A Guide to Corporate Tax Automation

What is tax automation software?

Tax automation software is used to streamline complex tasks that have traditionally been done manually, such as data collection, calculations, reporting, and filing. When done manually, these tasks can have disadvantages and risks, including the possibility of human error, dependence on other departments for data collection, and inconsistencies in source system data.

By using tax automation technology, busy corporate tax teams can improve their tax workflows by transforming processes, integrating data sources, and streamlining access to critical tax information. Tax automation capabilities can help tax teams mitigate common stumbling blocks and become more efficient and agile in their ability to respond to unexpected changes.

For example, Bloomberg Tax Workpapers automates the process of pulling data into tax workpapers by using data connections to link source data directly into calculations. Integration with Bloomberg Tax Research also ensures easy access to the latest guidance, keeping you compliant without additional effort. With built-in formulas and logic reflecting the latest tax regulations, Workpapers ensures every calculation meets compliance standards and eliminates risk due to outdated or incorrect spreadsheets.

Challenges facing corporate tax departments

According to a survey of corporate tax professionals, tracking legislative changes and tax reforms are among their biggest challenges, along with compliance and data management.

Tracking tax law changes

Legislative changes cause an uptick in compliance efforts for tax professionals. These changes often require new forms, new calculations, new processes, and new data types – not to mention software updates. Because of this domino effect of regulatory and operational changes, 45% of our survey respondents reported compliance burdens as their biggest challenge.

Managing tax data

Traditionally, corporate tax professionals have manually uploaded, processed, and managed tax data using technologies like Microsoft Excel. Manually reformatting data is not only time-consuming but can also threaten the integrity of the data, because the steps involved in transitioning data from source to destination aren’t always straightforward and can require complex business logic to achieve the desired results.

Conducting scenario analysis and modeling

Planning, scenario analysis, and modeling help executives understand potential implications of tax reform and global changes to inform appropriate business strategies. However, it’s often difficult for corporate tax professionals to find the time to conduct these activities on top of their regular reporting and compliance responsibilities.

Integrating new technologies

Implementing new technologies was cited as a top challenge for 38% of survey respondents. Corporate tax departments can lack substantial technology budgets for enhancements and staff training and may not have staff who can manage a technology strategy.

The benefits of integrated tax automation solutions

For far too long, tax software solutions have been focused on the last mile rather than the complete corporate tax workflow. The data and calculations that power tax deliverables are trapped in redundant processes that are largely underserved by existing tools. In addition, most enterprise automation tools aren’t built to specifically serve tax professionals, so all tax logic must be updated and maintained by the organization itself.

This forces tax teams to use disparate solutions and waste time, whether that’s wrangling data from multiple business systems, translating intelligence, or manually entering rates and rules to perform calculations.

By using an integrated suite of solutions purpose-built for tax work, today’s tax teams can complete timely tasks more efficiently, regain control over the tax process, cut their reliance on external groups, and harness automation to transform their overall workflow. That’s why many corporate tax departments choose a software solution such as Bloomberg Tax, which creates an integrated tax ecosystem by tying all these tools together to maximize each part of the tax process.

Bloomberg Tax product manager Ellen Barker walks through use cases for time-saving automation capabilities. (2:00)

Choosing the right tax automation solution

All tax departments are different, so it’s important to choose the best tax automation software for your specific needs. However, there are key features and capabilities to look for when evaluating tax solutions.

Control, integrations, and flexibility

Examine how the solution will fit into your current tax department structure and resources – and look for a tool that the tax department can own, control, and easily integrate.

For dynamic but repetitive workflows executed within the tax department – such as working up book-to-tax calculations, for instance – it’s most useful to implement an automation solution that doesn’t require much, if any, help from staff outside of the tax department (such as those focused on IT), because depending on outside departments can slow down processes. Be cautious with software solutions that require outsourcing, because you can become dependent on the vendor for managing that tool. Ideally, the solution you select is one that your department can manage and control to better streamline your workflows.

Also assess whether the software is flexible enough to handle inevitable curveballs. For example, if you were to acquire a new entity, consider how long it would take to incorporate that entity into your process and integrate new tax laws into your calculations. The ideal automation solution allows you to stay nimble and should align with the longer-term goals and vision of your department and enterprise.

A focus on tax

It’s not enough for software to provide general business-oriented solutions. Make sure the tool you’re considering is designed specifically for tax work, as these processes are complex and require specificity and accuracy.

User experience

Make sure the software you select supports your broader vision for your department and has the ability to streamline your workflow (instead of making it more complicated). Some tools, for instance, require a high technical skill set to manage and use, while others have a steep learning curve. Consider how easy a tool is to use within your workflow – including whether you can stay within the suite of tools for day-to-day tasks, instead of navigating in and out – and consider how quickly staff can complete onboarding and necessary tasks.

Accuracy

Accuracy is everything for corporate tax professionals. The best tax automation solutions help you remove risk from your processes and minimize human error for precise tax preparations. When it comes to tax data management, automation can reduce manual mistakes; allow more than one person to work with the data simultaneously; and provide greater consistency, control, and traceability. Ensure the software will help you spend less time on error-prone, manual processes to focus more on value-add activities such as tax strategy, planning, and cash flow preservation.

Provider expertise and customer service

It’s not enough to just have access to automation technology; tax practitioners need support to implement those capabilities to fully maximize their benefits and efficiencies for their specific workflow challenges. Consider whether customer support staff understand the real-world tax and accounting issues you encounter in your work.

Many members of the Bloomberg Tax customer support team, for instance, are attorneys and CPAs who are deeply familiar with your complex day-to-day work.

Security and compliance

For data extraction especially, it’s important to select a solution provider with experience working directly with IT departments to configure the most streamlined way to securely extract data. The solution should also offer compliance workflow tools to help you track and gather the latest federal and state tax deadlines and forms.

Also consider whether an automation solution is a traditional desktop tax software or if it offers a cloud-based platform. Cloud-based tax solutions allow users to access data from any device with an internet connection and typically offer superior security compared with desktop applications. By encrypting and storing sensitive data in remote servers rather than on an unsecure computer desktop, cloud-based tax automation software does a better job of keeping data safe.