We know you're probably done with your taxes for 2016, and we'd guess you'd rather not think about them anymore for at least a few months. But with the annual ordeal still fresh in your mind, now might be the best time to consider how technology can help you get ahead of the curve for next year.
There are three areas in which technology is making a big impact on book-keeping:
Accounting in the Cloud
Software-as-a-Service refers to use of a software application (usually for a fee) that's housed on a remote server, activated and operated via the Internet, and maintained by someone "in the Cloud" (e.g. remotely). The other major aspect of Cloud computing relates to remote storage of your records. There are several advantages to these arrangements:
- Paying a periodic fee may be more easily budgeted than making a big, upfront purchase of accounting software. (Such packages can cost hundreds of dollars.)
- You won't need as much raw computing power to operate an app that runs on a remote server ... a terminal with an Internet connection will do.
- Updates, patches and new versions become someone else's headache. This is especially applicable in the tax realm where laws and regulations constantly change.
- You won't have to buy, install and maintain hardware for storage space to accommodate your financial records.
The biggest concern is data security. Headlines about big companies being hacked are not uncommon, and your financial records would rate among your most sensitive. Whether to leave such information in the Cloud will boil down to your level of trust in a third party's security, and whether the cost-savings and convenience outweigh the potential risks. (Feel free to talk to us about your options; you might also want to consider SynchroNet's Hosted Solutions and Cloud Computing.)
Comprehensive, User-Friendly Tax Software
You no longer have to be a CPA to do your taxes. Today's tax preparation software offers step-by-step processes for entering financial records and making sure all the proper paperwork is done. If you simply address every question presented by the program as you do your taxes, you can feel reasonably certain they will at least "look" right from the standpoint of a reviewing tax agency. (Legality and accuracy still depend on the validity of your input ... no tax software can fix that.)
Tax preparation programs will also check to see if there are any last-minute changes to the law that can affect your filing. For instance, in January of 2015, TurboTax users were being informed by the software that they needed to wait to file due to unsettled regulations related to the Affordable Care Act (aka Obamacare). When the issue was settled, the software was updated via the Internet.
These software packages also will offer analysis as to your relative risk of being audited. If there are red flags, you may want to give everything a second look.
Have you ever been on a business trip, taken a client to dinner and then lost the receipt before you could get it home and filed away as a tax-deductible expense? Today, it's possible to whip out your smartphone, take picture of the receipt and upload a document -- all while you're still on the road. Welcome to the world of mobile accounting!
File storage is just one of many ways that IT is helping business owners keep track of their financial records, whatever the time and wherever they are. You can also check financial data and manage accounts with a mobile device, all in real time. Plus, integrated communications will allow you to contact and share information with staff, lawyers or CPAs if the need arises. (Just make sure your messaging systems are protected by encryption.)
Advances in Information technology for taxes and accounting can certainly make your life easier while helping you more efficiently manage business finances. But some IT investments will be better than others; it all depends on your current needs as well as your goals. Finding the best path for your business is always The SynchroNet Way.