Handling finances as an individual often starts with simple tools. But as income streams grow, accounts multiply, and reporting becomes necessary, small inefficiencies turn into serious problems. Data comes from different sources, formats don’t match, and reconciliation becomes frustrating. This is where purpose-built accounting tools step in. Instead of replacing your existing system, they improve how data flows into it cleaner, faster, and more consistent.

Why Traditional Accounting Setups Fail for Individuals

Most individuals rely on a mix of spreadsheets, bank exports, and basic accounting software. On the surface, this works fine. But the real issues appear when data starts coming from multiple banks, payment platforms, or clients. The biggest challenge is not tracking money it’s managing inconsistent data.

Bank statements may come as PDFs, CSV files, or even scanned documents. Each one uses a different structure. When you try to combine them manually, errors creep in wrong dates, missing entries, duplicated transactions.

Over time, these small mistakes affect everything:

• Financial reports become unreliable
• Reconciliation takes longer than expected
• Tax preparation becomes stressful
• Fraud or unusual activity goes unnoticed

This is why modern accounting tools focus less on manual input and more on automation and data cleaning.

1. Financial Data Conversion Tools (Fixing Messy Bank Statements Fast)

One of the biggest hidden problems in accounting is unusable data. Bank statements often come in PDF format, which isn’t directly compatible with accounting software.

Here the conversion tools become essential. Here the most efficient tool MoneyThumb which helps you to convert bank statements, credit card reports, and financial documents into clean formats like Excel, CSV, or QBO. That means no more copy-paste work or manual typing.

How this improves accuracy across formats

Different banks structure their statements differently. Some use inconsistent date formats, others mix transaction types, and some even embed data in scanned PDFs.

A strong conversion tool handles:

• Automatic extraction of transaction data
• Standardization of dates, amounts, and descriptions
• Cleaning duplicates or formatting issues
• Exporting into accounting-ready formats

This directly answers a common concern: how to ensure data accuracy across different bank formats. Instead of relying on manual correction, the tool normalizes everything automatically.

2. Bank Statement Analysis (Improving Reconciliation Accuracy)

Reconciliation is useful for financial data to get validate. It’s also where most individuals lose time. When transactions don’t match, you end up checking entries one by one. This becomes even harder when dealing with multiple accounts or months of data.

Bank statement analysis tools simplify this process by organizing and matching transactions automatically.

What makes a high-accuracy reconciliation tool

Accuracy depends on how well the tool can match and validate data. The best tools:

• Automatically match transactions between sources
• Highlight missing or unmatched entries
• Detect duplicates and inconsistencies
• Maintain accuracy even with large datasets

Instead of manually verifying each transaction, you focus only on flagged issues. This alone can reduce reconciliation time dramatically while improving confidence in your numbers.

3.  Automation Tools to Reduce Manual Data Entry

Manual data entry is one of the biggest sources of accounting errors. Even a small mistake can affect reports, balances, or tax calculations. Automation tools remove repetitive tasks and ensure consistency. They work by connecting different data sources and handling inputs automatically.

Practical ways to reduce manual entry errors

Improving accuracy isn’t just about tools it’s also about how the workflow is structured. A few practical adjustments can make a noticeable difference:

• Replace manual data entry with automated imports
• Use consistent file formats across all accounts
• Sync bank feeds instead of downloading statements repeatedly
• Schedule regular updates instead of processing data in bulk

When these changes are combined with automation tools, the result is a cleaner, faster workflow with fewer mistakes.

4. Fraud Detection and Pattern Recognition

In the fraud detection software clearly outperforms manual work is identifying unusual patterns in financial data. Fraud doesn’t always appear as a single obvious transaction. It often shows up as small, repeated irregularities that are easy to miss. Modern tools analyze transaction behavior over time and across accounts.

What these tools can detect

Instead of looking at transactions individually, these tools focus on patterns:

• Unusual spikes in deposits or withdrawals
• Repeated transactions with slight variations
• Irregular timing patterns
• Transactions that don’t match historical behavior

This type of analysis helps identify issues early before they become serious problems.

Detecting abnormal deposit patterns across multiple statements

When reviewing multiple accounts, patterns become more important than individual entries.

Effective tools can identify:

• Sudden increases in deposit frequency
• Structured deposits designed to avoid detection thresholds
• Consistent irregular patterns across different accounts
• Income streams that don’t align with expected behavior

This is especially useful for financial reviews, audits, and lending decisions where accuracy matters.

5. Investment Tracking and Portfolio Analysis

For individuals managing both income and investments, keeping everything organized in one place is essential. Switching between platforms creates confusion and increases the chance of missing key insights. Portfolio tracking tools combine financial data into a single view.

Why centralized tracking matters

Instead of checking multiple apps or statements, you can:

• View all investment accounts together
• Compare performance across assets
• Track growth over time
• Identify underperforming areas quickly

This not only saves time but also improves decision-making. When all data is visible in one place, it becomes easier to understand where money is working and where it’s not.

How Lenders Use These Tools to Speed Up Loan Reviews

Traditional loan processing often involves manual document review. This takes time and can lead to inconsistencies.

Modern lenders are shifting toward automated data processing to improve speed and accuracy.

How automation improves loan decisions

Instead of reviewing statements manually, lenders use tools to:

• Extract financial data instantly
• Standardize information across applicants
• Analyze cash flow and income patterns
• Identify risk indicators automatically

This reduces processing time significantly and allows faster decision-making without compromising accuracy.

White-Label Tools for Fintech Products

For those building financial platforms, creating data processing tools from scratch is not practical. White-label solutions provide ready-to-use technology that can be integrated into existing systems.

What to look for in a reliable solution

A strong white-label tool should offer:

• Accurate document parsing across formats
• Consistent data extraction
• Easy integration with existing systems
• Scalable performance for growing users

These tools allow businesses to focus on delivering value instead of building complex infrastructure.

Standardizing Financial Data Across Multiple Merchants

When dealing with multiple merchants or accounts, data inconsistency becomes a major issue.

Each source may use a different format, making comparison and reporting difficult.

Standardization tools solve this by converting all data into a unified structure.

Why standardization matters

Consistent data makes it easier to:

• Generate accurate reports
• Compare performance across accounts
• Identify trends and anomalies
• Integrate data into other systems

Without standardization, even the best analysis tools struggle to produce reliable results.

Best Practices to Improve Accuracy in Financial Workflows

Even the best tools need a structured workflow to deliver results.

Accuracy improves when processes are consistent and predictable.

A few key practices make a big difference:

• Use automated data extraction instead of manual entry
• Validate data immediately after import
• Keep formats consistent across all systems
• Reconcile data regularly instead of delaying it
• Use tools that flag inconsistencies early

These steps help maintain clean data and reduce the risk of errors over time.

Conclusion

The real challenge in individual accounting isn’t tracking transactions it’s managing clean, accurate, and consistent data across multiple sources. Once that problem is solved, everything else becomes easier: reconciliation, reporting, tax preparation, and even fraud detection.

This is where tools like MoneyThumb fit naturally into the workflow. Instead of replacing accounting software, they strengthen it by ensuring the data going in is already structured, reliable, and ready to use. That shift alone can save hours of work and prevent costly mistakes.

For individuals, the goal isn’t complexity. It’s clarity. The right combination of tools makes financial management simpler, faster, and far more accurate.

