With the recent surge in popularity of generative AI tools like ChatGPT and DALL-E 2, artificial intelligence (AI) has become a major topic of discussion in boardrooms, online and around kitchen tables. Its implications are potentially tremendous for business and society. Firms in almost every industry are considering adding AI-based tools and platforms to their existing processes. Tax preparation and accounting are no exception.
7 ways AI is impacting the tax industry
The rise of AI for taxes is already impacting the industry. Savvy firms and individual preparers are beginning to leverage this new technology. In this post, we’ll go through seven ways AI is affecting the tax industry right now.
Acquiring new clients
Managing requests for proposals, creating those proposals and sending them out to prospective or current clients is a resource-intensive job. However, AI-driven proposal management software can significantly streamline this important but often-tedious process, allowing accounting firms to reach out to more clients faster. Over time, the AI algorithms will “learn” the best language for winning pitches, improving client acquisition rates and driving increased revenue.
Reducing manual labor
According to Material Accounting, 86% of accounting tasks can be automated, and 70% of companies have seen positive ROI after integrating automation into their accounting processes. Manual tasks can be a major contributor to burnout, which nearly all accountants experience. By taking these tedious jobs off accountants’ to-do lists, they will experience greater job satisfaction and be able to spend more time on strategic, high-value initiatives. A reduction in manual work also means a reduction in human error. This is a major use case for combining AI and tax in a field where even a single misplaced zero can have profound implications.
Creating marketing and communications materials
AI-driven tools like ChatGPT can generate blog posts, email content, e-books, white papers, manuals and other content from a few well-chosen prompts. Of course, the resulting copy will need to be edited and refined, but having an “instant” first draft will significantly shorten the content creation process. A more expansive library of downloadable, relevant assets is a helpful tool for bringing in new client leads and providing additional value to current ones.
Detecting errors and anomalies
Inaccurate data, mistakes in applying generally accepted accounting principles (GAAP) and even typographical errors can lead to mistakes in financial statements and produce analyses based on incorrect information. AI can detect these errors or anomalies in real time and flag them before anything serious happens. It can help firms avoid compliance issues and meet all relevant regulatory standards.
Augmenting advisory services
With less time spent on manual, tedious tasks, accountants can spend more time working one-on-one with clients, delivering personalized advice and recommendations to provide the greatest possible value. This kind of white-glove service will have customers returning repeatedly, and they may even refer their friends or colleagues.
In addition, AI algorithms can provide insights into client behavior, helping you identify high-value customer activities. Predictive analytics tools also enable more accurate financial forecasts and insights for clients, which they can use to improve their processes and overall bottom line. The result? They value your business even more, and your firm stands out from the competition.
Deriving insights from data
Data analysis is a big job that requires a specialized skill set. While AI can’t take over every aspect of the data management process, it can help those responsible to do their job effectively. AI empowers data analysts to derive insights faster and more accurately, and AI-powered models are driving more accurate and complete predictions and projections. These tools can also assist with creating detailed dashboards that leaders can use to get a quick, high-level view of the current finances of their business.
Streamlining custom service
If you’ve ever interacted with a help desk chat on a website, you’ve likely chatted with an AI-powered chatbot. Of course, these types of tools can’t answer complicated tax questions, but they can help clients with common inquiries. During the busy tax season, this can be a tremendous help, taking a significant task burden off tax preparers as they hurry to complete tax returns.
AI at the cutting edge of taxes and accounting
The question of AI impacting the tax industry isn’t “if” but “why and how.” Savvy tax preparers and financial professionals are already implementing AI for taxes into their workflows and communications. As this new technology is only expected to evolve, tax preparers should be ready to take advantage of new capabilities and functionality to deliver greater value to their employers or clients.
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