Accounting deals with a lot of paperwork. Soon, most signature transactions will be made on mobile devices. Accounting professionals should be ready to enable eSignature solutions to transmit documents electronically.
An electronic signing solution offers accountants many benefits, including maintaining audit trails of all consent forms and signed agreements. It is important to mention that sensitive documents can be kept safe and secure from accidental exposure.
Covid-19 made it possible for people to work remotely. 20% of Americans used the internet to work before the pandemic. However, that number rose to 71% after the outbreak. Over 54% of respondents said they would like to continue working remotely.
Teleworking requires that you manage paperwork within your business. Complex business processes can make it difficult to move to cloud accounting. Signing documents is one of the most time-consuming tasks for accountants and bookkeepers.
E-signatures allow you to quickly and economically sign documents. You can improve productivity by 85% and save 55 to 80% on your document signing processes by switching to e-signature.
Many bookkeepers and accountants fill out forms electronically. To speed up the process, free eSignature software can be used.
Benefits Offered by Electronic Signatures to Accounting Firms
Accounting is a distinct industry. However, it is important for individuals and businesses in almost every industry. Accounting professionals are responsible for tax planning, bookkeeping, payroll, financial management, bookkeeping, and financial planning. This ensures compliance, healthy business growth, management, and compliance. These types of work require smart, structured, and well-informed approaches. They are also streamlined to ensure maximum accuracy and efficiency. Electronic signatures are here to help. We'll discuss the many practical and unique benefits of electronic signatures for accountants.
Accelerate Accounting Processes
Implementing an electronic signing solution for small businesses is often about increasing sales. However, accounting departments can also be affected by the implementation.
Instead of dealing with a lot of paperwork, which may require multiple signatures from you, an accountant can dramatically reduce the preparation time by using templates. This can result in dramatic savings, reducing the time required to print, mail, or fax paper forms back and forth.
Facilitate Internal Business Operations
Businesses often have trouble tracking the progress of documents. Documents can sometimes remain in one department for days before being moved to another. Using eSignature solutions to sign documents internally can make it easier for employees. They can be used for the corporate documentation, consent, and board resolutions.
They can also solve problems such as missing or straggling signatures and delays in signing expense reports. The whole operation runs more smoothly because everything moves in the correct order, from the person who completed it to the supervisors and accounting.
It's not necessary to create hard copies. What used to take weeks can now be done in one day. Employees can be reimbursed quicker, and accountants can close the monthly financial close faster.
Clients can Have Everything they Need
In the digital age, clients expect more from their financial advisors. They use portals, document management software, electronic signatures, and portals to manage many aspects of their day. Clients expect to do business with tax professionals using eSignature technology.
eSignatures, when combined with a well-designed workflow system, can eliminate all physical boundaries. This allows for greater efficiency in creating, sharing, and archiving documentation.
Offering Security and Compliance
Because accounting documents can be highly sensitive, compliance is also important. It is crucial to ensure that no one can alter the documents in the future, both for reliable financial reporting and compliance with laws, regulations, and policies.
Using ESignatures in Tax & Accounting Industry
Firms are adopting e-Signatures. They send annual engagement letters to clients or SS7216 consent forms, then distribute annual independence surveys to staff. These documents are perfect candidates for E-Signature technology as they can be batch-processed using mail merge functionality, require annual signatures, and can be signed remotely from any computer, laptop, tablet, or smartphone. Firms can process these documents at a fraction of the cost of sending hard copies. The E-Signed documents are returned to clients and staff in under seven minutes. This makes the workflow significantly easier.
Firms also send client-facing documents such as management and audit representation letters. To accelerate cash collection, they are also sending credit card authorization forms. They also send credit card authorization forms to other departments to speed up cash collection.
Form 8879 and the IRS
E-Signatures are most in demand on Form 8879. E-Signatures submitted on Form 8879 are not accepted by the IRS now. The taxpayer and ERO keep them on file for up to three years. Although the instructions for Form 8879 don't specifically address E-Signatures, one sentence in Publication 1345 states, "This doesn't alter the requirement that taxpayers sign Forms 8879 and 8878 by handwritten signature." This is quite ironic, considering the whole purpose of e-filing tax returns filings is to reduce the paper-based nature of the returns. To e-file a tax return, the only requirement is that the taxpayer must print, sign, and send back Form 879.
The IRS published Internal Revenue Bulletin on January 23, 2013. Announcement no. 2013-8 sought recommendations for E-Signature standards within the tax and accounting professions. E-signature standards would promote efficiency, reduce burden, and improve identity proofing methods for confirming the signer's identity. We don't know when or what the IRS will require for E-signatures to be approved on Form 8879. Many industry leaders believe it will take at least two years to get final approval.
E-Signatures are used on Form 8879 by many firms. Yes. And with great success. While I don't recommend it, successful firms have made the following decisions:
- E-Signatures are legal and valid under the ESIGN Act of 2000
- E-Signatures are now allowed by the IRS on Form 4506T and SS7216 consent, effective January 2013.
- One large tax vendor is currently enrolled in the E-Signature pilot program at the IRS on Form 87879
- E-filing tax returns reduce paper-based processes and increase efficiency for taxpayers, tax preparers, and the IRS. Only Form 8879, which requires a taxpayer's handwritten signature, can be used for e-filing.
- Many tax and accounting firms spend thousands of dollars and hours tracking and managing manually signed Forms (s).
- The IRS rarely receives Form 8879. The taxpayer and the ERO must keep it on file for three years.
