Lean Six Sigma Tips: How to Prepare for 2023 Tax Season

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Last Updated July 5, 2023


The arrival of the crisp fall air means the 2023 tax season isn’t too far off. It’s time to look at tuning up your tax production processes as you prepare. Make a point to investigate the latest technology, tools, and production processes for optimizing their tax production. Look for opportunities for your accounting firm to implement a few of these “Lean Six Sigma” tips.  

Opportunities to Fine Tune  

Much of my time is spent consulting with accounting firms. I consult on production automation, evaluating technologies, and shoring up firm security using a “Lean Six Sigma” consultative methodology. This is a structured approach to evaluate any workflow, which of course accounting firms have hundreds of.   

And let’s face it, many of the current processes that firms have implemented evolved from traditional manual ways of doing things. Let’s look at specific processes and my “lean” recommendations for you to consider to better prepare for the 2023 tax season.   

Accounting firms can prepare for the tax season with these Lean Six Sigma tips.

Lean Tip #1: Expand Tax Projections   

For stand-alone 1040s, doing a tax projection is the first step towards introducing clients to advisory services and culling those that don’t fit the firm’s targeted advisory client profile. It should be an easy sell since you already have the client relationship, client data to import, and knowledge of who needs advisory services. 

TIP: Include new staff in the projection process and subsequent client discussions. They can garner “real world” experience and actively be “advisory” which is what most want to do.   

Lean Tip #2: Arrange Client Meetings   

One Lean Six Sigma target that highlights wasted effort is the time it takes to go back and forth to arrange client meetings. You can streamline by integrating a client scheduling tool. This allows clients to book their own meetings when both of you are available. Tools including Calendly, Bookings, Monday and Doodle are all great options.   

TIP: Educate clients on using tools that improve efficiency, providing integrated web tutorials or even live client follow-up and education. 

Lean Tip #3: Integrated Engagement Letter   

Manually creating, delivering and verifying receipts of engagement letters is another long process. And it’s often not completed without a significant amount of busy work. Integrating the production of engagement letters with the organizer and using negative confirmation wording where needed can significantly reduce manual processes for those returns. For more complex engagement letters with expanded services, you can use a digital eSignature tool. Therefore, promoting digital delivery to the client. This allows clients to digitally sign and return a document that is ready for digital archival at their convenience.    

TIP: Centralize “rote” processes such as engagement letters that require an eSignature. Use tools where a well-trained staff person can more consistently deliver that service, freeing up professional staff time for tax and advisory production.   

Lean Tip #4: Modern Document Ingress   

Accounting firms that accept physical documents from clients have significantly higher handling time and expenses compared to those that use secure digital means. Today’s modern portals and secure email solutions allow clients to deliver requested documents at their convenience. It also provides a clear custody trail that is cost-effectively archived, processed and accessed by authorized users whether in the office or remotely. These tools also have progress dashboards and client reminders to streamline ingress workflow.    

TIP: Consider using a modern portal solution where a document request list can be integrated. Clients should be automatically reminded when items are due. These tools also allow authorized members to collaborate with authorized clients.   

Lean Tip #5: Firm Source Document Standard  

Implementing a digital bookmarking tool such as CCH Scan, Gruntworx and SurePrep forces a firm standard for organizing documents. The auto-populate features enter “rote” data into the tax program. This allows professional staff to only verify instead of having to manually key in this data. Standardizing PDF annotation with tools such as PDFlyer or Tick, Tie & Calculate, further streamlines this process.  

TIP: Having a standard format for organizing supporting documents for both individual and business returns improves efficiency Firm personnel know exactly in what order to organize documents, append them with missing items, and where to look when they have inquiries.    

Lean Tip #6: Prepare for W2/1099 Onslaught   

The IRS is increasing its interest in “gig” workers (Uber, Lyft), rental revenue (Airbnb, VRBO), and personal payment systems (Venmo, Zelle). We can expect the need to increase the use of reporting tools that will integrate with these systems for tax processing.    

TIP: Designate a person in CAAS practice to explore and standardize the use of W2/1099 programs for these types of users before the 2023 tax season starts.   

Preparing for the upcoming tax season.

Lean Tip #7: Integrated Invoice Delivery/Payment   

The final step of the tax process is to deliver the return digitally to the client. Which can be optimized via a “modern” portal and/or secure email solutions. This provides an opportunity to include a digital invoice that also has streamlined payment options built in. Solutions from CPACharge, QuickFee, Ignition, etc. not only streamline payment for clients but can also integrate with certain practice management products to post invoice and payment entries.    

TIP: Educate clients on digital invoice delivery. This should include automated payment solutions that integrate with the firm’s accounting/management applications.   

Lean Tip #8: Use a Dedicated Workflow Solution   

Clearly, the most important recommendation we make today is transitioning accounting firms away from manual due dates and project tracking to dedicated workflow tools. Studies show that firms can save an hour per day when they use dedicated workflow solutions. Ideally, these should be implemented at year-end. CCH Workflow, Thomson Reuters FirmFlow, and other workflow programs discussed in the webinar are key to future firm productivity.    

TIP: Implement a workflow tool to streamline tax production. If you already have one in place, evaluate how you stratify returns. Assign them by appropriate staff level and integrate verification of digital engagement letters, invoices and delivery instructions.    

Applying “lean” thinking to streamlining tax production for the upcoming busy 2023 season is only one of the aspects I covered in a recent Right Networks webinar. The webinar, Prepping for Peak Tax Season: Sailing through the Onslaught, is full of suggestions and automation best practices. It can help firms of all sizes evaluate what they are currently doing and find opportunities for change and growth. If you didn’t catch it live, you can watch it on demand. 

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