The tax season is the busiest time for accounting professionals and CPAs in the US. A lot of filing has to be done to ensure tax preparation is smooth and submit their tax returns. It requires gathering and organizing the information and supporting documents. While preparing to file taxes is a year-round job, it typically involves responsibilities.

The situation can pretty quickly get out of control in a seemingly chaotic time. Here is how CPAs and accounting firms prepare for peak tax season.

Start Early

Start the filing process, a tad early for clients to provide the much-needed time to collect the evidence to claim all deductions. Most importantly, it saves you from the hassles of stressing over figures and receipts. With immaculate documentation and organized records, CPAs will have a more flexible schedule and start working on your accounts immediately.

Things will go a lot smoother if certain administrative bookkeeping and tax chores are taken care of:

  • Send a notice to all employees, asking to verify the address so they will get their W-2s without delay.
  • Ensure all the right information for vendors that you need to produce 1099. Before you pay your vendors more than $600 in one year, ask them for a W-9 so that you have a current address and taxpayer ID number on file.
  • Check for any sales tax exemption certificates from vendors that you are not charging sales tax to.
  • Get your account balances in order and evaluate if it needs reclassification or correction.
  • Any clearing accounts for undeposited funds should be zero.
  • Check Bank reconciliations and book balances should match the bank or explain.
  • Inventory should be adjusted to reflect the correct quantities.
  • Accurate Loan balance adjustment to correctly reflect interest and principal allocations.
  • Depreciation entries should be made.

Staying Updated

As CPA firms prepare for the busy seasons, identifying where to start preparing for tax reforms can be difficult. There are several topics to learn, and thankfully, there are several resources available. AICPA Tax Section has created a Tax Reform Resource Center to help its members get prepared to meet the upcoming tax season challenges.

Here is a list of resources for every CPA

  • Tax reform FAQs
  • Recent IRS guidance
  • Tax reform podcast library
  • Guides, tools and templates

Complete due diligence to avoid penalties, fines and investigations

With the IRS consistently increasing the audits of Forms 1099 and 1042-S reporting, the focus is now back towards compliance with domestic organizations. Regulators are enhancing processes for identifying financial institutions and taxpayers for tax reporting failures and inaccuracies.

It is imperative that you follow the guidelines and expectations outlined in the Internal Revenue Code (IRC § 6695) to avoid penalties related to due diligence and other procedural steps. Typically, in such cases, preparers were facing fines and probably staring at the possibility of a business closure.

Ensure Compliance with All Tax Filings

In addition to income tax planning, it is mandatory to ensure compliance with all tax filings, mainly payroll tax filings. Make sure all have got everything in order such as:

  • Forms 940 and 941s
  • W-2 statements issued
  • Various 1099s (1099-C), (1099-D), (1099-INT), (1099-MISC)
  • Various 1098s reporting mortgage interest (1098)
  • Forms 1099 and 1096 should be completed and sent to the IRS for independent contractors paid $600 or more during the year.

Know your Technology

Several accounting firms and CPAs struggle to meet the challenges typically associated with technology such as unexpected systems and software upgrades.

Technology has a crucial role in delivering accounting services to clients. It is important to familiarize with changes in software and use the best accounting software to ensure a smoother tax season. Successful filing preparation begins with an efficient and flawless accounting system. Business owners must choose a bookkeeping program. There’s a variety of options – cloud, excel or software.

Take your pick and customize it based on your business need. The key is using technology to increase efficiency. Whether you narrow down or select Excel or QuickBooks, the information is only as useful as its input. So, hire a dedicated accountant, or good bookkeeper with in-depth knowledge of accounting terminology and principles.

Outsourcing Tax Preparation Functions

First let us understand what is Tax Outsourcing and How Tax Outsourcing Works?

The tax-preparation outsourcing process is simple. A CPA firm scans client documents into a .pdf file saved in the network

  • The taxation outsourcing service provider uploads all scanned documents and relevant tax files to a U.S. data center.
  • Offshore taxation professional can access the documents, organize into a Web-based file, and prepare the returns.
  • In case the offshore taxation company is based in India, chartered accountants use U.S. firm’s tax software to adjust the returns.
  • Firm gets the returns electronically and makes corrections as needed.

CPAs and businesses can improve efficiency and profitability by outsourcing tax preparation services. This allows firms to focus on strategic matters aimed at client satisfaction. Outsourcing provides expert, professional, and trained taxation professionals without the overhead of permanent hires. This comes to the quick rescue of firms dealing with a staff shortage during peak season and the worry of unused hours during the rest of the year.

Many firms turn off new clients during the busy tax season. Outsourcing model can accommodate new clients, ultimately increasing profitability that comes up during periods of peak demand. CPAs can spend time with clients and examine and organize documents to obtain essential information. Staff still input client data. The firm monitors the progress of returns. Outsourcing service provider completes tasks such as collecting client data, organizing information, and perform calculations, and it still reviews the completed return.


It is essential to start your return as early as possible, and the decision to file should be based on the complexity of the return. As CPA or business owners, it is best to understand the new rule and laws that might have direct implications on tax preparation. Accounting outsourcing can help the main stakeholders of accounting firms, small businesses, as well as CPAs to spend time on critical activities that add business value.


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