FAQs

What is the best accounting tool for individuals handling multiple bank formats?

The best option is a MoneyThumb tool that can convert and standardize data from different formats automatically. This ensures consistency and reduces manual work before the data enters your accounting system.

How can manual data entry errors be reduced in accounting?

Manual errors can be reduced by using automated data extraction, maintaining consistent file formats, and validating data immediately after importing it into the system.

Can accounting tools detect fraudulent bank statements?

Yes, modern tools can analyze transaction patterns and flag unusual activity that may indicate fraud, especially when reviewing large volumes of data.

Are white-label accounting tools useful for fintech platforms?

Yes, they allow fintech businesses to integrate reliable data processing without building complex systems from scratch, saving both time and development costs.

References

1. https://www.moneythumb.com/blog/5-moneythumb-business-accounting-tools-for-individuals/
2. https://www.moneythumb.com/pdf-to-excel-converter/
3. https://www.moneythumb.com/2qbo-convert-pdf-to-qbo/
4. https://quickbooks.intuit.com/accounting/what-is-bank-reconciliation/
5. https://www.investopedia.com/terms/r/reconciliation.asp
6. https://www.forbes.com/advisor/business/software/best-accounting-software/
7. https://www.pwc.com/gx/en/services/consulting/financial-services/fintech.html
8. https://www2.deloitte.com/us/en/pages/financial-services/articles/fintech-banking-industry.html
9. https://www.mckinsey.com/industries/financial-services/our-insights/how-banks-can-better-serve-small-and-medium-size-enterprises

The post 5 Business Accounting Tools for Individuals appeared first on MoneyThumb.

This shift is not about chasing trends. It is about building a structure that supports accuracy, efficiency, and long-term growth. A tech-forward approach allows accountants to reclaim time, improve oversight, and give clients the clarity they look for. Below is a detailed explanation of why these firms are firmly positioned for the future.

1. Cleaner Data and Fewer Manual Errors

Every accounting firm handles thousands of documents and entries each year. When teams rely solely on manual input, small mistakes can slip through and grow into bigger issues. Even the most skilled staff face fatigue during peak seasons, increasing the chance of errors.

Tech-forward firms reduce this risk early in the process. Modern tools can sort documents, read values, match entries, and organize statements automatically. This cuts down on repetitive work and gives teams more room to focus on checks that actually require professional judgment.

A few practical gains include:

• Less time fixing small inconsistencies
• Fewer last-minute adjustments before deadlines
• Smoother internal reviews with clearer trails

The result is simple: work becomes more reliable. Clients receive reports that need less clarification, and staff waste less time correcting avoidable mistakes.

2. Stronger Compliance Without Extra Stress

Regulations shift regularly, and each change brings new forms, new reporting standards, or new filing requirements. Firms that manage compliance manually often scramble during these transitions, creating stress for both teams and clients.

Modern accounting systems help by updating rules on their own and automatically checking entries against current regulations. This reduces the weight on staff while improving accuracy across the board.

Instead of constantly monitoring rule changes, accountants can spend time confirming that client decisions align with regulations, not searching for updated forms.

This creates confidence for clients who want assurance that their filings are consistently correct and up to date.

3. Real-Time Insight Instead of Backward Reviews

Most clients no longer want to wait until month-end or year-end to understand their financial position. They prefer ongoing clarity, updated cash flow, spending patterns, tax exposure, and performance trends throughout the year.

Firms that work with modern systems can provide these insights instantly. When financial data flows into dashboards in real time, accountants can share early warnings, spot cash shortages ahead of time, and help clients stay prepared.

Clients gain better decision-making support, such as:

• Knowing when to delay or accelerate expenses
• Planning for upcoming tax commitments
• Adjusting cash flow before issues arise

This makes the accountant far more valuable than someone who simply records past transactions. It turns the relationship into continuous financial guidance.

4. A Lighter Workload for Staff and Better Use of Skills

One of the biggest challenges in accounting is staff burnout. Long seasons of intense work, combined with repeated manual tasks, lead to turnover and higher training costs. Relying on additional hiring alone is not a sustainable strategy.

Tech-forward firms improve workload management by shifting repetitive tasks to automated systems. This allows teams to focus on review, analysis, and meaningful communication with clients. Junior staff can learn more advanced skills earlier, and senior staff can focus on oversight instead of data entry.

Firms report steady improvements when they adopt this approach:

• Higher accuracy from fewer repetitive tasks
• Better morale during peak seasons
• Smoother onboarding for new staff

This creates a healthier work environment and a more resilient firm overall.

5. Clearer Communication and Faster Turnaround Times

Traditional communication long email chains, scattered attachments, and follow-ups, slows down client service. Many firms lose hours each week just collecting missing documents or explaining minor details.

Tech-forward firms streamline this through secure portals, organized folders, and structured message systems that keep everything in one place. Clients can upload files, check reports, and request updates without waiting for an email reply.

This approach gives clients:

• Better visibility into their information
• Fewer delays
• A simpler way to stay organized

When communication becomes easier, trust grows naturally. Clients appreciate having access to their financial information without unnecessary back-and-forth.

6. Scalable Operations That Support Growth

A firm cannot grow sustainably if every new client requires a large increase in staff. Without structured systems, teams become overwhelmed, reviews take longer, and margins shrink.

Firms that adopt modern tools achieve growth with far less strain. Once systems are in place, clients follow similar workflows, documents move through the same checks, and reports are generated in consistent formats. This means the firm can handle greater volume without sacrificing accuracy or client satisfaction.

Scalability becomes a strategic advantage. The firm can take on larger clients, expand into new service areas, or grow its advisory offerings without chaos behind the scenes.

7. Stronger Data Protection and Lower Risk

Accounting firms manage highly sensitive information, making security a top priority. Outdated systems increase exposure to risks such as lost files, unauthorized access, and accidental deletions.

Modern accounting platforms provide stronger built-in protection, including:

• Controlled access for each user
• Record of every file change
• Encrypted document storage
• Backups that run automatically

This approach reduces risks and reassures clients that their data is handled responsibly. In an environment where trust is essential, strong security is not optional; it is a core part of professional service.

8. A Clear Edge in a Crowded Market

Many firms offer similar services: bookkeeping, payroll, tax filings, and financial reporting. What sets a firm apart is not the list of services but the experience of working with them.

Tech-forward firms deliver cleaner results, quicker responses, and clearer guidance. Clients immediately notice when:

• Reports arrive earlier
• Fewer issues appear
• Requests are handled without delays
• Advice is based on current data, not outdated spreadsheets

This creates a reputation for consistency. And consistency is a long-term competitive edge.

Instead of spending resources on aggressive marketing, firms grow naturally through referrals and strong client retention.

9. Ability to Offer Higher-Value Services

Compliance work is necessary, but it is also becoming more automated across the industry. Firms that depend too heavily on manual compliance work risk shrinking margins and rising competition.

Tech-forward firms use modern systems to move beyond basic tasks and offer services that clients consider strategic, such as:

• Cost control analysis
• Cash flow planning
• Growth forecasting
• Spending reviews
• Performance benchmarking

These services require a strong foundation of accurate and current data, which technology provides. Once the data is in place, accountants can step into a more advisory-focused role that strengthens long-term relationships.

Clients appreciate clear explanations backed by reliable numbers. This opens the door to additional revenue streams without stretching the firm beyond its capacity.

