Prepping for the Upcoming Tax Season & New Techniques to Consider in 2023
Enjoy your downtime before the 2023 tax season, but don’t forget to prepare your firm for the busy season ahead.
Tax preparers cherish their downtime after completing the bulk of their customers’ returns from January through April of a tax year. Although there is still tax business to be done, many tax professionals use May through September take a break to recuperate and focus on other work-related projects.
Once October rolls around, though, most tax preparers begin to prepare for the next tax season. How about you? Do you usually use the three months before the next tax season starts to gear up for the busy time ahead? If so, what’s on your to-do list?
Crucial Tasks for the Next Tax Season
Most tax preparers address the following high-priority tasks:
- Prepping tax software– By early October, you should order, download and install the latest release of your tax-preparation software on your computer. You also want to master any changes in the program’s design so you can begin efficiently using it for return production during January 2023.
- Upgrading tax software– If you had problems with your tax software last year, you might want to upgrade its capabilities or switch to another program. Look for the latest in cloud-based data storage, help with organizing tax deductions and highly responsive customer support.
- Updating one’s IRS e-Services account– Your tax-preparation software may require you to provide an IRS tracking number to set up your 2023 software. To get this number, log into your IRS e-Services account.
- Testing office equipment– You don’t want an important piece of computing gear to fail during the height of your busy season. Instead, update your computer operating system, the drivers for your printer and scanner and new patches to other applications on which you rely heavily.
- Renewing the firm’s Preparer Tax Identification Number (PTIN)– The sooner you complete this simple— but essential— step, the better.
- Getting familiar with 2023 state and federal tax law changes– Watch for updates on the IRS and your state’s tax agency websites. Reading tax preparer professional journals and keeping tabs on tax developments will help you hit the ground running in 2023. Finally, consider enrolling in an online course summarizing 2023 tax-law changes for professional preparers. Various educational publishers have affordable classes.
Updating Your Cybersecurity Plan
The federal government requires tax preparers to have a written cybersecurity plan. It should comply with the FTC’s Safeguards Rule. The fall preceding the upcoming tax year is a perfect time to revisit your plan, update it and test its effectiveness.
For example, consider doing the following to test the robustness of your cybersecurity defense:
- Check your network logs to see if anyone has accessed client data without permission.
- Make sure your intrusion alert system is working correctly.
- Check if anyone has sent large amounts of data to unknown third parties or foreign locations.
- Save a test client record using simulated data and track it to see if unknown parties have accessed it or attempted to commit fraud using the faux client’s personally identifiable information (PII).
Upgrading Your Firm’s Capabilities
Although much of your work before the tax season will focus on technology and security, don’t forget to upgrade your human resources and professional techniques. For instance, evaluate how you and your staff performed during last year’s tax season. Was your productivity adequate? Was your error rate acceptable? How impressive were your customer satisfaction metrics?
It’s also a great time to brainstorm new ways to produce tax returns. Are there techniques available to collect client data more efficiently? To do quality control more stringently? To prepare more returns per employee to enhance profitability?
Finally, when is the best time to reach out to clients to begin planning their 2023 returns? You also want to start training them on the best way(s) to submit their data to you.
The Role of Tax Preparer Professional Liability Insurance
The U.S. Tax Code is dense and multifaceted. And, it gets more complex with each passing year, making it more difficult to avoid making mistakes on client returns.
For this reason, it’s essential to purchase tax preparer professional liability insurance and to keep your policy active as long as you’re working in the tax field.
Tax preparers’ professional liability insurance covers expenses related to an alleged work-related error or omission that financially harms a client. It covers the cost of hiring a defense attorney and pays for judgments or settlements from legal or regulatory proceedings. With professional liability insurance, you can do your job with peace of mind, knowing your financial future won’t be in jeopardy if you run into legal problems.
In the market for tax preparer professional liability insurance? Check out the coverage available at 360 Coverage Pros, with premiums starting at $23.33 per month.