tax and accounting industry is a complex and demanding field. From managing increased workloads to keeping pace with evolving regulations, the demands often stretch resources and staff to the limit. Rising client expectations and evolving compliance requirements also add to the pressure.

However, amidst these challenges lies an opportunity. By strategically adopting AI-powered solutions, tax and accounting firms can transform these trials and tribulations into avenues for growth, enhanced efficiency, and stronger client relationships.

Overcome challenges and seize opportunities with AI

Every accounting firm has its unique set of challenges and inefficiencies. These pain points can either hinder progress or serve as a catalyst for change. Leveraging the right tools and strategies can transform a firm’s challenges into opportunities for growth. A forward-thinking approach — supported by AI-powered solutions — can help firms of all sizes achieve significant benefits that streamline operations, drive efficiency, and set them up for long-term success.

So, what can AI do for firms? At a high level, AI-powered tools can help tax, accounting, and audit professionals increase efficiency, mitigate risk, and provide premium client services. Firms can reduce the time spent on data entry, document processing, and tax research, thus streamlining workflow and increasing productivity.

Optimizing the tax planning and preparation process allows accountants to shift their focus to higher-value work such as tax planning and client advisory services. So, AI not only simplifies firm operations, saves time, and reduces workload for tax preparers but also strengthens employee morale during what is traditionally the most demanding time of the year.

All that said, the adoption of AI solutions is still relatively low at most tax and accounting firms, according to the 2024 State of Tax Professionals Report. Fewer than one-quarter (24%) of respondents said their firms use AI at all, and among those that do, the most common usage was for research. This gap presents a unique opportunity for forward-thinking firms to gain a competitive advantage. Becoming an early adopter of AI-powered tax technology lets your firm address long-standing pain points and reimagine your approach to the busiest time of the year.

Let’s take a look at how harnessing technology gives your firm a competitive advantage and can turn the challenges into transformative opportunities.

Keeping pace with regulatory changes and compliance

Navigating ever-changing tax legislation is a time-intensive challenge, especially for firms operating with limited staff and resources. The pressure only intensifies during tax season as the volume of client questions surges. In such a high-stakes environment, having a reliable, efficient tax research solution at your fingertips isn’t just helpful — it’s essential for maintaining accuracy, meeting deadlines, and delivering exceptional client service.

While popular, turning to publicly available generative AI (GenAI) platforms like ChatGPT that pull data from across the internet is not the answer. This is a risky, time-consuming practice that can lead to unverified answers, reputational damage, and tax penalties for your firm or clients.

Furthermore, even if your staff relies on a trusted source like IRS.gov or a state website for information, it still presents inefficiencies because they must apply that information to the specific situation their client is facing. Plus, guidance on these sites can sometimes be difficult to fully understand.

However, with an agentic AI solution designed by accountants, for accountants, workflow is simplified by automating routine tasks, including tax research. This enables staff to focus on high-value, strategic activities that drive growth and success.

Accelerate your tax and advisory practices with CoCounsel Tax, an end-to-end platform using agentic AI designed to streamline workflows, improve accuracy, and enhance productivity.

So how does it work? Agentic AI combines advanced AI-powered automation with seamless integration into your workflows. Ask questions in plain language and receive verified plain-language answers. With embedded citations, customizable tools, and enhanced collaboration features, agentic AI transforms how your firm manages knowledge, supports decision-making, and delivers results.

Checkpoint Edge is included with your subscription to CoCounsel Tax. With Checkpoint, customers can access trusted content and editorial enhancements that can help them work smarter, more efficiently, and with total confidence. CoCounsel is the latest innovation in Checkpoint’s long legacy of transforming tax, accounting, and auditing research technology.

AI solutions can also strengthen your advisory services offered to clients by providing data-driven insights that simulate various tax scenarios, assess risks, and suggest optimal filing strategies based on current laws. This empowers your firm to move beyond compliance work and position yourself as a trusted advisor, delivering personalized, higher-value services to your clients.