10. Greater Stability in an Industry Under Pressure

The accounting sector faces several ongoing challenges: increasing competition, rising client expectations, seasonal workloads, and constant regulatory changes. Firms that rely on outdated methods find these challenges harder each year.

Tech-forward firms stay more stable because their systems absorb much of the friction. They are not running behind on updates. They do not lose time to misplaced files. Their teams do not face the same burnout levels. Their clients stay informed without frustration.

This stability affects the entire firm:

• Better long-term planning
• Higher client retention
• More predictable workloads
• Reduced stress during busy periods

A stable foundation allows firms to grow without losing control of their operations.

Final Thoughts

The future of accounting belongs to firms that combine strong expertise with organized, modern systems. This combination strengthens accuracy, communication, compliance, and client satisfaction. It creates an environment where professionals can focus on meaningful work, clients receive clearer guidance, and growth becomes more manageable.

A tech-forward approach is not about chasing trends; it is about building a firm that operates with structure and clarity. The firms that adopt this mindset will be the ones that thrive in the years ahead, while others struggle with inefficiencies they can no longer afford.

FAQs

1. What makes a tech-forward accounting firm different from a traditional one?

A tech-forward firm builds its workflow around modern systems that automate routine tasks, reduce manual errors, and improve access to real-time information. Instead of spending most of their time on data entry, the team can focus on review, analysis, and client guidance. This creates smoother operations and a more reliable experience for clients.

2. Do clients actually benefit from real-time accounting data?

Yes. When clients can see current financial numbers, they make better decisions about spending, planning, and tax preparation. Real-time updates help identify issues early, avoid surprises, and support clearer communication between the client and the accountant. It also reduces delays because both sides work with the same updated information.

3. Is adopting new accounting technology expensive for a firm?

The initial investment depends on the tools chosen, but most firms recover the cost through increased efficiency, fewer errors, and higher output per staff member. Once repetitive work is reduced, teams free up hours that can be redirected toward higher-value services. Over time, the firm saves money by reducing overtime, preventing mistakes, and improving client retention.

4. How does technology improve compliance and reporting accuracy?

Modern accounting systems automatically apply updated rules, validate entries, and highlight potential inconsistencies. This lowers the risk of incorrect filings and gives accountants more time to focus on reviewing the data instead of searching for regulatory changes. The result is more accurate reports and fewer last-minute corrections.

5. Will technology replace accountants in the future?

No. Technology handles repetitive tasks, but it cannot replace professional judgment, client communication, or strategic decision-making. Accountants remain essential for interpreting financial data, advising clients, and ensuring compliance. Technology simply allows them to perform their work with greater clarity, speed, and consistency.

References

• https://safesend.com/about/news/tech-forward-tax-firms-future/#:~:text=Tech%2Dforward%20tax%20firms%20have%20moved%20beyond%20just%20responding%20to,time%20spent%20on%20compliance%20tasks.
• https://www.cpa.com/blog/2025/07/17/how-forward-thinking-firms-are-turning-technology-fuel-growth
• https://www.wolterskluwer.com/en/expert-insights/a-technology-forward-accounting-firm-offers-clients-and-staff-a-more-modern-firm-experience
  https://paro.ai/blog/tech-and-ai-consulting-for-firms/
• https://tax.thomsonreuters.com/blog/navigating-ai-culture-and-talent-in-tax-firms/
• https://futurefirm.co/will-ai-take-over-accounting/
• https://royalwise.com/leveraging-technology-accounting-firm/
• https://karbonhq.com/resources/accounting-firm-tech-stack/
• https://www.njcpa.org/article/2025/01/10/how-technology-is-transforming-the-accounting-profession
• https://jetpackworkflow.com/blog/jason-staats-technology-accounting/

The post Why Tech-Forward Accounting Firms Have the Inside Track to the Future appeared first on MoneyThumb.

But don't worry. If you're looking to expand your accounting practice, we're here to help. In this article, we'll cover whether expansion is the right move for your practice, how you can plan for successful growth, and the expansion strategies that established accountants rely on.

Is it Time to Expand Your Accounting Practice? 

Before you dive into preparing what could be a costly and time-consuming growth plan, it's best to assess whether your existing practice is ready and prepared for the expansion process. Here are some things to consider:

1. Client Growth - If you frequently acquire new clients and have a pool of potential customers you could attract with increased marketing, it may be time to expand. Furthermore, if your team is working to capacity or you're considering turning down potential clients due to resource limitations, expansion is a practical choice
2. Financial Health - Consistent profits are a good sign you're ready to expand. However, being in the green usually isn't enough to support expansion on its own. You might need access to investor capital or other funding, especially if you want to make significant moves like renting large physical premises.
3. Market Demand - If potential clients in your niche have multiple accountants to choose from in your area, you might find yourself with the same amount of competition even after expansion. However, if you plan to offer new services that will put you above your competition or enable you to appeal to a new client base, you can overcome this challenge.

There are a few more things to consider, like client feedback, industry trends, and your overall strategic vision. But if the three boxes above are ticked, your practice is usually primed and ready for expansion.

Preparing to Expand and Planning Your Growth 

When preparing to expand your accounting practice, the first step is to take stock of what you're currently working with. Make a list of and assess:

Employees - It might also be worth asking employees to list their strengths, opportunities for improvement, and KPI stats so you can determine what training you should offer or what skills new hires will need.

Technology and infrastructure - List the hardware and software you use, and make a note of any shortcomings you've experienced when using them. Additionally, it may be helpful to map the journey of a document or process through your practice to identify any inefficiencies.

Services offered - Record any client feedback or suggestions about your services. Then, take a look at your competitors' offerings to find out where you need to catch up.

With insights from these lists, you should know where to improve and scale your existing practice.

Creating Your Growth Plan 

Now, it's time to set out your goals for expansion and create a roadmap to achieving those goals. Make sure your goals are:

S - Specific 

Break your aims for expansion down into smaller sections. Take care, as this can be harder than it first appears. For example, you may want to increase the number of clients you can take on by 20%.

While this is specific, you'll need to expand some other areas of your practice before achieving this aim. You might need to hire a new CPA to handle the clients' workload or integrate automation software into your existing technology to save time. Try reaching the root of your issues and plans for expansion to create the most specific goals.

M - Measurable 

It may not be clear how the moves you've made toward expansion affect your practice's day-to-day operations. So, to track the impact you’re having, make your goals measurable.

For example, you may update your technological capabilities to decrease client onboarding time by 25% or offer your employees customer service training to reach a 90% client retention rate. As well as tracking how much your practice has scaled, this approach allows you to make necessary adjustments along the way.

A - Attainable 

The chance to expand means you can take steps toward your ideal practice. But it's important not to get too caught up in what could be, and focus instead on what should be. When setting your growth goals, consider the resources you have at your disposal and those you'll need to purchase.

While it's good to dream big, there's little point in setting goals outside your capabilities or budget. Instead, dialing it back and ensuring your expansion plans are achievable can help you maintain good morale as things get shaken up, ensuring a consistent drive toward growth.

R - Relevant 

There's a good chance that, when you set up your accounting firm, you had similar goals in mind to those you're jotting down now. Take a look at your original business plan and make sure your expansion goals align with the goals you've set in the past.

