Tax and accounting aren’t just going digital. They are beginning to leverage technology to deliver extra value to businesses. Here are the five biggest technology trends in tax and accounting.
Desktop computers are getting smaller, faster and lighter all the time. Cloud servers, however, can deliver all the power any business could want, literally at the press of a button. This means that even the smallest businesses can use the sort of computing power that was once reserved for corporations and government organisations.
Computer power in itself may not be exciting. It does, however, open up all kinds of exciting opportunities, particularly for smaller businesses.
At the other end of the scale, mobile devices are playing a growing role in tax and accounting. This is manifesting itself in all kinds of ways. Many of these are small but many small changes can often add up to a very big difference.
For example, even sole traders can now take card payments on the move (e.g. when selling at market stalls) thanks to mobile card readers and mobile internet. Their sales data can be automatically fed to their chosen accounting service. If they make any business purchases while on the move, they can capture these using accounting apps.
Thanks to the growing use of mobile devices, accounting services are getting cleaner data more quickly. Plus there’s no more need to deal with boxes, or even scans, of receipts.
Internet-connected devices can automatically report data required for the purposes of tax and accounting. For example, sales points could report data straight into an accounting service without the need for human intervention.
This would both speed up reporting and eliminate the potential for human error. With that said, technology is not infallible either so there would still be a need for regular hygiene checks.
Artificial intelligence is a long way off the sort of level shown in science fiction. It is, however, more than capable of taking on basic, repetitive tasks. The sort of work that humans tend to find extremely boring and time-consuming but which is still essential. In the context of tax and accounting, for example, AI can take on a lot of document analysis and processing.
Cryptocurrency itself may still be figuring out its place in the world. The blockchain technology that underpins it, by contrast, is being enthusiastically adopted for all kinds of purposes. In the tax and accounting worlds, blockchain technology is the foundation of the DeFi (decentralised finance) movement.
A blockchain is essentially a distributed (i.e. decentralised) ledger in digital format. This means that it is a quick and cost-effective way of verifying provenance and/or identity. Blockchains are fundamental to new ways of doing business such as NFTs and smart contracts. They can also be used to secure conventional transactions such as asset sales.
Presently, the use of blockchains is somewhat constrained due to regulatory issues. The law is notorious for lagging behind technology. These do, however, seem likely to be ironed out over the course of the coming years.
This will be partly due to demand from industry and partly due to pragmatism, especially with regard to security. For example, using blockchain to secure major transactions such as property sales could do a lot to prevent fraud and money laundering.