- The benefits outweigh the risks.
- With Announcement 2013-8, IRS sought industry feedback.
Using eSignly in Your Workflow
eSignly was designed with accountants and accounting companies of all sizes in mind. You need a custom-designed solution for handling sensitive information and documentation. Here is a look at eSignly’s offerings:
- Secured Fields to Protect Document Privacy: If private information is required, eSignly offers secure fields that block any or all of a field. This can be particularly useful when dealing with numbers such as social security numbers and bank account numbers.
- Meet Compliance Requirements and Verify Identity with KBA: Accounting professionals in the banking sector or people who submit IRS tax forms regularly require using security elements such as eSignly’s KBA and the MFA features. Accountants can use these functions as an integral step in proving and establishing the identity of signers.
- Add Template Rules to Increase Convenience: Accounting users can add fields to a template from eSignly to any document that matches the keyword. This allows them to optimize and automate document processes.
- Create a Content Library to Speed Up Form Completion. Many forms of accounting are repeated over and over. Save commonly used forms to your content library for faster document delivery.
- Delegate Signatories to Clear Signing: You can delegate who signs what in any document with just a few clicks. This saves both signatories as well as accountant’s time and effort.
- Avoid errors by mandating field completion and providing instructions. Long documents can lead to mistakes or misspellings. By using electronic signatures and digital documents via eSignly, accountants can reduce errors, and the time it takes to correct them.
- Quickly update templates with file replacement: Using eSignly, you can easily swap out or update documents with the same fields. To update templates quickly, use our template replacement tool.
- Increase Productivity by Integrating Signing into the Apps You Use. How many processes or procedures do you and your clients use daily to access apps and software like Gmail, Google Docs, and SalesForce? eSignly allows you to integrate signing into existing apps easily. Zapier makes it easy to create integration workflows. You can use our pre-built native integrations or go further and integrate e-signing directly into your software and platforms with our API.
- Upload Practically Every File Format: We know that everyone works differently. This is why we offer a variety of file formats for creating forms and documents. eSignly makes it easy to upload any file format.
- Automatic Document Saving to Cloud Storage and SFTP Servers: It is time to remove the old file cabinets and switch to digital. Electronic signatures will simplify the signing process and allow you to automate document storage and saving. You can send your documents directly to Google Docs or locally to your SFTP servers.
- Control Viewership by User Permissions: Accounting professionals must maintain visibility control over documents. eSignly simplifies visibility control by providing simplified tools to establish user viewing permissions.
Temporarily, the IRS allows taxpayers and their agents to use digital or electronic signatures on certain forms that cannot be filed electronically. This flexibility is only available for paper forms filed between August 28, 2020, and October 31, 2023.
Signatures on Returns and Forms
On paper forms and returns, taxpayers are required to sign in ink with a handwritten signature. To reduce the need to meet in person with taxpayers and representatives due to the coronavirus pandemic (COVID-19), the IRS allows e-signatures to be used on certain forms. Late last year, the IRS announced that it would extend the use of electronic signatures for relevant forms until October 31, 2023.
Types of eSignatures Accepted
The IRS accepts a variety of electronic signatures on the appropriate forms. An electronic signature can be created or captured using any technology. Acceptable methods are:
- A signature block that contains a typed name.
- A scanned or digitalized handwritten signature image is attached to an electronic record.
- A handwritten signature can be entered onto an electronic signature pad
- A stylus device that allows you to write a handwritten note, signature, or command on a screen.
- A signature that is created using third-party software.
The IRS accepts images of signatures, whether scanned or photographed. This includes file types supported by Microsoft 365 like tiff and jpg, jpeg and pdf, Microsoft Office suite, or Zip.
Emergence of Accounting Firm in Recent Years
Change is the essence of life, especially in finance and business. Accounting has seen the most significant changes in the past 50 years. Accountants/CPAs and bookkeepers, and tax preparers can attest to these huge changes. The impact of electronic signatures on document handling is undoubtedly the most significant.
Traditional document handling requires the client to visit your office and be presented with documents that need their signature. All parties then signed the documents. Multiple signatures might be required from multiple parties. Often, all parties will be required to attend the same meeting. This can be challenging as it requires coordination of schedules, and some parties may not show up.
There has been a shift in procedure in recent years. A client can send a document or form (typically a pdf) by mail, email, or fax. They printed them out, signed them, and then returned them by email or fax. Or they could drop it off at the office. This simplified the process slightly, but it also introduced other problems. Faxing and emailing is not secure way to send signatures. Using the mail can cause delays and pose a security risk. Although dropping off a signed document may mitigate the risk, it is often inconvenient. It can lead to further delays as you wait for them to arrive.
Instead, documents in an eSignature environment are usually electronically routed to all parties requiring signatures. This paperless method eliminates the need for clients to visit your office to sign (or "wet"-sign) documents. Security is also enhanced because the information can be stored and transmitted digitally.
The Key Takeaway
It is essential to adopt an eSignature solution to create a modern and adaptable accounting workflow. Many accountants have abandoned paper signatures. It may be time for you too.
More accountants are turning towards eSignature solutions for accounting to speed up document workflows. It is unnecessary to delay scanning, signing, and printing important financial documents or statements.
A digital signature can be a great way to speed up your workflow and cut costs for accountants.
The market for e-signature has seen rapid growth in recent years. According to the market projections, the market will reach $14.1bn by 2026. This is a good thing.
What are the advantages of using an electronic signature to sign financial and accounting documents? Why should accountants abandon the "print and sign" method?