For example, expanding marketing efforts to sole proprietors won't be worth it if you want your practice to be the number-one choice for big business audits in your local area by 2025. By keeping your targets relevant, you'll ensure your expansion drives your practice's overall success.

T - Time-Measured 

Though expanding your accounting practice is undoubtedly exciting, often it's better to scale certain areas before others. This piecemeal approach can take a lot of time, but it will ensure your practice continues to run smoothly throughout the expansion process.

Decide on an order of priority and ensure timelines reflect that hierarchy. For example, you'll want to hire and train new employees before tax season. However, you might not want to add new services to their workload until after April.

Putting Your Plan in Action 

There are a few other considerations you’ll need to make during the planning phase, such as:

Readying Your Contacts - It's a sound idea to reach out to anyone in your network who's expanded their practice before you to learn about common challenges. Additionally, if you need specialist advice or have to get on the waiting list with a headhunter or letting agency, do it sooner rather than later.

Budgeting - Before you begin making purchases, make sure all your budgets are in order, along with any contingency plans. Check back and adjust your budget along the way to avoid major pitfalls.

Double-Checking Regulations - Check the federal and state regulations that apply to your practice and any new services you plan to offer. For example, you may need to apply for permits or train staff in order to remain compliant throughout your expansion journey. Though it’s time-consuming, staying on the right side of the law is essential.

Strategies to Expand Your Accounting Practice 

Now that you've got an expansion plan, let's examine some time-tested strategies successful accountants use to scale their practices.

1. Investing in technology - Almost 60% of those running accounting practices say investing in digital improvements has a direct, positive impact on their profits. With advancements like cloud accounting, automation, data analytics, and increased cybersecurity at your fingertips, your firm can quickly improve efficiency and provide better service simply by investing in software.
2. Upskilling employees - Worryingly, 92% of accounting practices struggled with hiring new employees in 2023. This has led leaders to encourage their existing employees to hone their skills and offer niche services. In addition to training them in your new software and supporting their continuing professional education, encourage your employees to create their own growth plans. Welcome attempts to upskill by offering book tokens or tickets to training days.
3. Expanding your reach - In the digital age, clients don't need to come into your office for meetings or send documents through the post. In fact, your employees can do much of their work from their home offices. That's to say, you don't need to limit your clients to those in your local area. If you’re focusing on improving your technological capabilities, you can easily expand your reach with digital marketing to find and cater to clients entirely online.
4. Explore partnerships - A partnership is an excellent idea if you're pushing your employees and infrastructure to the limits but still need more resources for expansion. Merging with an existing firm will give you access to a new client base, additional expertise, increased market presence, and a fresh perspective on processes. Attend seminars and conferences to network, and don't hesitate to contact those looking for partners.
5. Diversify your offerings - One of the most favored ways for accountants to expand their firm is through new and unique services. Eighty-two percent of accounting firms say their clients expect more from them than they did five years ago, proving that there's a clear expectation for expansion in this area. However, it will take some time to determine precisely what services you should offer. Consider surveying your existing clients or performing market research on potential clients to get some ideas. Remember, you may need to train your employees to provide these services or invest even more in new technology.

In Conclusion… 

Expanding your accounting practice allows you to position your firm for continued success. However, changing how you're used to operating can cause problems for both your employees and clients. This is why expansion requires careful planning and a continued commitment from all those involved.

Make sure to determine whether your practice needs expansion, and if you have the resources to see your growth plan through to completion. Speaking of your growth plan, set SMART targets to ensure you stay on track and work toward tailored goals. Finally, take advantage of your industry knowledge and stick to time-tested strategies used by successful accountants.

Good luck!

Sources and Resources

• https://www.forbes.com/sites/forbesbusinesscouncil/2023/09/05/15-telling-signs-its-time-to-scale-up-your-company/
• https://www.infinity-globus.com/blog/grow-your-accounting-practice-everything-you-need-to-know/
• https://www.upwork.com/en-gb/resources/business-expansion-plan
• https://www.business.com/articles/writing-a-business-growth-plan/
• https://jetpackworkflow.com/blog/how-to-scale-an-accounting-firm/
• https://surfaccounts.com/6-tips-to-grow-accounting-practice/
• https://www.fctraining.org/ways-to-grow-your-accountancy-firm-successfully.php
• https://www.youtube.com/watch?v=dOR2UmiepxA

The post Strategies Successful Accountants Use to Expand Their Practice appeared first on MoneyThumb.

A breach of clients' information can result in a loss of trust and profits, penalties and fines, and even the revocation of your license. However, in the rush of tax season or while managing multiple accounts at once, data protection likely isn't your priority.

Still, managing client-sensitive information safely and efficiently is essential, even during the busiest times of the year. To make this feat easier, we'll explore exactly why that is, and discuss some practical strategies to ensure your focus on client confidentiality doesn't hamper the quality of your work.

Let's get started…

What Counts as Client Sensitive Information? 

First and foremost, it's important to know what information you'll need to protect. Broadly speaking, sensitive information constitutes "any data that, if compromised, could lead to harm, loss, or unauthorized access." But, in practice, this refers to several sometimes-unexpected things.

Client-sensitive information includes, but may not be limited to:

• Social Security Numbers
• Passport numbers
• Driver's license numbers
• Address or location information
• Bank account information
• Credit card information
• Investment account details
• Tax Returns and W-2 Forms
• 1099 Forms
• Other income documentation
• Proprietary financial data
• Client contracts and agreements
• Business tax filings
• Health Savings Account details
• Medical expense records
• Passwords for online accounts
• Biometric information
• Security questions and answers
• Emails and other correspondence between you and a client
• Internal memos related to clients
• Estate plans and wills
• Power of Attorney documents

For a comprehensive list, or if you need clarification on a particular document or piece of data, it's best to check your firm's policies or contact your attorney.

As you can see, various types of information are considered sensitive. These can be physical documents stored in a filing cabinet in your office or data points stored in a spreadsheet with a thousand rows. No matter what kind of sensitive information you're dealing with, applying the same care and accountability for its protection is crucial.

However, it's likely that you will have to share some of the above information with your colleagues or even third parties like executors as part of your role. This undoubtedly complicates the questions surrounding client-sensitive information.

What the Law Says About Client Sensitive Information 

The situation gets more complicated as the US has yet to pass one holistic law that governs accounting and data privacy, or even data privacy in general. Instead, as an accountant, you'll need to familiarize yourself with various regulations, requirements, and mandates that lay out specific data protection obligations.

Below is a breakdown of some of these laws. To ensure you've got the whole picture, check whether there are any state-specific laws or requirements you'll need to abide by.

Gramm-Leach-Bliley Act (GLBA) 

The Gramm-Leach-Bliley Act focuses on protecting consumers' personal financial information. This includes data held by accounting firms. Under GLBA, you must:

• Ensure client data remains private and protected.
• Disclose privacy practices to clients, informing them how their information is used and protected.
• Set up safeguards to stop unauthorized access to or use of client information.

Health Insurance Portability and Accountability Act (HIPAA)

While HIPAA primarily deals with protecting health information, it's relevant if you handle health-related financial data like Health Savings Accounts (HSAs) or medical expense records. It states that you must:

• Ensure Protected Health Information (PHI) is private and secure.
• Implement measures to prevent unauthorized access to health-related financial data.
• Comply with privacy rules regarding the disclosure and use of PHI.

