WORKPAPERS B Y R E G R O U P T A X

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Caitlin Thomas
5 years ago
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1 P R I N C I P A L S O F T A X WORKPAPERS B Y R E G R O U P T A X 1

0 1 Introduction Two CPAs with 15 years + public

2 0 1 Introduction Two CPAs with 15 years + public accounting experience Started company in 2012 that helped tax pros scale their practices by providing key data entry services In 2016 launched SaaS based tax workpaper app (regrouptax) designed to increase efficiency and workflow procedures 2

3 Workflow Efficiency 34% THE TOP CONCERN FOR FIRMS OF ALL SIZES 3

4 AGENDA Types of Workpapers: Ind. vs. Bus. 6 Principals of Good Workpaper Techniques Other Tips/Tricks to Maximize Efficiency Questions Short Demo 4

5 POLLNG QUESTION #1 What does your current practice look like? 5

6 INDIVIDUAL vs BUSINESS S T A N D A R D I Z E D F O R M S basic set of low-level functions can be completed for each return and every workpaper file looks the same V A R I O U S F / S F O R M A T S different formats makes it difficult to shift tasks and effectively create a workpaper file that's consistent across the board 6

7 Business returns = more room for profit $273 $743 Average tax preparation fee for a typical individual return (1040) Average tax preparation fee for a typical business return (1120, 1120S, 1065) 7

8 INDIVIDUAL TAX RETURNS ways to increase efficiency 1. DEVELOP INTERN PROGRAM Shift low-level tasks to interns; let them scan, organize and input info 2. OUTSOURCE DATA ENTRY Onshore and offshore outsource options; GruntWorx, SurePrep, etc. 3. UTILIZE TECHNOLOGY Most tax software offer an OCR add-on that will scan and populate; ProSystem fx Scan, etc. COMMON GOAL: Eliminate data entry and create consistent workpapers at a significantly low price 8

9 5.1 hours A C C O R D I N G T O I N T U I T, E A C H B U S I N E S S R E T U R N T A K E S 5. 1 H O U R S O F D A T A E N T R Y 9

10 BUSINESS TAX RETURNS ways to increase efficiency GOOD WORKPAPERS! Requiring extensive, organized and indexed working papers or PDF files may take about 20 minutes per return but can reduce the time it takes the preparer to actually work on the return by approximately 50 minutes, and reduce the reviewer time by about a half-hour, resulting in a net gain of one hour per return. For a workload of 400 returns, this can save the equivalent of one fulltime person during tax season. 10

11 P R I N C I P A L # 1 BE CONSISTENT Design a set of techniques that work for you and your firm and stick to them. W W W. R E G R O U P T A X. C O M 11

12 P R I N C I P A L # 2 SAVE A COPY Before you even think about making adjustments to the financials, save a copy of the Balance Sheet and Income Statement as received from the client or their bookkeeper "PBC" W W W. R E G R O U P T A X. C O M 12

13 P R I N C I P A L # 3 DESIGN AN INDEX Designing an index system along with a set of workpapers required for every return allows you to standardize the prep process and eventually delegate low level work to staff and/or interns. W W W. R E G R O U P T A X. C O M 13

14 POLLNG QUESTION #2 What is your role within your practice? 14

15 P R I N C I P A L # 4 AJES ONLY!!! If you go into the QB or Xero file and start changing transactions, you are going to lose your trail and create an extremely frustrating situation for yourself. By recording everything as an adjusting entry, you create a nice trail and give yourself the opportunity to present the changes to your client, an auditor, a partner at the firm, etc. W W W. R E G R O U P T A X. C O M 15

16 P R I N C I P A L # 5 TOP 3 CHECKLIST Come up with the first 3 steps you take on every return. Need some suggestions?? W W W. R E G R O U P T A X. C O M 16

17 CHECK. CHECK. CHECK. does retained earnings match prior year return? are the financials complete through year-end? does the balance sheet tie to the income statement? 17

18 P R I N C I P A L # 6 LEVERAGE TECH There are plenty of software programs designed to reduce inefficiencies. Each has it's pros and cons. W W W. R E G R O U P T A X. C O M 18

