While tax season can bring angst to many small to medium-size businesses (SMBs), the increasing adoption of accounting technology in the cloud is helping accounting professionals alleviate tax mistakes, such as attempting outrageous tax write-offs like bail, face-lifts and personal robots, according to a survey sponsored by online accounting software developer Xero and conducted by Zogby Analytics.
The vast majority of accountants (75 percent) surveyed said they believe that a comprehensive, real-time view of finances is essential for dispensing the best advice and saving money.
However, one in five accountants state that their clients do not have real-time insight into their finances, and nearly 40 percent do not maintain up-to-date records.
The survey, which polled 400 accountants across the United States, found that the biggest mistake SMBs can make is only talking to their accountant during tax time, with 65 percent of accountants recommending more frequent collaboration throughout the year—44 percent of accounting professionals advise meeting once a month.
Notably, the survey found that more than 50 percent of accounting professionals are now using cloud technology to better serve their clients.
With tricky tax laws, it’s easy to leave money on the table. SMB accountants place the blame on overlooked deductions, including depreciation (30 percent), out-of-pocket expenses (29 percent), auto expenses (16 percent) and office improvements (10 percent).
“By contributing more than 50 percent of America’s GDP, SMBs are the backbone of this country. Xero’s goal is to give these companies the tools and technology they need to make the best possible business decisions quickly and easily, from any device, anywhere in the world,” Peter Karpas, CEO of Xero U.S., said in a statement. “Given today’s industry needs, it’s no surprise that more accountants and SMBs are using cloud-based accounting solutions to better manage their finances. We’re thrilled to help make life a little bit easier for accounting professionals and SMBs during this extremely busy time of their year.”
Nearly 75 percent of accountants blame faulty deductions for audits. Thirty-six percent cited excessive deductions as causing audits, with mixing personal and business deductions a close second (35 percent). The third cause of deductions is misidentifying workforce members, at 14 percent.
“Tax time is stressful for most of my clients. Keeping tabs on existing rules and regulations is complicated enough, and new legislation like the Affordable Care Act and changes in the tax code further muddies the waters,” Tom Compere, Xero XPAC member and manager of RBZ Accounting, said in a statement. “In this time of ever-changing market conditions, it is imperative that financial data is up-to-date, easily accessible and comprehensive in order to be prepared for anything.”