California Consumer Privacy Act (CCPA)

Although CCPA is, in theory, a state-specific act, it was the first comprehensive data protection act passed in the US. As such, it's often used as a blueprint for other states' data privacy legislation. It's applicable if your firm grosses over $25 million per year, operates or has clients in California, or is partnered or works with a firm in California. Under CCPA, you must:

• Provide clients with the right to know what personal information is collected, used, shared, and sold.
• Allow clients to access and delete their personal information if they wish to do so.
• Implement security measures for personal information, and comply with clients' rights to opt out of data sales.

The IRS Publication 4557

If you deal with taxpayer information, you'll need to familiarize yourself with the IRS guidelines known as 'Safeguarding Taxpayer Data'. This publication outlines compliance measures for accountants and tax professionals to prevent data leaks and maximize security. Though not compulsory, following the guidelines in this publication can help you stay on the right side of the above laws, and protect yourself from penalties. To ensure compliance, you'll need to:

• Create a security and backup/recovery plan outlining procedures for protecting client information and responding to potential leaks.
• Encrypt sensitive client data, whether it's being sent or used, to prevent unauthorized access during storage or transmission.
• Train employees on data security best practices, phishing awareness, and how to respond to potential security incidents.

Finally, in addition to legal requirements, there are various codes of ethics you'll need to follow depending on how and where you're licensed. Each of these lays out specific confidentiality requirements. Here are a few examples:

AICPA Code of Conduct Section 7216 - "A member in public practice shall not disclose any confidential client information without the specific consent of the client."

International Federation of Accountants Code of Ethics Subsection 114 - "An accountant shall not disclose confidential information required as a result of professional and business relationships outside the firm or employing organization without proper and specific authority, unless there is a legal of professional duty or right to disclose."

NASBA Uniform Accountancy Act Section 18 - "Except by permission of the client for whom a licensee performs services or the heirs, successors, or personal representatives of such client, a licensee under this Act, shall not voluntarily disclose information communicated to the licensee by the client relating to and in connection with services rendered to the client by the licensee. Such information shall be deemed confidential…”

Essentially, unless your client gives express permission, their information should remain within your firm. Additionally, you need a plan to protect that information from leaks and breaches.

Client Confidentiality Tips from Accountants 

Now that you know what constitutes sensitive information and the regulations and requirements you'll need to abide by when dealing with it, let's examine some of the ways established accountants ensure they manage this data safely and efficiently.

Encrypt Data 

The easiest way to protect digital information is to implement end-to-end encryption. This makes it almost impossible for cybercriminals to access your firm's data, and ensures that only those authorized to review and use client-sensitive information have the 'key' necessary to do so.

The easiest way to ensure your cloud accounting systems and communication software have end-to-end encryption is to ask the software provider. If you're one of the many accounting firms switching to digital accounting, do research in advance to find out which software offers the highest standard of information security.

End-to-end encryption doesn't just protect your clients' data. It also demonstrates that you're taking steps to protect them, establishing your firm as a great choice for potential clients. As Elena Meshki, licensed accountant and tax advisor, says, "[Encryption] not only fosters trust but also positions the accounting service as a reliable and secure partner in managing sensitive financial data."

Physical Document Policies 

Despite the efficiency of cloud accounting software and other technological advancements in accounting, many firms have yet to integrate these tools into their practice. Joel Hughes, CEO of Rightworks, stated, "Ironically, our survey showed that security, often cited as one of the biggest benefits of technology adoption, is also a top concern firms cite for not moving to the cloud."

However, even though data breaches are on the rise and digital accounting solutions may seem less secure, you shouldn't underestimate the risk of physical breaches. In many cases, a break-in is the first step for a cybercriminal to conduct a hack, while accounting firms are at a higher risk of internal theft and employee fraud.

To combat these physical breaches, your firm will need to store physical documents in locked cabinets in locked rooms, limit access to them with keycards or a sign-out system, and integrate traditional security measures like alarms and cameras. Additionally, regularly auditing your physical security can highlight any potential 'blind spots.'

Educate Your Clients and Partners

Daniel Stachowiak, MD at MyDocSafe, stated in conversation with AccountingWeb that "An accounting firm can protect its most important, sensitive data with a private army, but if an ancillary system is exposed or a supplier or client is not using effective security checks, then the accounting firm is going to be under threat."

You don't have to prepare an in-depth data protection course like the training you complete, but it's worth reminding clients how and why they should strive to protect their information. In addition to Multi-Factor Authentication, strong password requirements, and a zero-trust policy, a simple, pre-written sign-off on emails or a brief recap at the end of a meeting will work well.

Ensuring that your partners and third-party companies, such as document delivery services, employ sound data protection methods is slightly different. You'll need to do your due diligence, perhaps even request that they complete an audit and share their findings, to ensure these companies and organizations care about client confidentiality as much as you do.

In Conclusion… 

Managing client-sensitive information safely and efficiently is crucial for accountants. This is not only to comply with various legal requirements but also to maintain client trust and ensure the longevity of your practice.

By implementing proactive protective measures like end-to-end encryption, employee and client education, access policies, and audits in your practice, you can rest assured that your clients' information is safe, even if protecting it is not your number one priority during busier periods.

Despite this, it's important to remain vigilant and look for potential weaknesses. Feel free to discuss with your colleagues how you can improve security, and familiarize yourself with your firm's policies when needed.

Sources

• https://www.titanfile.com/blog/6-best-practices-for-client-confidentiality/
• https://bigid.com/blog/sensitive-information-guide/
• https://library.croneri.co.uk/cch_uk/cwg/pmcwg1-4-5/
• https://www.varonis.com/blog/us-privacy-laws
• https://www.lowenstein.com/media/4730/privacy-principals-for-accountants-mh-and-ms-cpa-journal-0508.pdf
• https://practiceprotect.com/data-security-plan/
• https://nasba.org/files/2011/03/Transborder_Challenges_Accountant_Client_Confidentiality_Presentation-2010.pdf
• https://www.lawfaremedia.org/article/personal-data-in-the-cloud-is-under-siege.-end-to-end-encryption-is-our-most-powerful-defense
• https://redcloveradvisors.com/cpa-privacy-best-practices/
• https://thedocumentwarehouse.com/news-articles/tips-for-physical-document-security/
• https://www.compass-cpa.com/how-accounting-firms-ensure-client-confidentiality-security/
• https://oper8global.com/cyber-accountants/

The post How Successful Accountants Manage Client Information Safely and Efficiently appeared first on MoneyThumb.

Of course, this is mostly not the case when it comes to accounting clients, thus the reason it is such a dream. In fact, the biggest complaint accountants have is about those last-minute clients. You know the ones. They turn a suitcase full of tax paperwork over to you on April 10th, expecting you to have their tax returns done by the IRS income tax deadline of April 15th.

So how can you retrain those pesky procrastinating clients? People tend to be creatures of habit, and previously tardy clients are likely to remain that way without a little intervention. Here's advice from several CPAs in an article from the Journal of Accounting on how to plan for, and even reform, those habitually late clients.

MAKE IT EASY WITH THE CLOUD

Ryan Hagan, CPA, the managing partner of Altruic Advisors, a virtual accounting firm focused on serving not-for-profit organizations around the country, started in public accounting 22 years ago. At that time, many of his clients came in right before a tax deadline, often with complicated situations that increased the chance of delay.

