The CPA firm landscape is undergoing a significant transformation with the integration of artificial intelligence. Some CPAs will resist, while others embrace and encourage innovation. The same can be said for firm clients.
This article explores how AI is revolutionizing tax compliance-related services, expanding opportunities, and improving firm operations. This is being done while also improving the client experience and enhancing job satisfaction for tax professionals.
Most CPAs have seen the power of ChatGPT, Claude, Google Gemini, and Microsoft's Copilot and the progress these large language models have made in the past year. The growth and capabilities of AI are exponential, rather than incremental, and will transform the accounting profession in many ways. Key differentiators in a firm's ability to transform are leadership and mindset. Does your firm's leadership embrace or resist AI? Are they willing to change?
The following examples demonstrate how firms are benefiting from and exploring AI in their tax practices. The use cases and tools are expanding daily. (FutureTools.io by Matt Wolfe is a great resource for reviewing the many tools available. It saves considerable research time and provides thought-provoking dialogue of use cases. As of the writing of this article, Matt listed 2,675 tools, with more coming daily.)
1. AI's role in data aggregation. AI-powered tools are reshaping the data aggregation process for tax preparation (business and individual). Advanced algorithms can efficiently collect, organize and validate financial data from multiple sources. This automation minimizes manual effort, reduces errors, and ensures compliance. It can also have a major impact on the review process, which is often one of the primary chokepoints in the preparation process. TaxCaddy is one proven example that has standardized and improved the collection of data, documents and client communications.
2. Streamlining tax preparation with AI. AI continues to play a crucial role in tax preparation beyond data aggregation. AI-driven software analyzes financial data, identifies deductions, and optimizes tax strategies based on current regulations. Think augmentation rather than replacement of team capacity and capabilities. AI impacts internal and outsourced workflow. Remember, technology is a member of your team that shows up and gets smarter every day.
3. Improving the tax professional's experience and job satisfaction. AI improves job satisfaction by automating tasks and enhancing accuracy. Good examples are scheduling and filing extensions. By freeing up time from manual and administrative work, AI allows preparers to focus on higher-value activities such as planning and client communications.
More AI-driven analytics enable CPAs to anticipate client needs and wants associated with providing advisory and consulting services. Just because you can prepare tax returns does not mean that you should. Are you focusing on your unique abilities and adding value to your clients?
Working within one's unique abilities reduces burnout and provides life-long learning and growth opportunities. Stop and think; less is often more. Most firms have too many 1040 clients impacting their capacity to deliver higher-valued services to their best clients.
4. Enhancing the client experience. The integration of AI enhances the client experience throughout the tax preparation process. Clients benefit from a structured and simplified data collection process and real-time tracking of the process. AI-driven software provides transparency and fosters trust and confidence in the relationship.
Additionally, AI enables personalized insights and recommendations beyond filing instructions. AI software can also assist the profession in asking appropriate questions. Advisory and consulting services are based on questions. Value is created through leadership, relationships and creativity.
5. Improving operations. Billing and collection processes impact the firm's results and the client's experience. To price, invoice and collect effectively, firms must define their process and automate it.
Taking partners out of the process and utilizing a chief value officer will enhance revenue, improve cash flow, improve client satisfaction, and allow AI-driven tools to accelerate the process, freeing up professionals' time to better communicate and serve the client. AI can also assist in the generation of engagement letters and the use of electronic signatures, further enhancing efficiency and client convenience.
Summary
The inventory of AI tools is increasing daily, yet for firms to take advantage of the power of AI requires the appropriate mindset, toolsets, and skill sets. The convergence of technological tools, continuous process improvement, and change management determine success and the adoption timeline. "Who is responsible?" is more important than "How are we going to leverage AI?" The right "who" knows or will determine how and where to implement artificial intelligence in your firm.
Your mindset regarding vendors will also determine the timeline and results. Viewing technology vendors as business partners rather than suppliers is a big step forward. Incumbent vendors are looking for ways to increase value to their customers. Think in terms of learning and applying. This is a fast-paced journey.
Think — plan — grow!
