January into April is the most stressful time of year for most accountants and bookkeepers in the U.S. and Canada. Whether you’re managing internal accounts for your company or providing accounting services to business and individual clients, it can be tough to stay on top of everything. With some forward planning, account automation and the right tools, however, you can take control during tax season.
That starts with managing your clients — asking for what you need, setting expectations and ensuring they provide you with good quality financial and bookkeeping information. The way you collect data matters, too. Juggling multiple Excel spreadsheets, paper forms, PDFs, emails and receipts is a surefire way to pile on the stress.
Accounting automation can help, by rationalizing the data you need, getting it all into a similar format, and sharing it with your team. From there, it’s relatively simple to plug everything into your accounting software, check all the information, run the calculations, create reports and file the tax return.
Let’s explore five key tactics you can adopt to ensure you are in full command of busy season
1. Balance Your Staff Against How Many Clients You Have
It’s easy for accountants to take on lots of clients only to be overwhelmed by tax season. Before tax season arrives, carefully review your staffing levels and ensure you have enough experts in place to meet client needs.
If you’re going to be short-staffed, consider building out your team or outsourcing work during the busy season. Try not to overburden your current staff members — burnout can be a real problem for bookkeepers and accountants, which can lead to mistakes and inaccurate returns — not to mention problems with staff retention.
It’s helpful to review your client list, too, and estimate roughly how much time you’ll need to spend on each one. Clients with a good handle on their own bookkeeping and reconciliation will be much faster and easier to deal with than those who drop a shoebox of receipts on your desk.
This is also a good time to review client bookkeeping systems, so you have an overview of their general ledger and other software.
2. Review Tax Law Requirements and Changes Prior to Tax Season
The tax code is changing constantly, and it can be difficult to keep up. It’s worth spending some time reminding yourself of changes before tax season — so you’re not having to double-check new requirements while you’re working on tax returns. Collaborate with other partners and team members to train everyone on rules changes, and create quick-reference guides for at-a-glance updates.
3. Clearly Communicate Accounting Requirements to Your Clients
Taking the lead on client communications means you can get the bookkeeping and accounting information you need, when you need it. Start early — late December and early January are ideal times to remind clients to think about the approaching end of the current tax year and prepare to file their taxes.
Provide them with a list of the information and reports you’ll need between February and March so you can get a head start on their tax preparations. Sending out a checklist of the information you need means clients can focus on getting the details together, meaning less of a rush at tax time.
Here are some areas to ask about:
Helpful Information Requests from Individual Taxpayers
- Social Security Numbers and information
- Information from their retirement provider on any contributions they’ve made to retirement accounts, whether individual, through a 401(K), or via other means
- Information from their broker if they’re putting money into non-retirement investments
- Details of other income, for example, through rental properties, interest payments or other means, as reported on 1099 forms (in the U.S.)
- Tax deduction documents, like mortgage or student loan interest
- Any relevant expenses, especially if they’re itemizing deductions
- The amounts of any estimated taxes they’ve paid
- A copy of their W2 pay and any other income streams
- Information that may affect their filing or tax credits, such as their family status, health insurance contributions and similar
Helpful Information Requests from Small Business Taxpayers
- Employer Identification Numbers and other business information
- A profit and loss report for the year, together with expense categories
- A balance sheet for the year that lists all of their assets
- A depreciation schedule, together with assets
- The payroll report for the year
- Details of costs of goods sold
- Details of any provincial, state, federal and sales taxes already paid, whether through payroll, extra withholding, estimated taxes or other means
- Total income and any (in the U.S.) 1099-NEC or other 1099 forms they have received that show income
- Details of any changes in ownership or business structure
- Information on money taken out of the business as salary, drawings or distributions
- Any other information you believe is relevant
4. Assist Small Business Clients with End-of-year Reconciliation and Closedown
Stressful clients lead to stressful accounting and tax returns. That’s why it’s helpful to work with your small business clients at the end of the year to help them get everything in order. Here are some of the areas where you can assist:
- Ensuring all income, expenses and receipts for the year are entered into the bookkeeping system and reconciled against bank account transactions
- Reviewing payroll and distribution amounts and recommending final, EOY payments to business owners
- Going through their profit and loss report to ensure they’re claiming all of the expenses they’re entitled to
- Understanding retirement contributions and helping owners take advantage of contribution limits each year
This approach builds trust with clients. It shows you’re proactively helping them to manage business finances, and getting their books into better shape for year-end reporting. It’s a win-win.
5. Request Bookkeeping and Accounting Information in a Specific Way
You can save yourself an enormous amount of hassle by collecting financial and accounting information in a clear, concise and consistent way. This will reduce manual errors and centralize your financial data and reports for specific clients. Having everything at your fingertips makes tax preparation and filing a breeze.
“Come up with a system and use available technology to have an all-in-one place for these documents and requests to help you stay organized and on track. You can use tax preparation questionnaires that have tax planning questions embedded so you can prepare two services at once and this will also help you with your off-season workload. The more you can automate data collection and deliverable creation, the more quickly you can service clients and increase your firm’s revenue. So focus on innovation, which will in turn reduce time spent per return.” — 7 Tips to Preventing Tax Season Burnout, CPA Practice Advisor
One of the most powerful ways to achieve this is through using specialized accounting workflow software like Caseware Working Papers. Here’s how it works:
- Set up a collection of documents that you can request from each client. You might create a standardized document set for each client type, and then tweak it based on unique needs from individual clients.
- Send out requests to clients and they can upload documents, general ledger information, spreadsheets, tax forms and other data directly into Working Papers.
- Track the status of each client and where they are with providing financial information. You can send reminders and updates so everything is ready for accounting season.
- Easily import and export information from documents, spreadsheets and other files directly into your tax preparation software.
- Map financial data from client outputs, tax forms and other information directly into your systems, allowing for the easy creation of finance, accounting and tax reports.
- Drill down into the details of specific transactions and information to provide a deep understanding of client data.
- Store and manage all of your client financial data and supporting information in one secure location.
- Accurately capture every piece of client financial information you need to confidently complete, review and file tax returns.
Working Papers isn’t limited to tax season, either. It’s also a great financial reporting software tool for managing audits, tracking information and agreements, and pulling out the information you need, right now.
You can also assign complex client work across multiple teammates using Caseware’s SmartSync. This creates one view of the truth — a centralized collection of client documents, updated in real time, to allow for effortless collaboration.
The right preparation, combined with effective client communications and powerful accounting workflow software, will make this key time of year that much easier. The time to start is now. Get in touch with us today and discover how our tools can help take the stress out of busy season.