Flowing Through Tax Prep

Tax season is one of those things that never seem to end. There’s the chaotic four months from January through April — and after April 15, your tax prep practice seems to drag on. If you aren’t filing returns on extensions or amended returns, then it seems like you start gearing up for the next tax season on April 16.

Other than selling your tax practice and collecting a percentage of revenue, nothing is going to make your tax prep practice easy and enjoyable. But understanding the workflows in your firm, and employing workflow software where applicable and practical, can grease the rails a bit and put a dent in your aspirin outlay.



Defining tax prep workflow sounds like it should be easy. And on a superficial level, it is. Get the information from the client, enter it into the tax preparation application you are using, file the returns, and print or create a PDF copy of the return for your and your client’s files. Easy peasy. But we all know that it’s never quite that easy. That’s why workflow applications were invented in the first place.

The idea of workflow derives from the logistics science developed during World War II. From the need to get materials from where they originated to where they needed to be and on time, the fields of systems analysis, operations research, and project management were formalized and blossomed. In the 1950s, the idea of workflow analysis, at that time called time and motion studies, hit its stride. The so-called “Efficiency Expert” was popularized by the 1957 movie Desk Set with Spenser Tracy and Katherine Hepburn.

It’s common to talk about workflow management as if it were a single program or process. In reality, workflow management is not a specific well-defined application. It varies from a simple engagement or due date manager to complex business process analysis and management, as well as other project management techniques. Many firms do just fine tracking the progress of a client’s return using simple Gantt charts or an integrated set of collaborative utilities such as Office Tools. Others need more complex applications such as XCM Workflow, or even Microsoft Project. It depends on how complex your tax practice is, and how granular your management information has to be.

Barry McQuarrie, CPA, a consultant for the KAF Group, defines what he feels is appropriate: “The basics of a workflow solution allow a firm to monitor any type of task across all employees and through every step in the process.  The extra features of a workflow system in a CPA firm include due date monitoring, employee scheduling, workload balancing, paperless processing, dashboards and the ability to create custom workflows.”

With all of the users and vendors we spoke to, tracking data and documents throughout return preparation, as well as having the ability to collaborate on a client’s work product, all rank high on their list of what needs to be in a workflow application.

Mark Albrecht, CPA, founder and chief executive officer of XCM Solutions, added his must-haves: “It should also include a full date management system, checklists that help standardize the work actually being done, individual work management functionality, centralized information for team collaboration, a full suite of reporting, multi-office views, quick/advanced search capabilities, and the ability to see all of ‘my clients’ with a click of a button for partners and managers. Nice extras include mobile capabilities (basic functionality from a device), budgeting, time management, scheduling, dashboards, KPIs/business analytics, and secure client communication within the workflow.”

Mike Giardina, the CEO of OfficeTools, has a good take on the philosophy of workflow: “It’s about connecting all the dots — connecting the process of doing a return to the other related processes. When connecting everything together, you are not just completing a return — you are making sure that other integral processes get done and completed timely. It’s about how the firm works as a whole.”



It seems somewhat obvious, but before you can manage anything, you need to know what it is that you are actually managing. As obvious as this seems, many of us still jump right in with both feet without really taking the time to examine the data and process flow through the firm. And while this article is about managing the workflow around the tax preparation process, unless your practice is solely preparing tax returns, separating tax prep workflow from the workflows surrounding the other services your firm provides may not be the best approach.

James Bourke, CPA, the technology niche practice leader at Top 100 firm Withum-Smith+Brown, and an XCM user, is adamant about not applying workflow technology strictly to the tax preparation part of your practice. When asked about restricting workflow management only to tax prep, he said, “Absolutely not! I hear that firms only address workflow from a tax perspective because, quite frankly, the tax workflow process is a huge pain point during a compressed period of time. But in reality, firms move a ton of work product through a process from start to finish. To only focus on tax is only addressing part of the problem. From Day One we have deployed our workflow solution for nearly all work products that move through the firm — from the traditional tax return preparation to audits, reviews, compilations, consulting engagements, correspondence, etc.” Bourke believes that his practice benefits greatly by standardizing the workflow process within each area that the firm provides services in, and then developing rules and controls that can be applied firmwide.

The vendors we surveyed on this issue agree. SurePrep vice president of marketing Greg Pope is unequivocal on this point: “I don’t think it makes sense to implement software for one workflow and not another. Most true workflow solutions are just as applicable to an audit department as they are to tax department.”