Meeting increasing client demands

Firms today are under increasing pressure to deliver value to their clients. With higher expectations, firms must adopt strategies that streamline operations, foster client engagement, and provide tailored insights.

While most firms agree client responsiveness is a top priority, the significant jump in client inquiries during tax season can be overwhelming. Did you know taking a five-minute “quick question” call from a client can result in a significant loss in productivity? With an average of 60 distractions per workday, research shows U.S. businesses lose an estimated $650 billion because of distractions annually — and accounting firms can’t afford to be one of them.

Help accounting firms increase value and implement workflows that minimize disruptions with Practice Forward.  Adopting proactive planning and communication strategies, such as scheduling regular advisory meetings or automating responses to common client inquiries, minimizes disruptions and empowers your staff to focus on higher-value work. Tools like engagement letters and predefined client agreements help set expectations about the nature of advisory services, thus eliminating ad hoc requests that decrease productivity.

By creating consistent touchpoints — like quarterly advisory meetings, financial health check-ins, or tax strategy sessions — your firm can establish itself as an indispensable partner in your clients’ financial success. This deeper engagement builds trust and increases client retention and satisfaction by shifting the focus from once-a-year, transactional interactions to year-round, client-centric relationships.

Transitioning to a value-based business model means aligning pricing with the benefits delivered to your clients. Instead of billing by the hour, firms that adopt Practice Forward are creating service packages tailored to their client needs. Imagine offering a year-round tax planning and advisory bundle. You’ll not only generate predictable income but also open new revenue streams in addition to preparing taxes.

When it comes to offering your clients personalized data analysis and insights, AI-powered tax technology can sift through large data sets and generate valuable reports and forecasts. This forward-looking, data-driven advice supports better decision-making and proactive planning for clients, helping you not only meet but exceed their expectations.

Managing data effectively

Efficient data management is a cornerstone of successful tax preparation and compliance. When handling large volumes of client data, firms need a digital document management system that simplifies the collection, storage, and retrieval of financial records. Doing so reduces the risk of misplaced or incomplete documents and improves collaboration across teams.

With increasing client expectations and evolving regulatory requirements, accountants must adopt tools and systems that simplify workflows and reduce the risk of errors. A robust system for managing documents ensures your staff can focus on analyzing data and identifying opportunities for their clients instead of chasing down missing files.

Spreadsheet software, document management systems, tax research platforms, and client communication tools are the most common technologies used within the tax practice.

However, even with this level of technology at their fingertips, nearly half of all accounting firms say they spend too much time gathering client inputs and preparing tax returns.

Clearly, a better workflow is needed.

Allowing clients to upload tax documents directly streamlines the data-gathering phase and minimizes back-and-forth communication with clients. Integrated AI solutions can then scan, categorize, and import tax data directly into your 1040 workflow.

Such is the power of SurePrep 1040SCAN, which not only enhances compliance but also addresses one of the most common bottlenecks in tax workflows — delayed client responses. According to a 2022 Thomson Reuters Live Poll Event, 62% of practitioners reported missing a deadline due to slow client responses.

SurePrep helps mitigate this risk by improving document tracking and ensuring deadlines are met. With its advanced automation features, SurePrep 1040SCAN streamlines the process of extracting, categorizing, and verifying information from client documents. This ability ensures greater accuracy while significantly reducing the time spent on manual data entry.

Direct integration into UltraTax CS eliminates the inefficiencies of repetitive data entry. This reduces the chances of manual errors and saves valuable time during tax season and all year round. UltraTax centralizes client document management and integrates seamlessly with other tools, ensuring accuracy, timeliness, and increased productivity.

Combining tools like UltraTax CS and SurePrep 1040SCAN empowers firms to build a streamlined, secure, and accurate data-management system. These solutions enable staff to address common challenges, such as repetitive data entry and document tracking while maintaining high standards of compliance. As a result, firms can allocate more time to advisory services and client engagement, positioning themselves as trusted partners in their clients’ financial success.

