How We Filed 342 Personal Tax Returns in 2018 Without Any In-Person Meetings

It all started last personal tax season (April 2017).

Tax season for most accounting firms, and more specifically, the last two weeks of tax season are pretty intense and rigorous for all those involved (everyone from office managers/administration to preparers/associates all the way to managers and partners).  

April 2017 was a little different for us though.  From the end of the 2016 tax season to the beginning of the 2017 tax season, we grew considerably on the corporate side, which naturally led to a growth in our personal tax work as well.

Although we were adequately staffed - we know this because we had no issues with our corporate work - we didn’t prepare well enough (to our standards) for the 2017 personal tax season.   I say “our standards” because we are obsessed with processes and automation.  Our corporate accounting/tax work is like a well-oiled machine. But our personal tax side was lacking.  This resulted in an intense last few weeks of April 2017.

This is actually common in accounting firms across Canada - we know - we have been there when we held positions at other accounting firms.  That being said, we did want to operate this way. And most of all, we’re not fans of completing our work at the last minute - it shows lack of internal organization - and it leaves things to chance.

Our growth from 2016 to 2017 made us focus on corporate work because it’s a year-round event, whereas personal tax season occurs once per year.  It’s a time of the year that most accountants don’t want to think about and prefer to just power through and forget about until the following year.  We wanted to change that. Our goal was to systematize, streamline, organize and automate as much of personal tax season that we could for 2018.

Background

We’re a Canadian online accounting firm that operates a virtual/remote accounting firm using cloud-based accounting software and apps.  Our clients span across Canada (and somewhat in the U.S.) and we communicate with our team and clients virtually. We do have a physical office in Toronto where we do get together and work out of from time to time - for firm culture reasons - but we rarely meet with clients there.

As part of personal tax season in 2018, we drew a hard line in the sand:  If you need an in-office meeting, then unfortunately you weren’t a good fit to work with us.

It Started with a Question

At our annual retreat - in The Blue Mountains, Ontario in August 2017 - we assembled the team for a three day/two night get-together.  For most of the retreat, we just hung out, ate some good food and got to know each other. Part of the retreat focused on improving some processes, namely personal taxes.  The team got into a circle, pulled out a flipchart and started brainstorming.

Can personal tax season be automated?

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I wasn’t so sure.  Others weren’t either.  Many were and thought it could be to some degree.

The brainstorming session was extremely productive.  We concluded that if we were able to automate and streamline as much of the intake process as possible (document gathering and obtaining answers to basic questions about our clients’ tax situations in the current year), we’d be much happier as a team throughout next personal tax season.  And our clients would be too!

The next objective was to build out a framework; a list of questions that must be asked at the onset, including what client documentation we would need.  We understood that everyone’s personal tax situation differs and that some clients will require a more personal touch. But we were hoping to have this framework get us 80% of the way there on 80% of our personal tax returns.

By the end of the retreat, we produced a solid framework which we were able to start working with.  Using the framework as a blueprint, we used an online form builder to create a questionnaire that personal tax clients would complete during personal tax season.

The questionnaire went through many, many revisions:

  • We moved from one form builder to another for various reasons (response limits, file size limits, ease of use, etc.).

  • The questionnaire was built around conditional logic (i.e. if ‘this’, then ‘that’) and new ideas and questions kept coming up and made us rethink how we were building the form/questionnaire in general.

  • We had to find a good way to upload sensitive personal tax documents in the most secure, yet efficient way possible.

There were multiple times during this process when we thought this wasn’t going to work.  There were times that we wanted to give up. Yet, our desire to improve personal tax season was so high, that we powered through and achieved an amazing result.

Our online questionnaire and improvement to the whole personal tax process - from start to finish, including the time spent brainstorming at the retreat - took about 50 hours over a span of 2 months.  It was an evolution that required lots of thought, building, rebuilding, re-re-building, testing and then testing again until we were happy with the final product.

The questionnaire was just the beginning

We had a great questionnaire that we thought would really help us streamline personal tax season in April 2018.  

The next task was to get the team involved in creating a firm-wide process to:

  1. Understand the questionnaire

  2. Know what to do when a completed or incomplete questionnaire was submitted

  3. Prepare and review personal tax returns

  4. File the personal tax returns with the CRA

  5. Securely share the personal tax filings with our clients

The Result

Personal tax season in 2018 was unlike any other - in a good way.  In fact, in a great way! Were there some last minute filings? Yes.  But overall, there was a significant difference in comparison to the prior year.

With one week to go, we completed 90% of our tax returns.  There may have been some late nights but nothing close to a typical personal tax season at an accounting firm.  The tax deadline was Monday April 30, 2018 and we did put some hours in on the Saturday of the last weekend - but it was super casual - and not intense at all.

The best part of the process was the process.  It was fluid.  Everyone knew what they were accountable for.  Our weekly stand-ups were a breeze. It was the first time that the partners were barely involved.  They were able to focus on other important things (growth, recruitment, strategy, etc.).

After a debrief in May, our associates, who were tasked with preparing the personal tax returns told us that tax season was “completely fine”.  One associate said that it was a “night and day difference from the accounting firm I was working at before”. This didn’t mean that the workload wasn’t the same - it just meant that it was much more efficient and smooth - allowing the team to spend less time on each file.

Final thoughts

We know that we didn’t achieve anything enormous in the grand scheme of things, but for us, it was a significant accomplishment.  

Since then, when tasked with other internal problems we want to solve - we draw on our experiences from personal tax season - because the biggest benefit we received out of this process was the confidence that all (or most) problems or challenges we run into as a firm, can be solved.  

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