Toward a (More) Paperless Tax Practice

Nearly all CPA firms prepare tax returns electronically. However, many still also use some old-fashioned methods, such as sending out tax organizers manually. Here are tips to more fully realize what it means to go paperless.

First, understand and share the goal: A more efficient, digital tax process can help firms provide a better work/life balance for employees, giving them more control over when, where and how they work. Empowering employees to work more productively can also yield marked improvements in retention, client service and profitability.

Converting to electronic versions of all major tax practice functions may not seem substantially different from what your firm is doing now. However, the real savings are in time not spent deciphering handwriting, searching for files, determining the status of a return at any given time, and responding to staff and client questions at various stages.

The first and most crucial element of success is selecting your internal champions—the individuals or team tasked with executing the plan. The team should include members with various roles instrumental to your tax process who possess a clear understanding of the goals, are committed to the project’s success, and have the authority to move ahead.

Once your team is in place, the next step is to take inventory of all your existing technology investments. Most firms have already made some investments—tax software, Adobe Acrobat Pro, e-mail, mobile devices, etc. Next, catalog all your existing procedures, documenting how your firm uses its current technology investments.

In addition to your tools of the trade (tax and workpaper software), which products your firm invests in will vary according to the firm’s size and budget, existing technology investments, project plan and goals, and short- and long-term needs. Essential elements of a digital tax practice include:

Scanner. Options and prices vary widely; a basic, reliable scanner will get you started, and you can upgrade from there (see “Don’t Skimp on Scanners,” JofA, Dec. 09, page 25).

Dual monitors. Good quality flat-screen monitors are fairly inexpensive and are essential to working digitally. You may even decide you need triple monitors after your first digital season.

Workflow management system. In its most basic form, this is a mechanism for moving work from person to person in a digital environment. It should also encompass tracking, due date monitoring, reporting and individual and practice-wide work management (see “Improve Tax Tracking With Automated Workflow,” JofA, Feb. 10, page 18). The underlying workflow in most digital tax practices is:

• Scan incoming client documents and file them digitally.
• Move responsibility using workflow software from receipt of source documents through preparation and shipping or e-filing.
• View scanned source documents on your second monitor to prepare and review the return digitally in your tax software.
• Use remote access to check the status and/or respond to review points from home or in the field.
• Archive the completed return with the source documents in your secure document management or network filing tree.

Document management system. Again, here the options vary widely from a simple Windows Explorer filing tree to a complete, scalable document management system.

Remote access. Web-based “software as a service” products offer this flexibility naturally; however, client-server applications can be easily accessed remotely using Citrix or VPN (virtual private network) technology.

Myriad other products are important, if not essential, technologies to consider: client portals (see “Client Portals: A Secure Alternative to E-Mail,” JofA, Feb. 10, page 36), optical character recognition, paperless engagement, etc. Many firms start simple then add as they refine their processes and identify the need for more robust technologies. Many resources, such as totallypaperless.com, can aid in determining the right technologies for your practice.

Adopting technology is the easy part; adapting your culture and processes to optimize your technology investment is the real challenge. Documenting your existing processes, identifying “better practices,” and standardizing them across your tax practice will help you maximize the benefits of a digital environment.

By Joseph Manzelli, CPA/CITP, (jmanzelli@fuoco.com) director of operations for Fuoco Group LLP in New York City.

To comment on this article or to suggest another article, contact Paul Bonner, senior editor, at pbonner@aicpa.org or 919-402-4434.