When it comes to office procedures, whether it’s tax preparation, client writeup, or other firm services, management tends to believe that they have a good handle on how things play out in the firm.

The problem with this is that there is seldom a formal analysis of the roles and duties of every employee (including management) and every procedure within the firm. Is there a procedure manual in your practice that lays out how, who and when client contact is made and organizers go out? Is there a formal system for tracking the status of client contact, as well as monitoring the progress of a return? At what point does the
tax preparation process integrate with practice management and accounts receivable?

If this type of information hasn’t been formally codified, you’re running your business on the fly. The time to have this kind of information is before you need it. And the way data and people operate within your practice (and possibly outside of it, if you use external service providers) is the workflow. And unless you’re a one-person-band, i.e., a sole proprietor, this workflow is probably a bit more complex than you think it is.

As odious as it may seem, performing an actual workflow study is one of the best ways to not only get a better feel for the workflow in your firm, but it also allows you to codify it so that others have a better understanding of the roles they play in the overall process. Graphics tools like Microsoft Visio and SmartDraw VIP can help in the process. SmartDraw has an excellent tutorial on using a graphical approach to process management that you might find helpful at www.smartdraw.com.



One place where firms often get into trouble is going at the software implementation process alone. The consensus among both the users and vendors we surveyed was that training in the application is a must. “Implementing workflow software is going to be disruptive to the firm; how serious this disruption will be largely depends on how the technology is introduced and managed,” GruntWorx vice president and general manager Julie Pierce told us. “It’s important the firm follows a process when rolling out workflow software. The most common five key steps in this process are assessment, acquisition, selling the concept, selecting a champion and finally making adjustments during and after implementation. The biggest pitfall in implementing any new software or technology is not having a process in place.”

SurePrep’s Pope agreed: “I don’t think any software should be implemented without thoughtful planning and training. You would never buy a car without first learning how to drive, and when implementing new software no one should be expected to just ‘figure it out.’ Thorough training is the only way to ensure a successful implementation.”



Figuring out where workflow software is headed is almost like looking at one of those fortune-telling Magic 8-Ball toys that were popular in the 1960s and are still available at toy stores now: You asked a question out loud, turned the 8-Ball over, and a noncommittal answer swam into view in a window.

The problem with making a prognostication is that workflow is such a practice-specific thing that it’s exceptionally difficult to come up with a one-size-fits all solution. Even within the same practice, the tax prep workflow can differ from tax season to tax season depending on changes in the tax law, changes in client needs, changes in employees and their skills, or all of these.

The vendors and users we surveyed had some ideas of where they hope and expect workflow software to go. K2 Enterprise partner Randy Johnston suggested that “vendors add more scheduling intelligence, easier approvals, and the ability to more easily customize workflows within applications. There should be more integration done at the database and application levels that will be simplified in user interfaces, allowing easier customization.”

WithumSmith+Brown’s Bourke sees a similar need for better application connectivity: “As pure workflow technology matures, many vendors in the space are beginning to realize that there are other areas in the firm that could be better served if they were ‘more’ aligned with the workflow tool.”

K2 Enterprise’s Johnston feels that having predefined processes using best practices would be a nice feature to see in future products. And SurePrep’s Pope’s wishlist includes some interesting features: “Wouldn’t it be nice if the tax return preparation process could be further automated by allowing the taxpayer to submit their income data (W-2, 1099, K-1, etc.) to the CPA directly from the issuer, rather than via PDFs or paper documents that need to be scanned? I think we’ll be there soon.”

More use of the cloud and enhanced mobile access are also a pretty sure bet to be widely adopted. Many vendors either already provide cloud-based services and mobile access, or have them in the works.



Workflow software isn’t a necessity for a successful tax season. Plenty of practices do just fine without it. But even if you never decide to implement some form of workflow-related software, understanding the tax prep workflow in your practice is a necessity, and it’s also just plain good business sense. And once you have mapped out the flows, implementing software to track and manage your workflow won’t make tax season effortless, but it can make it a lot more efficient and productive.



CCH Axcess (Wolters Kluwer)

CCH iFirm (Wolters Kluwer CCH SFS)

GruntWorx Organize (GruntWorx LLC)

Intuit QuickBase (Intuit Inc.)

OfficeTools Workspace (OfficeTools)

SurePrep (SurePrep LLC)

FirmFlow (Thomson Reuters)

XCM Workflow (XCM Solutions)

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