We may be a few months away from the tax season but that doesn’t mean we shouldn’t start preparing for it now. Here are five mistakes that CPAs and accounting firms are costing US businesses billions each year due to incorrect reporting of business income and employment values.
1) Closing the books early
Understandably accountants are swamped with work during the tax season but a mistake made by many is rushing to close the books early prior to all the required data being collected. Take your time to collect the required data. Tax season starts from January.
2) Incorrectly applying and adhering to state and city tax regulations
Tax laws are changing regularly and it is sometimes very difficult to keep track while keeping up with your workload. This causes firms to miss out on some of the benefits of local tax incentives.
3) Failing to use the best tables resulting in not maximizing depreciation
Generally this is down to those CPA firms that do not have up-to-date accounting software or are unable to retain qualified staff. Are you one of them? If yes, it is time to make major changes.
4) Saving corporate financial/tax data to personal devices
Yes, it is convenient for your employees to save the files to their devices so they can complete the work in the comfort of their home or on their commute but their devices are not always secure. That puts your company at risk. Make a point of telling your employees it is against your company policy to do so because of the risk of data being hacked or leaked.
5) Inputting data incorrectly
It may sound obvious but you are inputting huge amounts of data on a day to day basis. It is very important to catch those mistakes so that you keep audit or penalty at bay.
Mistakes like these are costing CPAs their reputation and are costing their clients money. If these mistakes keep occurring and clients find out, it could lead to a loss of clients. Be aware of the mistakes to ensure your firm is not one of those contributing to the billions of dollars being lost in penalties to the IRS.