In an industry where efficiency and accuracy are paramount, adopting advanced data management solutions is no longer optional — it’s essential for staying competitive.

Addressing staffing challenges

Recruiting and retaining top talent continues to be a significant challenge for accounting firms. High-pressure environments and repetitive tasks often lead to burnout, so firms must find ways to create a more engaging and rewarding workplace.

Investing in technology that alleviates workload and enhances job satisfaction can make a substantial difference in attracting and retaining skilled professionals.

Automation plays a crucial role in reducing stress by eliminating repetitive, time-consuming tasks and allowing staff to focus on higher-value work. Tools like UltraTax CS automate workflows, streamline processes, and enable teams to handle more complex or strategic tasks. Reducing manual effort increases efficiency and improves job satisfaction, making roles within the firm more appealing to current and prospective employees.

Technology investments alone, however, are not enough. Today’s professionals are looking for workplaces where leaders genuinely care about their well-being and actively promote harmony between work and life. According to research from Thomson Reuters, 85% of new practitioners ranked work-life balance as a top priority when choosing an employer.

To meet this expectation, firms must embrace solutions that automate processes, enhance efficiency, and improve collaboration among staff and clients. These tools allow employees to work smarter, not harder, creating opportunities to achieve the work-life balance they value most.

According to more Thomson Reuters research, new practitioners report working an average of 46.1 hours per week — the highest among all surveyed groups, including business leaders (48.6%) and employees at non-accounting firms (48.1%). However, respondents expressed a desire to reduce their workweek to an average of 40.6 hours — approximately 12% less. Interestingly, practitioners at smaller accounting firms with fewer than 30 accountants were the most likely (62%) to prefer working fewer than 40 hours a week.

Integrating automation and AI offers a practical path toward recruiting and retaining quality staff — and reducing burnout during the hustle and bustle of tax season.

The Future of Professionals Report 2024 found AI could save up to four hours of work per week within the next year, equating to roughly 200 extra hours annually. Professionals could redirect this time savings toward fostering the work-life balance professionals crave.

Additionally, AI-powered solutions can help address stress and burnout, particularly during high-pressure periods like tax season. Firms are increasingly taking notice, with 49% of professionals surveyed in the 2024 State of the Tax Professionals Report planning to increase automation to reduce workload and bridge talent gaps. Tools like UltraTax CS and SurePrep help firms manage workload spikes effectively, ensuring accuracy while reducing stress for staff.

Beyond automation, AI enables firms to refocus hiring efforts on candidates with skills in communication, collaboration, creativity, and critical thinking — qualities essential for building strong client relationships and cultivating a collaborative work environment.

These “soft skills” are particularly valuable in hybrid and remote settings, where effective communication and teamwork are critical. Firms can refine their hiring practices by incorporating behavioral interviews, skills assessments, and constructive feedback to identify candidates who excel in these areas.

Leveraging automation helps create a workplace culture that attracts top talent and empowers staff to thrive personally and professionally. 

The importance of robust training and implementation

Despite a growing emphasis on technology, many firms still lack the proper training and implementation strategy to successfully integrate AI-powered tax technology. While many firms consider themselves proactive adopters, only about half have a dedicated leader overseeing their technology strategy, according to the “2024 tax firm technology report.”

The survey also revealed a gap in technology proficiency among staff. Most respondents felt their teams were only somewhat competent with technology, and just 25% reported using key metrics to track technology success. This misalignment has led to widespread dissatisfaction with existing tech stacks as firms struggle to bridge the gap between technology’s potential and its practical implementation.

While many respondents acknowledge GenAI will play a role in the future of tax work, firms remain uncertain about how to implement these tools effectively. Some early adopters have already begun integrating GenAI. However, the complexity of these technologies requires a strong foundation of data integration and a clear understanding of how AI generates its outputs.

“Software instruction is passed on from prior or existing personnel, so updated or new or different ways of doing things sometimes gets overlooked,” says one respondent from a large U.S. tax firm. “We do not do training for how to better use software, versus just new changes from the software developer for a particular year.”

