There are a many challenges tax professionals face when preparing a business tax return. Likewise, there are a number of solutions that can help firms address those challenges. When considering tax software, keep these five challenges in mind.
Challenge #1 – Managing Trial Balances
- Challenge – Most business returns require a trial balance as an integral part of the tax preparation process. It can be time consuming to keep the trial balance and business tax return in sync.
- Remedy – Some integrated tax and audit workflow products allow you to quickly and efficiently manage the trial balance. Finding the software that’s right for your firm and implementing it assures that the trial balance and tax return stay in sync.
Challenge #2 – Dynamic Computations vs. Static Data Entry
- Challenge – Due to tying back to a trial balance, data in a business return tends to be interrelated. Once a business return is in balance, changing one number often requires changing other related information. It can be time consuming to assure modifications are carried through the entire return appropriately.
- Remedy – Look for solutions that can dynamically link key data points to the underlying forms and entry screens so that modifying one number or changing one option automatically carries the impact of this change throughout the return. This saves significant time and assures accuracy.
Challenge #3 – Comprehensive Diagnostics
- Challenge – Business returns can be complex and require that various components of the return tie out against each other while complying with tax regulations.
- Remedy – Complex software diagnostics can provide key insights into a return and help assure accuracy, all while highlighting possible pitfalls and planning opportunities.
Challenge #4 – Managing K-1 Information
- Challenge – When preparing Partnership or S-Corp returns, preparers must often manually enter the K-1 data in the taxpayers personal return. This can be time consuming and error prone.
- Remedy – Look for a tax preparation and compliance solution – either on-premise or in the cloud – that allows users to easily transfer the K-1 data to the 1040 return, eliminating data entry and reducing the risk of errors. This electronic transfer is a great time saver in the return process.
Challenge #5 – Meeting Federal and State Electronic Filing Requirements
- Challenge – Every year, more and more federal and state return types fall under electronic filing mandates.
- Remedy – You have to stay current with the times so try to find a solution that offers an extensive list of e-file returns throughout the year. Also, check to see that mandated forms are also available.