Small Businesses Can Improve Profitability with a Digital Tax Workflow

Digital tax workflows will be the norm more than the exception going forward. Businesses that do not capitalize on technology for their accounting risk becoming obsolete for potential clients, particularly those who conduct business primarily in the cloud or in a virtual set-up. Additionally, switching to digital accounting methods not only allows better alignment with clients’ systems, but also improves reliability and accuracy of accounts for businesses themselves.

Here are some challenges that small businesses encounter regularly in a manual tax workflow and which often prove to be difficult to overcome:

• Glaring gaps in financial records: Unaccounted income or expense figures arise because transactions are unintentionally omitted from books and receipts, invoices, etc. are misplaced.
• Data entry can be unreliable: Small businesses typically lack dedicated resources for data entry and often end up struggling with incorrect entries that may need a lot of back and forth when tax time approaches.
• Misjudged calculations: For tax season to be smooth, income and expense calculations must be accurate. However, these can only be correct if the other accounting basics referenced above are adhered to.

How Does Having A Digital Tax Flow Help The Above?

Here are some solutions to those challenges:

• Ensuring gaps in record keeping are minimized: Effective and hassle-free tax filing is a direct result of how well records of business transactions are preserved. Digital tax workflow ensures all transactions, however minor, are recorded to be presented as relevant proof when needed.
• Ensure reliability in data entry: Data needed for tax filing should be accurate to begin with. Digital workflows are designed such that the data entry operations are not manual, and therefore they are more reliable.
• Accuracy in calculations: Tax calculations are based on a number of complex factors, key among those being how accurately income and expense calculations are made. These, in turn, are also influenced by the business type and exemptions granted to different businesses. Tax liabilities and exemptions for S corporations differ markedly from those for C corporations, for example.

Automated Tax Processes

When applied to tax workflows, a digital tax workflow can help boost profitability greatly.

Here are some ways in which digital tax workflows help businesses:

• Reduce dependency on manpower

Tax returns are manpower-intensive processes. When replaced with automated processes, manpower does not get redundant; it gets harnessed optimally, with the added advantage of reliability and accuracy of automation.

• Complete more work in the same amount of time

Automated processes allow businesses to handle greater workloads without having to deal with the hassle of hiring more people, training them on it, etc. A digital tax workflow thus helps manage higher volumes of tax filings with greater accuracy and time savings.

• Accept more business

For CPA firms, this is especially meaningful. Tax time for a CPA firm often translates into a series of events that include calling clients with reminders to submit records, transferring data from paper receipts to electronic forms, reviewing forms to check entries, sending paperwork to clients, filing returns after complete, etc. All of these activities are part of the normal process of filing manually. A digital tax filing, on the other hand, streamlines the process, beginning with accurate records and ending with maintaining digital copies of the clients’ filings.

Supported by the accuracy of digital record-keeping, digital tax workflows minimize the uncertain elements of tax season, replacing them with accuracy and reliability. The result is hassle-free, streamlined tax returns.

At Analytix Solutions, we have been helping businesses, including startups, efficiently file their tax returns year after year. Our breadth and depth of experience helps us to better understand clients’ unique accounting requirements. We formulate customized solutions and incorporate industry best-practices. This allows business owners to address their challenges in a systematic manner, helping to streamline operations.  For more information on our services or to find out more on our complementary assessment of your accounting procedures, visit us at www.analytixaccounting.com.

Written by

Analytix Editorial Team