Virtual Data Rooms: How to Make Your Tax Season Less Stressful
Date: 12 October 2018 Share on Twitter Share on Facebook
The end of the tax year is always a stressful one for any business. Making any kind of mistake on your reports or income statements for the tax season can lead to big consequences. So efficiency and accuracy are extremely important throughout the entire process.
However, this is easier said than done, as businesses encounter problems every year and will continue to do so without some efficient method of finding all of the files that they need to compile their tax statements. This is where using a virtual data room (VDR) will benefit your business. The features they offer will bring efficiency to the process, and in the end will lead to a smaller chance of mistakes in your reports. Here are some common issues that business faces at the end of the tax season, and how using a VDR will help you overcome those issues.
The first problem is that of poorly organised documents that take forever to sort through when needed. Even if a business keeps an organised physical data room, it can still take hours, if not days, just to find documents. A business can save huge amounts of time when preparing for the tax season by using a VDR, as the advanced search functions that they offer will allow for documents to be found nearly instantly. Furthermore, if you can’t remember exactly where a document might be stored within the data room and the search function can’t find it, the automatic indexing function will help you sort through your data far quicker than you could ever do it physically.
Easily share documents during the tax season
When using a physical data room, first you have to find all of the documents that you need. The next issue is that you have to email or courier documents and other information to your accountants or auditors. The risks and costs of this can be great, as there’s no telling what might happen to your data while in transit. Especially since this data will be your confidential financials, it’s important to make sure it can be accessed by your teams at minimal cost and maximum security.
If, instead of sending physical copies of your documents to the necessary parties, you compiled all of the information in one place and then gave access to everyone who needs it, the process will become far quicker. A VDR is perfect for this use case, as it allows you to give multiple parties access to your data, while controlling what each party can see. Because of this, you will be able to reduce the on-site time of your accountants and auditors, and therefore mitigate as much of the stress of the process as possible.
Security of the VDR during the tax season
As for the security, VDRs are purpose-built around data security, so you won’t have to worry about that at all. If you were to use the aforementioned methods, such as sending data over email or via courier, there can never be a guarantee of the safety of your data.
VDRs provide industry-leading security features, such as 256-bit data encryption software and two-step authentication, that will make certain your data is kept safe. If you keep your documents in a controlled environment, in your data room, there will be no risk of exposing employee data as there would be using other methods.
Other benefits of the VDR for your tax season
It’s clear from what we have seen that using a virtual data room to manage your tax season is only beneficial. However, we haven’t exactly explained how you can actually reap these benefits for yourself. The first thing you should do is get a checklist of the documents that you will need from your accountant or auditors. The rest is a short and uncomplicated process, so just sit back and follow these steps to get your data ready for tax season:
- Create a folder in your data room and name it “Tax Documents”.
- Throughout the year, add all of the documents that you find on the checklist as you create them (believe us when we say it’s easier to do it this way than to sift through all of your data at the end of the tax year and then add them to the folder).
- Invite the necessary parties to your data room with access rights to your tax folder.
- Relax because the stress of tax season has practically been nullified.