Tax & Accounting Blog

Why information technology is important to accountants

Accountancy Practices, Accounting, Blog, Tax December 6, 2022

Over the past decade, major advances in accounting information technology have opened up opportunities for accountants to turn their focus from time-consuming, manual tasks to data analysis, tax strategy, and predictive insights.

This profound shift has created a pathway to improving operational efficiency, seamlessly achieving compliance, and fostering more meaningful relationships with clients.

Today’s accountants must not only be up to date on the latest tax regulations, but also understand accounting technology and how it can be leveraged to boost efficiency, accuracy, and productivity.

How is information technology used in accounting?

Not so long ago, accountants spent much of their time manually entering data and searching for information. Today, technology has changed the accounting industry. Junior staff are wondering how accounting will be automated and whether new practitioners like themselves will eventually be replaced by technology.

Trends like cloud computing, machine learning, and artificial intelligence (AI) have made it possible to visualise and interpret data from data lakes in real-time and automate repetitive tasks. By automating and streamlining your accounting processes with information technology, you can begin to shift your focus to building more meaningful relationships so you can offer clients forward-looking advice and adopt an advisory services business model that frees you from seasonality and excessively long hours.

In today’s complex and uncertain environment, many clients are seeking more than a tax preparer. They want a strategic partner that can advise and support them in growing their business. So why not use the latest advances in accounting information technology to wow your clients?

With accounting information technology in place, you can get pertinent information and strategic insights to your clients ahead of time. From sending reports to notifying them of legal or regulatory changes or sending reminders to make estimated tax payments, integrated accounting technology can help you position your firm as a committed partner who supports your clients.

What are the benefits of accounting information technology?

Imagine this: Your staff collaborates without version control issues. Data passes seamlessly between platforms. Your clients get insight that helps them make better decisions—and you bill for more value-added work. All this and work-life balance.

While it may sound too good to be true, these are benefits of accounting information technology. To start reaping the benefits, it’s important to understand where your firm is now—and where you want to go.

Understanding your tax workflow

As you search for ways to capitalise on accounting information technology, start with an end-to-end review of your current processes, systems, and data. Identify your overall goals—and your pain points.

Integrated information technology can help your firm automate each stage of the tax workflow—but you need to start by documenting each step, taking inventory of your current systems, and identifying ways your technology could work together better.

With information technology, you can connect all platforms across your tech stack for a customised workflow that works best for your firm.

Building an API roadmap

Application Program Interfaces are software code that allow two unrelated systems to “talk to each (APIs) other” by accessing and using each other’s features or data.

The use of APIs in accounting automation is critical in creating a custom solution tailored to your firm’s unique compliance processes. Open API connectors can easily integrate with third party vendors, so the ways in which your firm uses APIs depends on your workflow.

APIs increase efficiency and reduce redundancy by enabling disparate systems to work together to compare data sets. This helps reduce redundancy in workflow processes and facilitate automation, which saves a significant amount of time.

And once you’ve solved your disconnected workflow issues, you’ll enjoy the ability to collaborate without version control issues, pass data seamlessly between platforms, and shift your focus to more value-added work.

In addition, APIs can support succession planning and business continuity because the resulting automation is not reliant on the knowledge of a single person.

Integrating your tech stack

There are so many ways to put information technology and APIs to work in your firm. From automating the e-file process to exporting data into a tax return from your work papers, accounting information technology enables your firm to:

Complete work faster

Tackle the most complex tax returns, such as multi-tiered consolidated return processing for corporations and partnerships and build the entire tax return from scratch using an imported data file.

Streamline data entry

New real-time APIs import data into a tax return within seconds rather than minutes. Eliminate the need to enter the same data into multiple places.

Ensure data integrity

Protect your data with multiple layers of security, including network security, virus protection, encryption schemes, and more.

Easily file advance tax returns

Process individual, corporate, and partnership returns with time saving tools.

Improve firm value

Shift high paying staff from tactical work to focus on higher value advisory services.

Understanding IT requirements

To prepare for a smooth transition, work with your information technology provider to ensure their products are optimal for your firm. Typically, they will provide recommended system requirements necessary for optimal performance.

As processing speed and RAM are increased, software performance will also improve. Technology providers also recommend accountant use business-class computers, which generally offer higher levels of performance than home models when running business applications.

How to find tech staff for your accounting firm

With accounting firms reliant on information technology processes to keep their firm up and running, there is certainly a need to have an experienced IT professional on hand. That said, this role can come in different forms.

For larger firms, it may be beneficial to hire someone specifically tasked with supporting the firm’s IT infrastructure and related accounting information technology. Or it may be more cost-effective to outsource this position from an IT staffing firm. Yet another alternative is to rely more heavily on your accounting technology provider as many provide round-the-clock assistance, as well as personalised on-boarding and training.

As you contemplate tech staff, it is important to note that a significant portion of today’s accounting curriculum is dedicated to teaching aspiring accountants how to use current technology. And many graduates are likely looking forward to learning even more advanced technology on the job. That said, entry level or new hire staff may be eager to learn and take on an additional role in supporting IT activities.

It also may be beneficial to look outside of the box. Recent college grads with skills or majors related to analyzing and using data are often a great fit for firms that use advanced technology. Consider candidates from non-accounting backgrounds including science, technology, engineering, and math (STEM) degrees. Given the digital disruption taking place in the profession, evolving the recruitment process can give your firm new ways to thrive.

At the end of the day, accounting information technology provides a foundation for what prospective employees want—more high-value work, flexible working arrangements, increased productivity, and support to grow their skills.

How do I find the right accounting information technology?

Look for an established technology provider offering accounting technology solutions designed specifically for accounting firms. Whether it’s audit, tax, firm management, marketing, or staff training, accounting information technology can help you unleash your firm’s full potential. Find out how Thomson Reuters can help you find the right accounting technology.