Without consistent training, professionals often struggle to optimize workflows, which can lead to inefficiencies and frustration. Regular and comprehensive training is critical to ensuring professionals can fully leverage AI-powered tools and feel confident doing so. Firms that provide frequent technology training report higher productivity and employee satisfaction.

A trusted tax technology provider like Thomson Reuters plays a crucial role in helping accounting firms successfully implement AI-powered tax technology while ensuring staff are well-equipped to use these tools effectively. With deep industry expertise and cutting-edge solutions, Thomson Reuters provides firms with AI-driven tax research, automation, and compliance tools that seamlessly integrate into existing workflows.

Beyond technology, comprehensive training and ongoing support maximize the benefits of AI adoption.

Thomson Reuters offers expert-led training, real-time guidance, and continuous updates to keep firms ahead of evolving tax regulations and industry trends. Equipping staff with the skills to use AI-powered tax technology effectively empowers them with confidence and capability in their roles, contributing to long-term job satisfaction. According to the tax firm technology report, employees who feel supported by technology and training are more likely to stay with their firms, reducing turnover and fostering a more stable, skilled workforce.

Ultimately, technology and training together offer a powerful solution. Focusing on reducing workload stress and professional development creates an environment that attracts top talent, improves employee retention, and ensures long-term success in a competitive industry.

Navigating AI adoption with confidence

Adopting AI-powered technology can transform tax and accounting firms, but success requires careful evaluation. When assessing new AI solutions, firms should consider:

1. Seamless integration. Ensure the technology integrates smoothly with your firm’s existing systems and workflows. Compatibility minimizes disruptions and allows staff to transition efficiently.
2. Scalability for growth. Growth your firm smoothly with AI solutions that handle increased workloads without compromising performance. 
3. Vendor reliability and support. Choose a technology provider with a strong reputation and a commitment to ongoing support, training, and updates. Doing so ensures your firm remains compliant with evolving tax regulations and industry standards.
4. Return on investment (ROI). Evaluate the full cost of implementation — including software, training, and maintenance — against projected efficiency gains, cost savings, and improved client service.

While AI enhances efficiency and enables firms to deliver more personalized services, technology must be implemented with an emphasis on human connection. Building trust and maintaining strong client relationships remains central to success in an AI-driven future.

Best practices for firms implementing AI

Implementing AI during tax season may seem like an overwhelming challenge, but these solutions can provide immediate relief when firms need it most. While some may hesitate to introduce new tools during their busiest period, AI can streamline processes, reduce manual effort, and enhance overall efficiency without disruption. Instead of viewing tax season as a time of stress and overload, firms can leverage AI to transform the way they work.

Beyond efficiency gains, AI also elevates the quality of client service. Automated tools can quickly analyze vast amounts of data, flag potential errors, and ensure compliance with the latest tax regulations. This reduces the risk of costly mistakes and gives clients greater confidence in their tax filings.

For firms concerned about making changes during their busiest period, starting with small, incremental AI implementations can be an effective strategy. Deploying AI in targeted areas — such as tax research, compliance checks, or client communication — allows firms to experience the benefits without overhauling their entire workflow. These early successes can then serve as a roadmap for broader AI adoption across the firm.

Embracing AI enhances your firm’s efficiency and improves client relationships through faster, more informed decision-making. With AI handling the complexities of tax law interpretation, your staff can focus on providing personalized, strategic advice — ensuring clients stay ahead in an increasingly complex regulatory landscape.

Rather than waiting until the off-season to adopt new technologies, firms that implement AI during tax season can see immediate benefits. AI solutions are designed for seamless integration, meaning they can complement existing workflows. Many AI-driven tax tools come with user-friendly interfaces and require minimal training, ensuring professionals can start reaping the benefits quickly.