But now cloud-based accounting software allows accountants and their clients to interact year-round. At Hagan's firm, clients can upload documents anytime, and both they and Hagan's accounting staff can get real-time assessments of where audits, tax returns, or other reports stand. Clients also get checklists so they can clearly see what they need to do for Hagan's team to do their work.

"They can go through the checklist item by item," he said. "It's a clear indication of what's remaining and what the expectations are."

His staff can also look internally to assess which accounts are behind. Staff can then determine when they need to jump in and bring attention to clients who may need additional help.

SEND PLENTY OF REMINDERS

Letting clients know ahead of time what deadlines are coming up and what documents they need to provide to meet them can prompt clients to stop dragging their feet, said L. Quinn Hart, CPA, a partner at accounting firm Strothman and Company in Louisville, Ky. Her firm had always sent reminders with lists of needed documents to clients but didn't necessarily reach out to their business clients on a set schedule.

Then the firm began using a new piece of software last year that was easy to use on the client end and gave earlier reminders about documents needed by the tax professionals in Hart's office. The software, used primarily for business clients but also some individual tax clients, allows clients to drag and drop needed items into the firm software and also gives a clear picture of what documents are still needed, what has already been submitted, and whether firm staff has reviewed the information.

Those little nudges, in emails and communications through the firm's accounting software, paid off with a noticeably smoother process on the firm's end.

"We actually got a lot of information sooner," said Hart, who had assumed that clients would stick to their own schedules and was pleasantly surprised at how effective the reminders were.

Reminders can come by mail or email, or even via technologies that can text clients to let them know about upcoming deadlines.

BE PROACTIVE ABOUT UNUSUAL DELAYS

What can be more concerning than perpetually late clients are small business owners or individuals who have been timely in years past but haven't reached out by midseason to set up a time to talk about their taxes.

That can be a sign that a bigger issue is brewing and that it might need more attention and time than past tax returns have required, Hart said.

Hart reaches out to those clients by phone in mid-March to gently inquire about their status and to see what the situation is. It could be a health problem or a financial situation that means the tax bill may be tougher to pay this year. Then she and the client can talk directly about how to handle things and whether to file for an extension.

"It's usually they're dreading it for some reason, which is the worst reason to put it off," Hart said.

ACKNOWLEDGE THE PERPETUALLY LATE

Part of public accounting is acknowledging that a certain percentage of clients will always rush in at the last minute, whether right before April's deadline or before the extended filing deadline in the fall, said Paul Grummett, CPA, of Kline & Company CPA in Nashua, N.H., a firm that specializes in taxation and DCAA compliance of federal government contractors.

He suggests going in with an attitude of acceptance toward these latecomers and making sure there's some energy left toward the end of the busy season to deal with what many see as an inevitable aspect of the profession.

"It's more a mindset than anything year to year," he said.

His firm reaches out to clients in advance to let them know about deadlines and when to get information in. But if clients come in at the last minute expecting a miraculous turnaround, he politely tells them he'll do his best but advises them to expect an extension if it cuts too close to the wire.

"We'll try to get it out, but no guarantee," he said.

Managing clients proactively is important. Some firms, for example, inform clients that if their information is not submitted by the firm's cutoff, their return will automatically be extended. Cutoff dates vary by firm, but for those that use them, the cutoff generally is no less than four weeks before a deadline. Setting expectations up front is crucial for firms to avoid a last-minute flood of work that would overwhelm the staff.

EMPHASIZE THE BENEFITS OF TIMELINESS

Hart tries to emphasize that when clients submit their information earlier, it allows her and the firm's other CPAs to spend more time helping with strategic advice instead of rushing at the end of a strenuous busy season.

"You really don't want to wait until later in the season," she tells her clients. "It really benefits you to get your stuff in earlier."

CONSIDER PENALTIES

This is definitely a more stick than carrot approach, but it works at Hagan's firm, which primarily serves not-for-profit organizations with tight budgets and agreed-upon pricing for audits and tax filings.

By understanding how costs might escalate if firm staff have to chase down documents, the firm's clients have more incentive to meet the firm's well-communicated deadlines.

"If there's additional accounting work, you're going to get dinged for that," he said.

The key is being clear ahead of time by defining the scope of services in engagement letters, the firm's standards for communication, and the expectations of receiving documents in a timely manner so that clients aren't caught by surprise when a bill for additional work is received. Hagan said his firm has made that clarity a priority.

"As a CPA firm, we've gotten much better about setting expectations," he said.

With some work on the front end, CPA firms can turn their perpetually late clients into early filers, leaving time and capacity to handle the stragglers.

USE MONEYTHUMB'S FINANCIAL FILE CONVERTERS

There is only so much you can do when it comes to controlling the behavior and habits of habitually procrastinating clients, but one urgent thing accountants can do from their end is to make your own job easier and faster by using our PDF financial file converters to convert clients' financial documents.

The post 7 Ways Accountants Can Retrain Procrastinating Clients appeared first on MoneyThumb.

Today on the Rules of Thumb blog from MoneyThumb we will discuss the niche of payroll and offer helpful steps for building a successful payroll practice.

Define Your Payroll Practice Processes

You should have a definite plan in writing for the processes of your new payroll practice. This means plainly laying out what is expected when it comes to processes such as taking on new clients, quarterly filing, year-end tasks, and client terminations. These processes and how they will be handled are documented step-by-step so there is never any confusion.

If you have employees this will help them to clearly understand their job responsibilities and be able to work efficiently and effectively. Knowing that your business is running as intended will give you the peace of mind to focus on strategy, sales, marketing, and supporting your team.

Not only do processes help with internal alignment, but your clients know exactly what to expect from your payroll practice. Consistency is key, and clients quickly learn to trust you and trust the process.

Define What Kind of Clients You Want

You should have a set idea of what kind of payroll clients you want and standard procedures for handling clients. If you don't define your payroll practice and exactly what it offers clients, you could create chaos and confusion for everyone involved. It's better to grow healthy, with the right clients, and not give in to every client's whim.

You may have to turn down good-paying clients because they aren't a good fit for your payroll practice, or if their demands are beyond the scope of your work. Some clients just are not the right fit for you. The market for payroll services is huge. If a client doesn't work out, move on to the next prospect.

Learn About Marketing Your Payroll Practice

Most accountants and payroll companies are terrible at marketing – bad websites, no social media presence, and zero differentiation from competitors. Do all you can to learn the basics of successful online marketing for your payroll practice. You need a great website, a busy social media page, and always be adding new good reviews of your practice. Gain subscribers to a fantastic newsletter you create.

Define Your Pricing Plan

Before you announce your new payroll practice you should have your prices for all services clearly laid out. To help you with this, download this free whitepaper from Accounting Web, Pricing Plans for a Profitable Payroll Practice. 

In this guide, you will learn the following:

• Insights into payroll that may lead to necessary changes
• Deciding which direction to take in payroll pricing
• Tips for building your own payroll pricing structure
• A full checklist to ensure success along the way

For even more assistance in creating a successful payroll practice, check out MoneyThumb's PDF financial file converters designed specifically for accountants. Having the ability to quickly and easily convert bank statements and payroll information will help your practice thrive.

The post How to Build a Successful Payroll Practice appeared first on MoneyThumb.

