Looking to bolster productivity and trim costs, Drake Software user Alex P. Anderson, chief executive officer of Laird's Tax Service, is in the midst of transforming the company's 15 office locations to paperless environments and is experimenting with such data entry capabilities as QuickBooks imports. "It worked wonderfully and we have all of the [client] information stored on hard drives," says Anderson, whose Springfield, Ohio-based firm serves thousands of clients. "We are pushing technology harder and harder."
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Whether taking advantage of data-entry capabilities within tax software products to facilitate the tax prep process or implementing a digital filing environment, like that offered by Cabinet NG, accounting professionals like Anderson are taking steps to eliminate the time-consuming data entry process.
Such steps are critical given the staffing pressures facing accounting firms today and the wave of retirements expected in the coming years.
According to the American Institute of CPAs, the shortage of CPAs continues. While firms hired 17 percent more entry-level recruits in 2006 than they did in 2005, the need for CPAs is outstripping the supply. The AICPA also notes that in 2004, one in six CPAs left their firm-2 percent more than in 2003. Adding increased pressure on the industry is the fact that in the next 15 years, 75 percent of current AICPA members will reach or approach retirement age.
"Productivity is important because of the staffing crisis. We are well aware of the issues and are looking for ways to help clients to solve that problem," says Jorge Olavarrieta, group product manager for Intuit's Lacerate. "The most time-consuming aspect is entering data."
One of the ways Lacerate is helping professionals is through its new Trial Balance Utility, which leverages the SmartMap technology. This enables users to import data from several sources including Excel, QuickBooks Premier Accountant Edition and Intuit EasyAcct, saving time with client data that carries over year to year. With the SmartMap technology, it automatically maps many tax line assignments.
Last year, Lacerte and ProSeries introduced Source Doc Auto-Entry, which allows users to scan source documents and import the data into the tax software, simplifying data entry. Users scan their clients' source documents, like W-2s or 1099s. Once scanned, information is automatically mapped to the appropriate tax lines within Lacerte Tax or ProSeries tax software, helping to save time and reduce data-entry errors.
Source Doc Auto-Entry also enables users to save the scanned source documents directly into a client's Document Management System folder.
Last year, there were more than 3,000 users who used Source Doc Auto-Entry.
Going forward, the company will continue to work to improve character recognition within Source Doc Auto-Entry, bolster the list of forms and formats that it supports, and further enhance the workflow to the tax software.
On the consumer side, Intuit also is looking to reduce data entry. "Data entry is about ease of use and accuracy. It is about making the process easy for [users] and cutting down on mistakes," explains Julie Miller, a spokesperson for TurboTax.
One way is through its Instant Data Entry feature that enables users to import tax information from multiple sources, such as employers, brokerage houses and mutual fund companies, into their TurboTax tax return over the Internet. Through a partnership with Pleasanton NSC, Intuit enables users to download W-2 data directly into the TurboTax return.
Miller says that there are currently about 100 institutions participating in the program.
One company that has generated a great deal of buzz is SurePrep, a provider of tax outsourcing and workflow solutions. In September 2006, the company announced that it had secured $3 million in funding from software entrepreneur Sheldon Razin to introduce its new software application named 1040Scan.
SurePrep claims 1040Scan is the only application on the market that automatically reads and transfers data from client source documents, including W-2s, 1099s, organizer pages and brokerage statements, into tax software. (See related story, pg. 25)
"Almost every firm will say that the biggest problem is finding and retaining staff," says David Wyle, chief executive officer of SurePrep. "Firms have to find ways to get work done without overworking people and burning them out."
Jack LaRue, senior vice president of the CS Professional Suite for Thomson Tax & Accounting, Professional Software & Services, says that one way his company is working to ease the burden of data entry is through Web organizers.
What makes the online organizers especially helpful is that once clients complete the form, accountants can import the data into the tax return either line-by-line or page-by-page.
But Web organizers are only useful if the client actually fills them out, so the company is continually working to make them easier. The work appears to be paying off. LaRue says the company has hosted about 40,000 Web organizers, with clients completing 30 percent. That compares with the 10 percent to 15 percent of clients who typically complete a paper-based organizer.
However, a major focus for Thomson is barcode scanning. "We are trying to lead the way and last year started barcoding W2s," says LaRue.
Using the barcode scanner, preparers can simply scan in-rather than key in-data fields and demographic information. LaRue says the company is working with the IRS and other industry members to develop a standardized format for barcoding W-2s.
In 2006, the company released technology enabling the CS Professional Suite Accounting software to generate scanner-readable 2D barcodes on W-2s and 1099s. Also released was the technology for UltraTax CS software to accept scanned data. LaRue says this technology is a tremendous time saver for users with 1040 clients as they can scan W-2s and 1099s that were created in Write-Up CS or Payroll CS by other tax professionals, and then accept the data into UltraTax CS.
If the concept catches on, it represents a tremendous opportunity for the industry and will have a huge impact on the productivity of preparers, according to LaRue. The company has offered to share the technology for generating W-2 barcodes with any interested software or payroll vendor to encourage widespread usage.
On The Band Wagon
TaxWise and ATX, which CCH acquired in October and August respectively, are also looking to facilitate data entry with the new Scan & Fill product. The program enables users to scan in such documents as W2s and 1099s and edit them on screen. The scanned documents can then be exported to TaxWise or ATX, paving the way to a paperless office.
ATX, a product with a lower price point, is targeted at small practitioners (typically firms with fewer than seven professionals) who operate out of a home or office environment. These tax preparers are typically serving middle-income clients and small businesses.
TaxWise is suited for firms that are slightly larger (typically fewer than 10 people), have multiple locations, and the commercial segment known for its seasonal business and bank products.
Meanwhile, CCH launched ProSystem fx Scan early last year, which is designed to simplify the handling and organizing of source documents for tax returns.
How it works: Scan orients each page, automatically identifies W-2s, K-1s, brokerage statements and all other tax source documents, and produces a bookmarked PDF file.
Going forward, CCH is working to enable the product to perform data extraction from such source documents as W-2s, creating a direct import into the tax return, explains Stuart Gill, product manager for ProSystem fx Scan. He notes that this next phase is currently in development but will likely be available in the next year.
XCM Solutions, which provides firms with Web-based process automation solutions, does not offer scanning technology for data entry but has teamed up with CCH to help "complete the puzzle" of data entry and workflow. Through the partnership, XCM, the hosted workflow solution provided by XCM Solutions, provides integration with CCH's product suite, including ProSystem fx Scan.
According to XCM president Glen Keenan, such a partnership makes sense for XCM because it enables the company to focus on its core offering: workflow.
"We are working with them and looking at the industry as a whole to ask, 'Where can we help?'" says Keenan, who notes XCM is open to forming additional partnerships with other tax software vendors.
Firms looking to ease the burden of data entry also can take advantage of Xpitax, an XCM Solutions sister company that provides offshore outsourcing services for the accounting industry through 250 employees in India.
Using both XCM and XCM Outsource as the workflow and communication tool, Xpitax helps firms streamline their tax return and accounting preparation process.