How CPAs Can Prepare for the 2022 Tax Season

The way tax seasons work, it always feels like the next one is just around the corner. Over the last year (2021), there have been several unclear situations regarding how taxes are filed and to whom they pertain. Granted, 2021 was a unique year all around. The world has faced a lot of changes in a short time, and it has carried over to the field of accounting. Now, accountants and their clients have to be uniquely aware of new regulations and classifications instituted for the unique circumstances of 2020-2021. Accountants have been battling several issues, ranging from guidance on COVID relief to answers from the IRS regarding backlogs. CNBC mentions that over eight million paper-based tax returns ended up in a backlog thanks to the pandemic’s effect on the IRS’s offices. This year might be just as bad. Still, accountants and their clients can buffer themselves against the fallout by focusing on preparation.

Get Documents in Order

Most accountants know that filing limits have been extended because the pandemic is still not ultimately over with yet. The extension was designed to give accounting firms and CPAs the time to train themselves and their staff on new accounting software. The hope is that this extended window will allow for better results regarding accuracy in submitted returns. Accountants need to be aware of these windows and set guidelines for clients that give them enough time to check values and prepare returns. Timely filing should be a hallmark of an accounting business, especially if they wish to avoid having their clients pay penalties for late filing. Many accounting firms have taken electronic processing a step further, allowing an online platform for clients to submit their documents. This approach has the added benefit of saving this data on a server for easy access later (in the case of an audit, for example).

Brush Up On Current Tax Legislation

The rest of the world might have struggled to get things done, but legislation continued to be proposed and signed into law during the pandemic. Tax legislation at the state level would be different from that at the federal level. Understanding the differences can help to avoid misunderstandings when it comes to submissions. Tax laws are likely to be updated as months go by, so being aware of changes ensures that the accounting firm doesn’t make any mistakes in its submission that may need to be rectified later. Keeping these mistakes out of the process will speed up the process of returns significantly and encourage more trust from clients as a result.

Evaluate the Company’s Workforce

If it’s a single accountant operating a sole proprietorship, evaluation becomes much more straightforward. In the case of a CPA running a private accounting firm, the need for determining the amount of work the company can take is crucial. A business shouldn’t take on more work than it can handle, especially during tax season. If this has already happened, outsourcing the work to another firm is a viable idea. However, keeping in mind the client’s requirements can limit which clients can be outsourced and which can’t. Knowing which companies are worth hiring as support requires doing due diligence on each firm and their capabilities as well. Outsourcing is supposed to help the firm prevent delays, and choosing the wrong firm might exacerbate those delays instead.

Figure Out Your Clients’ Filing Methods

Some small business owners might want to file their taxes themselves, while others would prefer to have their CPA do it for them. Business owners that choose to file their own taxes might want to do so out of convenience. They believe that once they control the process, there will be less of a delay. Sadly, this is a misconception, as the amount of time taken to process the returns remains the same regardless of who files them. There is a bit less work to do for businesses opting to hire a CPA or accounting firm. Files can be filled out in the accounting firm’s office and then filed with the relevant authorities. In some cases, as mentioned above, documents can be submitted electronically, speeding up getting those documents into the IRS.

Use Remote Working Channels to Their Fullest Potential

Thanks to the pandemic’s broad impact, remote working has now shifted from exception to the rule in many cases. With many businesses now adopting a remote working paradigm that goes hand in hand with office availability, tools for remote work interaction are much easier to find. Remote working also allows employees to be more productive, with less time spent commuting between work and home. Accounting offices should seek to capitalize on this remote work culture to get advisory services set up. With a client having access to their accountant at the firm directly, the business fosters an environment of trust that allows a client to put more faith in the organization.

Keep Proper Records

With remote working and document filing a significant part of the work that an accountant’s office will do during this period, there is a tendency for things to get misplaced. When the files are all done on paper, finding what’s missing might be easier than if they are mislabeled within the digital filing system. One way to combat this (and make life easier in the case of an audit) is to use a tagging system. Each document would be tagged with the company it represents and which overarching expense or income it represents. This approach allows the office to search for relevant information and documents by simply searching for the appropriate tag. Several filing systems exist that would enable the digital tagging of documents.

Don’t Be Afraid of Change

Accounting has gone through a significant evolution in a short period. Firms that are used to doing things “the old way” may soon find themselves losing customers because of their inability to embrace this change. The upcoming tax season for 2022 is likely to be a massive change from last year’s. It may be the start of a system of change that reacts to new legislation for taxation. There’s no telling what will happen for sure, but being prepared is the best way a business can deal with this kind of change.