Tax season is a stressful time, so when you interview a client for financial information related to doing their tax return, you don't want to appear like a salesman, hawking your additional wares when they are only concerned about their taxes and what they can deduct. However, there is a way to seamlessly bring up additional services you offer during this initial tax interview. For instance, many of the questions you will be asking have to do with saving money, while you are getting information to ascertain what tax breaks the client can take advantage of. This is the perfect time to bring up financial planning and how the client can save on taxes with investment alternatives.

Why Sell to Existing Clients?

First and foremost, it is easier to sell to existing clients. To a certain extent, they are presold as they already have an investment in their relationship with you, their accountant. Who knows their financial situation better? Imagine all the personal documents that must be reviewed to prepare a tax return. They provide insight into not only tax matters but family, investment, and business matters as well. The condition of the records alone may provide an opportunity to add value for the client by offering bookkeeping or organizational services.

Secondly, a level of trust has already been established with the client. One of the biggest barriers to selling any type of personal service, especially those involving finances, is developing a solid level of trust. This is also why obtaining a new client through a referral is much more valuable than by a cold approach. Existing clients transfer some level of their trust via the referral so that the accountant does not have to start at ground level.

A client's experience with his or her accountant is a good basis for a relationship, but even better is when the accountant knows the client. Increasingly, tax professionals are learning the value of vetting potential new clients and ensuring a solid onboarding process before accepting them. When determining which clients should be offered additional services, you can look to previous behaviors, including treatment of staff, condition of records, level of participation, and payment history to determine if this is a client he or she would serve again.

The No. 1 reason to sell additional services to existing clients is that clients want them. Too frequently clients seek new providers because they complain that their accountant is not proactive enough. Clients say that they want someone who comes to them with updates, ideas, and recommendations throughout the year, rather than just preparing their tax return once a year. Clients assume that in addition to preparing tax returns, an accountant will identify opportunities and help them reach their goals. Cross-selling may generate revenue for the firm, but it is really about adding value for the client.

During the interview, be interested in the client, ask what they are concerned about, and really listen. With this perspective, you are offering not only your tax services but yourself, and the conversation will often naturally turn to other topics of interest other than taxes.

Of course, you don't want to stray too far from the tax issue in your initial interview. The art of good marketing is creating a relaxed environment where the client feels they are showing interest rather than being bullied to sign up or buy. Take notes during your interview about any additional services the client showed interest in, then later, weeks or a month say, send them a follow-up email regarding the services they seemed interested in. Give them ample time to become relaxed after their tax issues are taken care of. In your email, just remind them of the things you two talked about, whether it be financial planning, investment suggestions, budgeting concerns, etc. Be cordial and professional and you will find that you often end up with a client for a whole other product you handle. Who knows? If your new client is a small business owner, you could end up taking care of their finances all-around or coming on board as a consultant.

Here at MoneyThumb, we love the saying, "If you don't ask the answer is always no." Don't be afraid to ask. You never know what new service a client could need and they will thank you later down the road for mentioning it in the initial tax interview if you handle it like a boss.

The post Make Clients Aware of Additional Services Your Firm Offers in Initial Tax Interview appeared first on MoneyThumb.

However, especially at tax time, having an accounting professional take care of your finances takes SO much weight off of you, and frees up time to build your business. Another great aspect of having a professional, qualified accountant on your team is that you will feel like you have bought an insurance policy against faulty or ineffective financial management of your business. You will rest well knowing you have a pro handling things in the most effective and legally correct way.

If you are just starting out, an accountant can help guide you in decision making when your personal finances are tied to your business. He/She can also advise you on important aspects of setting up your business, such as whether to create an LLC or other type of corporation to take the most advantage of tax breaks and future financial issues.

If you are already in business, a professional accountant can handle all tax preparation, advise you on financial growth and investment, create financial reports for possible investors, budget planning, give advice on regulations and laws, write new business plans, and the list goes on. Having an accountant on board means you are freeing up your time and the time of your office people to work on other tasks that will grow your business evermore.

If you feel your business is not quite ready for a full-time accountant, it is very common for accountants to freelance and only work for their clients during the tax season or other busy periods the business encounters.

Or it could be that you are ready to actually create your own in-house accounting and financial team to enhance your business. If this is where you are in your small business journey, and you want to make sure you hire and retain the best people, download this free report from Robert Half, one of FORTUNE^® magazine's "World's Most Admired Companies." The report is called The People Puzzle: Building and Retaining a Talented Accounting and Finance Team. Robert Half and the American Institute of CPAs (AICPA) surveyed accounting and finance staff to learn what motivates them in the workplace. The survey results provide essential insights into what factors make employees want to build a career with a company.

The bottom line is that an accredited accounting expert--whether you hire a firm to handle your finances, a freelancer to do it part-time or even create your own in-house accounting team--will be able to manage your company's finances far more efficiently and profitably than you could ever do it yourself.

The post Who Handles the Accounting For Your Small Business? appeared first on MoneyThumb.

In one of our previous blog posts, we offered advice to anyone transitioning to work from home situations. The advice in that post is very helpful but doesn't take into account the specific challenges of the accounting profession. A few of these challenges unique to accounting are; how to protect the delicate financial information of clients, safely transferring IT to your employees' home offices, and making sure deadlines continue to be met.

We found this great article at the Journal of Accountancy with sage advice from seasoned accounting professionals who are way ahead of the curve when it comes to working from home. The article discusses how not all accounting firms, or other businesses for that matter, are as prepared for all or large segments of their staff to work remotely. What can organizations do if quarantines or other travel restrictions preclude staff from coming into the office? What technologies will be needed? What policies will need to be in place? Can even organizations that have so far eschewed remote work cobble together a workable solution? The article addresses those questions and more.

The article points out how accounting firms who have already moved to the cloud are in a much better position to handle having employees work from home. "That’s because cloud applications and infrastructure provide much more scalability and accessibility than servers and software housed in the office," said Marc Staut, a shareholder and chief innovation and information officer at Boomer Consulting and former CIO for CohnReznick, one of the dozen or so largest U.S. accounting firms.

Fortunately for businesses, even those largely not in the cloud, several large technology vendors have provided a silver lining in the form of free access to products or certain features within products. For instance, Microsoft, Google, LogMeIn, Cisco, and Zoom are all offering free licenses during the COVID-19 outbreak to their meeting, collaboration, and remote work tools. “This is a great opportunity for firms that haven’t planned for a full-scale remote working scenario,” Staut said.

With security being one of the major issues accountants deal with, accounting firms and finance departments often have applications, data, or computing resources that employees must access directly. “Security is critical no matter the systems used,” said Lisa Traina, CPA/CITP, CGMA, a partner with cybersecurity firm CapinTech, a CapinCrouse company. As an example, Traina said that accountants should not be working at home on computers with outdated anti-virus software, especially if others in the household use the computer.

“So, any system used must have security measures in place, including things like current operating systems, updated software, virus and malware protection, encryption, login restrictions, IP address restrictions, and employee-acknowledged acceptable usage policies,” Traina said. “The list is long. Employers should also have multifactor authentication in place for all key systems, including email," she said.

All of this advice is for naught if accountants can’t access stable and secure high-speed internet access. Traina recommends that accountants avoid using public Wi-Fi networks, such as in coffee shops or some public areas, and should also make sure that the security on their home Wi-Fi connections is set up.

