What is Tax Accounting? Everything You Need to Know
For United States citizens earning income, tax accounting is unavoidable. But what is it?
The accounting industry is constantly in flux. Rapid technological innovation means systems and processes are continually being iterated and swapped out with newer innovations that promise greater productivity, efficiency, accuracy, and profitability. In recent years, the rise of virtual accounting has given way to new strategies and methods of managing businesses and their finances.
Virtual accounting is the system by which qualified accounting professional provide services to their clients remotely, as opposed to physically working in the client’s office. In many respects, it offers the exact same services as traditional accounting. However, it also comes with its own set of idiosyncrasies and benefits. Virtual accounting is primarily used by small businesses that want the same perks of having an accountant on staff, without the added cost and challenges that come with keeping a full-time accountant in the office and on the payroll.
You’ll commonly see small businesses choose virtual accounting when they:
Operate a home-based business and don’t want someone regularly visiting their house to handle accounting.
Operate out of a formal office space, but don’t have the square footage to house another employee.
Can’t justify bringing on a full-time employee and increasing payroll taxes, benefits, and other added expenses.
Run a virtual business in which all other services are also handled remotely.
At the end of the day, virtual accounting is more efficient and cost-effective for all parties involved.
Virtual accounting software gives tax professionals a streamlined cloud solution that enables them to offer virtual accounting services to their clients without having to build a proprietary system from the ground up. Think of it as an accounting solution that all accountants can use, yet is scalable and customizable enough to be leveraged by any virtual accounting firm in any niche.
If you’re thinking about using virtual accounting software to build your virtual accounting firm, it’s absolutely imperative that you choose the right solution. In fact, this is arguably the biggest decision you’ll make in the early stages of growth and development. Here are some things to look for:
Obviously you should start by evaluating the features of any virtual accounting software you’re considering. Accounting practices are built on the services they provide to their clients, so if the majority of the business owners you work with want a certain service, you need software that enables you to satisfy this need. Most virtual accounting solutions will have the same basic features. The key is to analyze the additional options to find a fit that’s right for you and your virtual CPA firm.
Some basic virtual accounting tools only allow one user to access an account at any given time. While this can be fine in certain situations, be careful not to limit yourself right out of the gate. Multi-user access is always valuable. As you grow your firm, it’s helpful to be able to share the system with employees, business partners, and clients.
You obviously need software that enables you to work with multiple businesses. Make sure you’re using virtual accounting software that’s designed for accounting firms, not clients. Otherwise, you could end up with a system that can only be used by a single company.
Any time you introduce a new tool or software into your company, you have to consider compatibility. Will the software seamlessly integrate with your existing technology stack?
In today’s day and age of cyber attacks and threats, you have to think about security. Consider how well the system is protected, or you could end up compromising your clients’ confidential data and secure information.
The good thing about SaaS products is that you don’t have to worry about updating your system and downloading patches – everything is done for you on the vendor side of things. But in order to get the most out of SaaS accounting software, be sure they’re making frequent updates.
Building a successful virtual accounting firm is as challenging as ever before. However, you also have access to more resources and support than what was available in the past. As you grow, consider how you’re scaling – not just how high you’re scaling.
Sustainable growth is all about growing with the right foundation in place. When you build from the bottom up, you don’t have to worry about becoming top-heavy. It frees you up to grow with confidence and consistently add new clients without the risk of undermining your existing clients.
The right virtual accounting software is a good start. Beyond this, think about how you’re generating leads, onboarding clients, managing and upselling existing clients, and building a recognizable and trustworthy brand. Each of these elements is important to your current and future growth.
At Taxfyle, we understand that no two businesses are the same. That’s why we offer accounting solutions that can easily be tailored to any business, client, or individual. If you’re interested in growing your accounting firm, consider using Taxfyle.
Contact us today to find out how you can try our proprietary system for free!
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