How is your practice planning to comply with the IRS mandate that will require all professional tax preparers to file electronically?
While the IRS recently announced that the requirement for all tax-preparers to e-file would be phased in over two years—requiring all preparers who anticipate filing over 100 returns over the year to make the transition by January 1, 2011, and for all providers who anticipate filing 11 or more returns to comply by January 1, 2012—it is clear that the IRS is following its Congressional mandate to make the process of tax filing primarily electronic.
For many tax preparers who have already adopted e-filing, this deadline will pass unnoticed, and may even provide a competitive advantage. For other preparers who have put off adopting, or simply have not seen the need for a digital workflow, this is a crucial time to make long-term strategic decisions about technological adoption and cost management.
If your firm is faced with a need to upgrade its workflow in order to maintain current levels of efficiency while complying with the IRS e-filing regulation, the preferable strategy might be to spend as little as possible until the technology begins to truly benefit the practice.
Increasingly, firms and preparers are meeting this challenge by adopting cloud financial solutions.
One of the best reasons to start doing business in the cloud now is that cloud-based solutions can accommodate a paperless workflow. In this scenario, administrative support staff may scan incoming documents, which are then identified, labeled, and bookmarked by an automated, cloud-based software platform, where the tax preparer can quickly access the information to save valuable time.
“Smart Scanning” has been around for a while. In a recent study, 70 percent of firms reported that they were scanning tax documents. However, while scanning is the first step to a paperless workflow, cloud-based financial solutions, such as Copanion GruntWorx for tax document automation, and XCM for firm-wide tax workflow, help tax-preparers to leverage this practice, making them more efficient during the busy tax season.
Mandatory e-filing means that all tax preparer workflows will end in the digital space, so consider the ROI implications of using cloud financials to implement a streamlined, paperless process for your entire firm. Some of the questions firms should ask are:
- Will adopting a cloud-based workflow solution pay off by increasing productivity; and
- Will choosing more user-friendly solutions mitigate training costs?
As James Bourke, CPA.CITP, of WithumSmith+Brown, puts it, “Before deploying new technologies or replacing existing ones you need to ask yourself, ‘How will this deployment make us a better, more profitable firm, and is this technology aligned with our strategic plan?’”
With conventional, non-cloud-based software solutions, firms must consider not only the cost of the licenses, but also increased IT costs and the “planned obsolescence” model of traditional software, requiring additional large expenditures to upgrade.
Cloud financials, by contrast, are priced on a rolling per-user, per-month basis, with ongoing support, training, and upgrades to the platform included in the Service Level Agreement (SLA).
Some of the benefits of this model are:
- Ease of fitting cloud financials into a tight budget;
- Having new users trained as needed ; and
- Limiting IT expenditures
How is your firm preparing to meet the e-Filing requirement? Is your firm moving to a paperless tax workflow? Let us know by leaving a comment.
In the spring, President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act, more commonly known as the federal “jobs bill.” The cornerstone of the HIRE Act is a federal program that provides employers with incentives to hire and retain certain previously unemployed workers (“qualified employees”), including:
- Payroll Tax Exemption
Employers will be exempt from their portion of Social Security taxes (6.2 percent) for the remaining year—through December 31, 2010—for new hires who had been unemployed for at least 60 days, or who had worked no more than 40 hours total.
- New Hire Retention Credit
Employers can claim a business tax credit of up to $1,000 for each qualified employee who stays on payroll for at least 52 consecutive weeks.
Would you like additional information? View a recent Infocast on this topic.
You can view the recent AICPA Infocast on “The 2010 HIRE Act Understanding the Employer Incentives” to help you understand and take decisive action on the newly required components of HIRE Act and what it means to your firm and your clients.
The Infocast was developed to help you ensure your clients stay in compliance with this new legislation and help you better recognize how your clients can benefit from the key provisions, such as increased tax credits and reduced payroll taxes.
Also visit www.paychex.com/hireact for more information and to calculate the possible savings for your client’s business.
A Special Message from Erik Asgeirsson, President and Chief Executive Officer, CPA2Biz, Inc.
The world of client accounting is changing. New cloud-based technologies are transforming the way CPAs will work and interact with their clients for years to come. These new technologies are increasing the productivity and profitability for many firms. The AICPA Trusted Business AdvisorSM Solutions featured on this web site, including Bill.com, Intacct, and Paychex, are designed to help the CPA community harness the power of these new technologies.
We are excited to announce the launch of CPA2Biz's all-new web site and blog dedicated to new advances in client accounting for the CPA community. Now, on a single web site, you will have access to the latest information on cloud-based technologies, tools, and business programs that will transform the way you do business with clients.
We'll be posting timely articles to this blog that you'll find useful in your day-to-day and long-range business operations. Of course, we want to hear what you think. Please don't hesitate to comment on our posts, ask questions, and share your thoughts and experiences using the new technologies featured on this site, including:
- Intacct: On-demand financial management and accounting tools
- Bill.com: Paperless bill management solutions
- Paychex: Payroll processing, HR, and 401(k) retirement services
- Trusted Business Advisor training and workshops
- Marketing solutions for CPA firms to help you attract and win new business
- And much more.
Over the last year, we have noticed a dramatic change in the rate that accounting firms are adopting these web- or cloud-based technologies. We believe it is extremely important for all firms to understand the positive impact of these changes. In particular, these new web-based tools will improve the standard and quality of services you can provide to your clients, while helping your firm increase productivity and profitability. One result of these new advances in client accounting is that firms, like yours, are in a better position to provide higher level (and more profitable) services to your clients, from budget planning and cash flow analysis to virtual CFO and business advisory services. We want to know what you think. So please share your thoughts here.
From time to time, we also hope to have thought leaders and other experts as guest bloggers. This will be your opportunity to read what these experts are thinking first-hand, as well as to comment on their posts and ask them questions.
Once again, welcome to our new web site and blog dedicated to your client accounting practice. We look forward to seeing you online.
President and Chief Executive Officer, CPA2Biz, Inc.