In a pinch, accountants can use their cellphones as mobile “hotspots” through which their computers can access the internet securely. Search your phone’s settings menus to access its “hotspot” controls, which often provide instructions on how to use it to connect your laptop or another computing device to the internet. "The use of mobile hotspots can help accountants avoid public Wi-Fi and stay online if their home internet connection goes down," Traina said.

Another connection concern is capacity. Can a firm’s VPN and technology infrastructure handle a larger percentage of its workforce connecting remotely? “That’s a great question,” said Les Nettleton, director of information technology services for Metairie, La.-based accounting firm Bourgeois Bennett. “So, I think … you’ve got to set up some test procedures and make sure that your people are able to get connectivity into your office.”

One approach, which Nettleton said he is aware of a firm using during the current pandemic, is to have a certain percentage of staff working from home on a Saturday and see if they can work effectively without major slowdowns in computing performance. The firm can assess the results of that test and then do another assessment with everyone working remotely.

The article also discusses how the ultimate success with remote working arrangements is as much about cultivating the right culture as having the right technology. Liz Mason, CPA, the CEO, and shareholder for High Rock, the Arizona-based accounting firm that she founded, has this to say on that subject,

“Make sure you are setting expectations upfront with your team,” she said. “If you bill hourly, set billable hour goals. If it is project-based, set expectations of what project milestones need to be completed each week. Set up virtual team meetings or one-on-ones with anyone planning on working remotely. It helps keep projects moving as expected and avoid the last-minute delays to clients. I would say project management or a practice management application with milestones, deadlines, and assignments is a must for anyone planning to have remote workers.” In the end, employers may be surprised at what they learn when staff works remotely. “Embracing the remote work life might give some firms a taste of the potential where they would not want to go back,” Mason said.

The MoneyThumb team strongly suggests that if you are an accountant who is transitioning to work from home, you read that article in its entirety. We'd also like to share with you this free downloadable whitepaper from CPA Practice Advisor titled, Solve for Now While Preparing for the Future. Here is a description of what the whitepaper covers:

"In the midst of the 2020 tax season, CPAs were challenged with yet another mandatory regulation: stay home. And what was first classified as a short, temporary, relocation has now extended into... uncertainty. The truth is: no one knows when life will return to "normal." The situation has been further exasperated by firms making snap technology decisions going back to “old and familiar” manual ways of doing things, a practice that leads to data loss, unsecured internet connections, and more. But these are unprecedented times; how is a firm employee expected to manage their workload the same way they would in an office setting?" Download this free whitepaper by following this link.

These are definitely trying times for everyone, but we will make it through. Nothing is stronger than the human spirit and our indomitable will.

The post Rising Above Challenges Unique to Accounting When Working From Home appeared first on MoneyThumb.

Gross Income

Military service members receive many different types of pay. For tax purposes, it is important to identify the types of pay and allowances that can be excluded from your gross income. These exclusions generally include living allowances, moving allowances, travel allowances, combat zone pay, and death allowances. Excluded items are not subject to tax, but may have to be shown in your tax return. Below, we will examine some of these exclusions as well as relevant deductions from income in more detail.

Combat Zone Exclusion

If you are a member of the Armed Forces serving in a designated combat zone, then you can exclude certain pay from your income. The month for which you receive this payment must be a month in which you either served in a combat zone or were hospitalized as a result of wounds, disease, or injury obtained while serving in the combat zone. You need only serve for one or more days in a month to qualify for the exclusion for the entire month. A few examples of pay types eligible for exclusion include:

• Active duty pay earned in any month you served in a combat zone
• Imminent danger/hostile fire pay
• A reenlistment bonus if this extension occurs in a month you served in a combat zone
• Pay for accrued leave earned in any month you served in a combat zone
• A portion of any student loan repayment made for the year while serving in a combat zone

It is important to note that retirement pay and pensions do not qualify for combat zone exclusion. In some cases, service outside a combat zone can be considered service in a combat zone if the Department of Defense designates it in direct support of military operations in the combat zone, or if the service qualifies for duty subject to hostile fire or imminent danger pay.

Retirement Contributions

Generally, you can deduct some portion of the contributions you make to your traditional individual retirement account (IRA) for the year. However, if you or your spouse were covered by an employer-maintained plan at any time during the year then not all of these deductions may be eligible. According to the IRS, Armed Forces members (including reservists on active duty for more than 90 days during the year) are considered covered by an employer-maintained retirement plan.

Keep in mind that military personnel qualifies for additional time to make contributions to an IRA. It is also important to note that even though combat pay is nontaxable, you must calculate it as part of your limits on IRA contributions and deductions of IRA contributions.

Sale of a Home

You may not have to pay tax on all of the profit realized from the sale of your main home. A deduction of up to $250,000 of gain (or $500,000 if married, filing jointly) is generally available upon the sale of the main home in 2009. The main home is one defined as having been lived in as a primary residence for more than two years. You may also be able to exclude gain from the sale of a home that was used as a rental or business property as long as it meets certain ownership test criteria outlined by the IRS. You cannot deduct a loss from the sale of your main home.

Moving Expense

If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, then you are entitled to a deduction for reasonable un-reimbursed moving expenses related to travel and the cost of moving household goods and personal effects.

Travel expenses

You can deduct un-reimbursed work-related travel expenses when you are traveling away from your permanent duty station. You cannot deduct expenses related to travel overseas when you are stationed there, or when you are traveling for personal reasons. You are considered away from home when you are away from your permanent duty station for longer than an ordinary day's work and you need sleep or food. Eligible expenses include business-related meals, lodging, laundry, and business phone calls.

If you are a member of a reserve component of the Armed Forces that must travel more than 100 miles away from home in connection with your service, then you can deduct your travel expenses as an adjustment to income.

Transportation expenses

The costs of traveling from one workplace to another, attending a business meeting away from your regular workplace, or traveling away from home overnight can be deducted from your income. However, the expenses of commuting to your regular place of work are not deductible. For reservists, if a meeting of a reserve unit is held on a day of regular work, then related travel expenses are deductible.

Uniform expenses

Generally, these are not deductible, except when regulations prohibit you from wearing uniforms off duty. In this case, you can then deduct the un-reimbursed cost and expense of the upkeep of the uniforms. According to the IRS, examples include:

• Military dress uniforms and utility uniforms that you cannot wear when off duty
• Articles not replacing regular clothing such as insignia of rank, epaulets, and swords
• Reservists' uniforms if they can only be worn while performing reservist duties
• Professional dues

You can deduct dues paid to any professional society that is directly related to your military position (ex. engineering society), but you cannot deduct dues paid to an officers' club or a noncommissioned officers' club.

Educational expenses

You can deduct the cost of work-related education as long as it meets one of two qualifying criteria as defined by the IRS:

• It is required by your employer or the law to maintain your salary, status or job. This must also serve a bona fide business purpose of your employer.
• It maintains or improves skills needed in your present work.

In both instances, this education cannot be used simply to meet minimum job requirements or cannot be used to find a new trade or business. With some exceptions, travel and expenses for obtaining this education can also be deducted.

The MoneyThumb team hopes the information we have provided in this blog post helps you with your income tax return if you are in the U.S. military, and thank you for your service. If you desire the ability to quickly convert your personal bank statements, we suggest you learn about our PDF financial file converters specifically designed for personal use.

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