Tax season preparation: Begin with tax software

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Preplan the tax season with your accounting staff

What to look for in tax season software

Plan tax processes for the year-end close

Test run your tax processes before next tax season

Expedite your tax preparation with tax software

Now that you’ve successfully closed the books on a difficult tax year, it’s time to prepare for the next tax season and a successful year-end close. With the right preparation, you’ll identify any roadblocks that need to be overcome and any errors that should be fixed. Your commitment to evaluating the software you use should make tax season go much more smoothly next time. 

Preplan the tax season with your accounting staff 

As you prepare for the new tax year, you’ll want to conduct a review of last year’s tax close with your staff. The time frame for this preplanning optimally begins in July or August, when you’ll establish and inform your team and begin identifying potential roadblocks. 

Conduct a post-mortem. What worked well last year? What didn’t? Are there easy improvements you can make? Zero in on your tax preparation software, looking at such areas as excessive manual data entry, tax form overrides, and missed regulatory changes. That way your team will avoid making the same mistakes next year. 

What to look for in tax season software

Evaluating tax software is an important task in order to ensure accuracy and efficiency when completing the tax-preparation process. The software should be user-friendly, allowing the staff to quickly and easily navigate the software and enter the necessary data. 

It should also have comprehensive features that enable the staff to complete a wide range of tasks, such as gathering data and documents from clients, automating workpaper preparation, and electronically delivering tax returns, vouchers, and invoices. 

In addition, the software should be secure and reliable, providing the accounting staff with a high level of confidence in the accuracy of the tax returns they submit. 

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Plan tax processes for the year-end close

October is a great month to pick up the pace with planning. You can set key deadlines, validate your users, test your processes, and ensure that your data is clean. With fully tested processes and tax software, you can ensure that your tax filing for clients goes smoothly. To prepare for the testing of your processes, complete these steps: 

Establish year-end close deadlines. Now is the time to strategize and set all target dates for the year-end close. Create a timeline for the peak tax reporting season that includes data submission and filing deadlines for original and corrected tax returns, as well as other key deliverables.  
Finalize all users. Confirm all tax software users on your staff, set them up properly, and review their security profiles. Follow best practices and grant the least privilege required for users to complete their tax duties. Authorized users should then log in to make sure they can review data, upload files, and conduct other digital workflow processes. These double-checks help ensure that you’ll avoid unnecessary IT issues during the heat of tax season that can slow or compromise your progress. 
Review and make changes. Consult with your team on any business changes or other changes and make sure they’re reflected in your tax software. For example, you may need to update source files, fine-tune file layouts, or add new form types. In addition, if you use custom forms, you’ll want to review them for accuracy. 

Test run your tax processes before next tax season 

Now that you’ve set a solid foundation, you’ll want to test your processes to make sure they function as intended when tax deadlines draw near. Follow these steps to perform your test run: 

Rollover relevant data. Before testing, rollover any data that is still relevant in the new tax year.  
Update your preferences. Update or add information such as statement messages, payer information, information about deliverables, custom documents, and any file transfer protocols. Verifying addresses is particularly important because so many businesses have moved or shuttered offices due to the pandemic. 
Transfer data files. To prepare for your test run, transfer and import your data files and then check all of your mapping coordinates, comparing default values against sample files and making any necessary changes. Be sure to sample data for every single map and every single position in each of your data files. 
Review reconciliation reports. After importing your files, you should review reconciliation reports to validate your data, no matter how clean you think that data is. Forms can fail due to missing taxpayer identification number (TIN) data, ZIP codes, and other information. In addition, formatting requirements, such as those required by IRS Form 1042-S, may cause errors. Communicate your findings of common errors back to your team so that contributors don’t make them at tax time. 
Do a final test run. After you’ve cleaned up all errors, do a final test run to ensure that all forms will be accepted. You’ll want to do a draft print job on a sample of your forms to make sure TIN data is masked, that other information is presented correctly and that forms include all relevant information, including inserts. 

With this advanced preparation and the right tax software, resources, and support from a trusted partner, you’ll be able to build on the lessons learned from an extraordinary tax year and be ready for a smooth year-end close next season. 

Expedite your tax preparation with tax software

Ready to make a change? Automate your workpaper preparation and eliminate data entry with a scan-and-populate solution that automates 4-7x as many documents as the alternatives and exports data directly to Thomson Reuters UltraTax CS®. Experience a full end-to-end process that both your staff and clients will love.  

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