Small or big, mistakes are a daily part of our life. While some can be harmless, some can result in severe losses and disrupt your everyday life.
This is true for different industries as they strive to enhance their work output by curbing the mistakes made on a daily basis.
The accounting industry, too, has its own share of mistakes, affecting its organizational efficiency. They tend to make common mistakes such as improper data management, lenient administrative protocol, inaccurate job costing, and insufficient data safety.
While these mistakes can drastically affect their performance, they are not entirely unavoidable either. By enacting proper measures, accountants and CPAs can avoid them and enhance productivity.
Here are some of the common mistakes an accountant can avoid during tax season 2021 and improve their performance.
Absence Of Pre-Planned Organizational Procedures
When you run a business, a predetermined procedural layout is necessary for achieving your organizational vision. You must have proper and standardized tax filing policies, handling the customer base, managing the firm's data, and carrying out other routine tasks. Having such plans helps you smoothen your organizational workflow and make you more productive in the longer run.
Accountants and CPAs should also follow formalized workplace procedures and pre-plan different organizational duties to prevent getting overwhelmed by immense workload during the tax season.
For instance, having a routine method for collecting your client's information helps you regulate the collected data and ensure consistency at an organizational level. It also saves both time and money, as you only need to follow a standardized plan of action for calculating and filing taxes.
Taking Data Security For Granted
Do you know that economic damage resulting from the cyber-attacks in 2021 is estimated to be the world's third-largest economy? The ransomware attack on Foxconn, the massive cyber-hack discovered in FireEye, and the recent SolarWinds hack that left the world as a whole reeling, clearly shows the cyber-related threats that many businesses face.
The tax season also involves accountants and firms handling sensitive financial information regularly, the illicit procurement of which can put your clients at tremendous risk and make them susceptible to frauds.
Since CPAs have access to data like credit card numbers, bank account details, social security numbers, and customers’ credentials, it must also have adequate security measures in place.
Firms can either hire professional IT experts for devising a multi-layered and modern security framework or invest in cloud technology. Hosting your accounting and tax data on the cloud provides you with robust security features such as the latest intrusion detection and prevention systems, modern antivirus/anti-malware solutions, multiple firewalls, and the like.
Poor Data Organization
Keeping your data in an unorganized state and then expecting to find it during a critical juncture like the tax season is akin to searching for a needle in a haystack. Accounting firms have to deal with a vast amount of data – they have to manage clients’ credentials, record every transaction, store receipts, and do much more. They must also always have this data readily accessible for quick client reference and rapid response for any customer-related query.
However, most firms either deploy traditional methods for managing their data or are negligent in implementing database handling procedures. This, combined with enormous accounting responsibilities during the tax season 2021, can easily cripple your organizational efficiency and lessen your firm's output.
Thus, every firm must ensure proper data management. You must train your employees to be more organized. Moreover, using the latest cloud accounting solutions to manage your data is also a good practice. This way, they will access the required data when needed.
Inefficient Job Cost Tracking
While an accounting firm helps an organization make sound financial decisions and utilize its resources better, it needs certain measures for its benefits during the tax season. For example, let's take tax calculation and billable hours into account. Accurate time tracking for billing while calculating taxes is the major revenue source for accountants and accounting firms during the tax season.
However, most of the firms commit themselves to the customary methods for tracking job cost and billable hours, which is inherently ineffective and unproductive. This hinders your firm's ability to make precise tax calculations. This is why CPA firms require modern methods for accurately tracking their job costs and curb their financial discrepancy.
You can implement the latest software to track the employees’ performance, monitor the time spent, and earn better revenue during the tax season 2021.
Irregular Data Backups
Imagine waking up one day only to find all your precious data gone, or the data you had stored in your office systems is suddenly unavailable due to an unprecedented disaster. Quite saddening.
Data is an indispensable asset for any industry, especially for the accounting sector. In this modern era, clients need more than traditional accounting services. They want a proactive approach for their business, something which can only be provided if an accounting firm has appropriate analytic tools and sufficient data volume.
However, not taking regular data backups, the absence of centralized data backing procedures is one of the worst yet common mistakes made by multiple CPA firms. This calls for adequate backing up measures, which every firm must adhere to.
An effective way to ensure continuous data backups is to migrate your accounting setup to the cloud and experience guaranteed data availability.
Conclusion
The tax season can be tricky and time-consuming. There is no way to eliminate the risks that accountants make. However, with the right planning and organization of tax data and the use of appropriate technologies, CPAs and accountants can improve their accuracy during the tax season 2021.