19 THE PCPS CPA FIRM TOP ISSUES SURVEY Top 10 Issue: Leveraging Technology to Enhance Client Service 19

20 OTHER TRICKS... Prior year file Book-to-tax reconciliation Fixed asset detail Referencing State tax detail + estimated payment schedule Tax-related questions 20

21 PY FILE Make it a habit to quickly review the prior year file before you begin tax prep for the current year. This will give you a roadmap of what's going on with the client. W W W. R E G R O U P T A X. C O M 21

22 BOOK-TO-TAX Paint a clear picture of how you moved from the book financials to the tax return. Use this reconciliation to explain the tax return to your clients. W W W. R E G R O U P T A X. C O M 22

23 FIXED ASSETS Tie out the depreciation schedule to the assets on the books. Make sure your client confirms any assets that are no longer in use or have been disposed of. W W W. R E G R O U P T A X. C O M 23

24 REFERENCE Reference determinations you made on the tax return. We recommend to To/From system. W W W. R E G R O U P T A X. C O M 24

25 STATE TAX + EST. Avoid future notices by confirming the state taxes and estimated taxes paid during the year. W W W. R E G R O U P T A X. C O M 25

26 TAX RELATED?'S Brainstorm with your staff before tax season to compile a list of tax related questions to ask every client. Think new credits, etc. W W W. R E G R O U P T A X. C O M 26

27 POLLNG QUESTION #3 What product do you currently use for business workpapers? 27

28 C O N S I S T E N C Y I S K E Y 28

29 Recommendations for consistent workpapers CREATE YOUR OWN WORKBOOKS EMBEDDED OR ENGAGEMENT TAX WORKPAPER APPS Use the off season to create an excel workbook and setup each client s financials + formulas Most tax software offer embedded functions and addt l engagement software for purchase Apps that are designed specifically to create tax workpapers allow for flexibility in acctg tax software choices 29

30 Excel Workbook PROS -Low Cost -Minimal Training -Customize Reports CONS -Significant Setup Time -Human Error -Manual Upkeep 30

31 Embedded Functions PROS -Integrates w/ Tax Software -Minimal Data Entry -Familiarity CONS -Lack of Updates & Maintenance -Inconsistent Output -Future Conversions 31

32 Engagement Software PROS -Integrates w/ Tax Software -Minimal Data Entry -Familiarity CONS -High Cost; Difficult to Implement Firm-Wide -Designed for Audit -Future Conversions 32

33 Tax Workpaper Apps PROS -Software Neutral (Acctg + Tax) -Implement Firm- Wide; Consistentcy -Low Cost CONS -No Direct Integrations w/ Tax Software -Web-Based: Pro or Con? -Breakeven 33

34 C O N C L U S I O N... UTILIZE TECHNOLOGY 82% of top 100 accounting firms tie new tech to client retention and firm growth 34

35 T H E B E N E F I T S "The value of technology is best seen in its ability to automate routine or otherwise manual processes. What does this mean in practical and beneficial terms for your firm and clients? The consulting firm McKinsey anticipates that automating work processes that used to be done by human labor will allow more meaningful work as routine or repetitive tasks are replaced." W W W. R E G R O U P T A X. C O M 35

36 POLLNG QUESTION #4 Of the following issues, which is most pressing for your practice? 36

37 D E M O W W W. R E G R O U P T A X. C O M 37

38 RECAP GOAL -Increase Workflow Efficiency HOW -Consistent Workpapers -Utilize Technology 38

39 Automating or even eliminating mundane or routine tasks like manual data entry with computers or software programs frees up employees time to actually use their brains for things that computers or software programs can t do, like utilizing their creativity. N I C K L O W E N S T E I N, D I R E C T O R I N S A G E W O R K S A C C O U N T I N G D I V I S I O N 39

40 POLLNG QUESTION #5 What was the most valuable part of this webinar? 40

41 thank you. Rachel Gregg, CPA Emily Dear, CPA 41

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