Moreover, implementing AI now helps future-proof operations. As tax laws evolve and client expectations continue to rise, firms that invest in AI today will better position themselves to adapt and compete in the years ahead. Embracing AI during tax season can build a foundation for continuous improvement, ensuring long-term efficiency and success.

Fostering a culture of continuous learning

Accounting firms must prioritize a culture of learning and development to remain competitive and retain top talent in an ever-changing professional landscape. A forward-thinking approach that integrates career development with the adoption of modern technology is essential for long-term success.

To attract and retain top professionals, firms must offer robust career progression opportunities. They must also align learning and development programs with current industry standards and technologies. These programs not only keep employees engaged but also equip them with the tools to meet the dynamic demands of the profession.

New professionals place a high value on long-term job stability and opportunities for professional growth. According to Thomson Reuters research on keeping staff happy, 75% of new practitioners cite long-term job stability as a top career goal. Firms that actively demonstrate a commitment to helping employees achieve their aspirations stand a better chance of attracting and retaining top talent in an increasingly competitive job market.

Technology, particularly AI-powered tools, can play a key role in fostering staff development and improving efficiency. For instance, implementing advanced tax research tools enables firms to reduce the time spent on manual research while empowering newer staff members to find solutions independently. Tools with intuitive search capabilities, predictive insights, and cutting-edge AI technology allow employees to work more efficiently and focus on higher-value tasks.

The bottom line is this — technology alone is not enough. Firms must also rethink their approach to professional learning. Comprehensive training programs that embrace blended learning formats give employees the flexibility to upskill on their own terms. This can involve options such as in-house sessions, webinars, conferences, and online self-study. These programs ensure teams stay competitive and knowledgeable while working to achieve their career goals.

Transform challenges into opportunities with AI

Tax season will always be a challenging time, but it also presents an opportunity for growth and innovation. Adopting AI-powered tools and strategies lets firms tackle the immediate challenges and set themselves up for long-term success. Becoming an early adopter of AI technology can transform how your firm operates, enabling you to deliver exceptional client service, improve efficiency, and drive sustainable growth throughout the year.

A trusted leader in tax and accounting technology, Thomson Reuters offers AI-powered solutions designed specifically for professional firms. With a deep understanding of industry challenges and evolving regulations, Thomson Reuters provides the tools, training, and expert guidance needed to integrate AI seamlessly into your firm’s operations. Partnering with a proven technology provider to confidently navigate AI adoption, ensuring long-term success and a competitive edge in the marketplace.

Solutions like SurePrep 1040SCAN, Practice Forward, CoCounsel Tax, and UltraTax CS provide a foundation for enhanced efficiency, accuracy, and client relationships. Firms ready to adapt and leverage these technologies will position themselves for long-term success.

The immediate benefits — reduced workload, improved accuracy, and enhanced client service — demonstrate that the right AI tools can be a game-changer for tax professionals. The long-term benefits echo far beyond a single tax season as the shift in both mindset and culture set the stage for transformative growth and continuous learning.

Are you ready to embrace AI and make tax season more manageable, efficient, and productive? Leverage AI-powered solutions to turn tax season problems into an opportunity for transformation rather than a period of stress.

AI-powered solutions from Thomson Reuters

Time-saving tools like UltraTax CS automate your entire tax workflow. By seamlessly integrating with other Thomson Reuters solutions, including CS Professional  Suite, SurePrep 1040SCAN, and SPBinder, you’ll never lose any billable hours to manual processing. This capability is thanks to a customized end-to-end solution built on cloud computing, advanced data sharing, and paperless processing.

Be confident your research is accurate and complete while finishing your work faster than ever before with CoCounsel Tax. Revolutionize processes with AI-driven automation that transforms how tax professionals handle their entire workflow — from research to document analysis to process automation.

Shift your firm from a compliance-focused model to a lucrative advisory services approach with Practice Forward. Engage and sustain clients with trusted methodology, guidance, and content solutions.

Through your Practice Forward implementation, you have access to over 160 tools — including proposal templates, pricing calculators, and checklists — all paired with personalized consulting.