Why Tax and Accounting Services Are Crucial for Businesses in the Digital Age?

 Over the past decade, more than 70% of businesses have embraced cloud-based accounting for their tax and accounting needs. However, most companies report that they need to revise their taxes after filing, owing to changes in digital economy rules. From cash flow management to tackling compliances, businesses face multiple such challenges due to changing regulations. Thus, in this dynamic scenario, while having efficient digital accounting solutions in their arsenal is important for companies, the need for professional tax and accounting services is the most important.

In this blog, we will discuss why businesses that rely on digital accounting solutions still need tax and accounting services in the digital age.

Importance of Tax and Accounting Services for Small Businesses in the US -

In the past decade, we have witnessed how technology has transformed financial management with technological advancements like –

• Hosted accounting software solutions like QuickBooks and Sage help manage accounting operations, track expenses, and collaborate with clients in real time.
• Government compliances have gone digital. Most businesses have chosen to embrace the cloud with digital accounting solutions for the same reason
• Easy data generation and transfer solutions from multiple POS systems, CRMs, e-commerce websites, and payment gateways.

However, rapid digital transformation brings with it the challenge to keep pace with technology. In such times when uncertainty is at its peak, the role of accounting professionals and tax experts has evolved. From traditional roles where accountants balanced books, prepared taxes, and assisted with complex tax returns filing, they now observe strategic roles that help in –

• Business Decision Making – Businesses today need to make instant decisions based on strong data insights. Accountants, therefore, act as Consultants for startups and small-sized businesses, helping them build detailed dashboards that are regularly updated, forecast cash flows, plan budgets, and analyze KPIs. 
  
  
• Navigating Government Regulations – Small businesses must comply with the government regulations and tax laws. Accountants help them ensure that they remain compliant, helping them focus on business growth and keep their operations running smoothly.
  
  
• Integrating Technologies with Accounting – There is a plethora of tax and accounting tools in the market, making it difficult for business owners to make the right purchase. Accountants help businesses choose the best tools that can cater to all of their accounting, tax, and CRM needs.
  
  
• Expert Level Guidance – Hiring a Financial Advisor may not always be feasible for businesses, especially startups. CPAs and accountants can act as expert advisors for these businesses and help them save big with their expert insights on cost optimization, attracting investment with detailed financial reports, or choosing the right structure for their firms.

Can Technology and AI Replace Accountants?

No. Technology cannot replace accountants for their insight, experience, reasoning, and valuable judgment in complex scenarios are irreplaceable. While software like QuickBooks, Sage, TaxWise, UltraTax, etc, greatly assists with data handling and cloud-based accounting aids remote access for accountants, they cannot compete with the human element offered by experienced accountants and CPAs. An accountant will -

• Provide valuable guidance to help minimize your tax payable
• Flag any issues in your tax reports
• Keep up to date with US tax laws, IRS notices, and make suggestions as per the changes
• Create a bridge between the business owner and the investor
• Help owners utilize their tools to the best of their capacity
• Catch errors, incorrect depreciations, missed deductions/credits, etc, to help avoid expensive mistakes

5 Factors to Consider When Choosing Tax and Accounting Services for Your Small Business

Some of the key aspects that small and mid-sized businesses must consider while selecting the best accounting service are as follows –

1. Check whether they are experienced in your business domain
   There is no one-size-fits-all approach when it comes to accounting. Every business has its own set of challenges. Your tax and accounting needs change depending upon the type of business you own – e-commerce, wholesale or retail, startups, service provider, or product-based, etc. Familiarity with your business type can get you the best, customized advice that saves you both time and money.
    
2. Are they up-to-date with technology?
   Your ideal accountant should understand technology and cloud computing. With most transactions happening online and the growing popularity of online platforms like QuickBooks, Sage, etc, an accountant who is still following the traditional pen and paper is a big no. Find an accounting partner who is well-versed with these platforms or is willing to get on board with your preferred software.
   
   
3. Are they present in your state?

Your accountant being present in your state and understanding the state tax laws is critical. With State and Federal Laws changing frequently, it is important that the CPA or accountant keeps up with them to prevent expensive mistakes later. In case you offer services nationwide, you must comply with different state laws. Your accountant should be able to guide you through the State-specific compliances and support you through audits.

4. Do they offer the support you need?

Prompt and effective communication with your accountant goes a long way when building a sustainable business. When choosing an accountant for your business, ensure that they are responsible, open to your needs, communicate well, and are proactive. They should be able to provide you with prompt resolutions that reduce tax liabilities and do not simply assign a junior associate to assist you.

 

A solid growth strategy, a foolproof business plan, and expert help in procuring funding are some of the many areas where your accountant can play a significant role.

5. Do they promise a long-term relationship?
   Finding a new accountant and building trust every time your business scales is not practical. Your accountant must be aware of your long-term plans from the beginning and should be able to scale with you. In case you require additional services as your business scales, the accountant should be able to accommodate them. For instance, opting for secure accounting in the cloud, payroll services for new employees, tax guidance across borders if you take the business abroad, multi-entity accounting for business subsidiaries, etc.

Final Word: It is not just Number Crunching

Accountants are no longer number crunchers, bookkeepers, or tax filers. Their role has evolved with time, where technology doesn’t threaten, but elevates their role into building successful businesses. While businesses adopt digital accounting solutions and prefer hosted accounting software to save time, tax and accounting services offer what AI and online platforms cannot – the human touch, the security of having a partner in growth, and the attention to detail. Your tax and accounting service provider goes beyond your hosted accounting software and guides you through every step of the day. Understanding technology and building the right strategies that cater to YOUR business needs and fulfill your vision is how CPAs and accountants add value.

For information regarding digital accounting solutions or hosted accounting software, visit our website at www.winscloudmatrix.com.