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Workflow in a Tax Office


Workflow system.

The more traffic grows on The Wealthy Account the more questions I get from accountants wanting to know how to run their office more efficiently. The tips below can be tweaked to work in many business settings and can be applied to personal management of time with family and friends while allowing ample “me” time for reading, thinking, and relaxing.

The workflow process in my office evolved over time as the tax industry changed and my practice transformed from a tax office to an accounting/payroll/bookkeeping office to its current incarnation as a quasi-communications company focusing on tax issues. So you understand my thought process I will walk through how I handled workflow in the past and why I changed procedures when I did. By seeing each stage of my workflow history you can pull the pieces that fit your situation best and modify them for your needs.

In the Beginning. . .

Organization in a tax office is not optional. From day one workflow had to be recorded and tracked. In business and even in our personal lives it is important to write things down. We start each client with a line item on a legal sized piece of paper. Since there are so many steps we take with our clients we break down each task into its components. Accountants track their own work and the computer monitors progress. My front desk is used as a redundant system, preventing mistakes. An empty checkbox on the legal paper requires investigation.

Before workflow even enters the office, client flow must be managed. In your personal life you can’t visit 38 different friends in different locations at the same time. The same applies in business; you see one client at a time. The early years of my business grew fast. People would frequently drop in without an appointment. Then one year in early February there was a line out of my building and half way down the parking lot. Something had to be done.

We instituted a pre-appointment program. With well over 2,000 tax returns during tax season we needed to control how many people were at the office at one time. At the end of each year we sent an organizer to help clients gather their information. We included a pre-scheduled appointment for each client and reminded the client they could always call and change the appointment.

There was another feature we instituted and encouraged: the drop-off. I have no problem talking with clients. (I have no problem talking at all. Ask anyone who has met me.) The problem arises when people want to see one of the accountants before the return is prepared. We discovered if people dropped off their documents and we called them with questions while we worked on the return we did a better job. Then, when the client picks up the return we sit with them. By talking with a client after-the-fact we can review the completed return for accuracy and plan for the current year with maximum tax savings in mind.


Managing workflow in a tax office is not optional.


We got rid of the pre-appointment program completely. We encourage clients to call if they need an appointment or to drop off/email/mail their documents. We see some clients before the return is prepared, but the money shot is the meeting when the return is picked up. This is where we save the client real money.

The type of client we serve has also changed. More businesses versus simpler individual returns allowed us to ease up on client flow procedures. My practice now prepares around 1,000 returns annually with most clients owning a business or investment properties. The size of the tax returns takes more work than the 2,000+ returns of a decade ago.

The demographic change to our client list means clients naturally want to drop off their paperwork and meet afterwards. Business owners prefer working normal business hours versus individuals always wanting evening and weekend appointments. I enjoyed that change.

The issues changed; we did too. I included some photos of our current system around this post. The open doors photo is where tax returns are categorized by where they are in the process. The open drawer is empty because it is after tax season, but normally is filled with tax returns categorized as an A, B, or C. More on this in a bit.

When tax work comes in it is put into a drawer until it is scanned. Every document in our office is scanned and backed up daily to a third party, off-site administrator. Some data is backed up every 15 minutes and some is backed up at night. Everything is backed up in 24 hours or less regardless.

We still use legal paper as a check-mark system to assure each step was handled properly on each tax return. If the tax return does not need a certain task a note is made. When a client picks up their tax return the line after their name should be filed almost to the end. When the tax return is e-filed and accepted the line for that client should be completed. We also include a checkbox for invoicing and payment. If we are not going to get paid we might wish to consider a different line of work.

Back to the open cupboard doors. If any slot (there are 6 if it is hard to see in the photo) overflows we have a filing cabinet to handle the short-term overflow issues. Starting at the top right the slots are labeled: pending, review, e-file, ACK rec’d, drop off, and print. The details for each slot are as follows:

  • Pending: Files in this slot are for tax returns started, but we are waiting for more documentation from the client. As you can see we still have a few files there in late October. Some clients are slow.
  • Review: Most tax returns are reviewed and I look at all but the simplest of tax returns before e-filing. Even my work is reviewed. I might be good, but I want a second set of eyes holding me accountable.
  • E-file: This slot has the signed e-file forms. All signed e-file forms are filed before I leave at night, no exceptions.
  • ACK rec’d: ACK is the indicator the IRS provides when a tax return is filed and acknowledged. Once a return get an “A” indicator for accepted, it is scanned into the electronic filing cabinet and the hard copy destroyed.
  • Drop off: These are dropped off returns awaiting scanning.
  • Print: This slot is for completed tax returns ready for printing. The client gets a hard copy; we keep a PDF copy.

The A, B, C drawer is where all tax returns go waiting for an accountant to take them in. Any accountant can prepare an “A” return and a review is unnecessary. Most tax returns are classified as “B”. Any preparer can enter the data, but the return must be reviewed. “C” returns must run through my desk. Only very experienced preparers can touch these returns and are always given a full review by me. If I handle the original preparation of a “C” return, I review the work again after a second preparer reviews my work. “C” returns always have special issues.


The A, B, C drawer.

To Infinity and Beyond!

Of course, the world changed everything on me then. This blog and several Mr. Money Mustache mentions increased the volume of work and the number of “C” returns. I am only one guy and like my free time for creative thought, reading, and, oh yeah, family.

Half my clients no longer reside in Wisconsin. More work arrives via email and the web portal than ever before. Demand for my time has also exploded.

All these changes are forcing me to once again rethink workflow in the office. The ultimate goal is accuracy at the fastest pace, but it also now includes determining how it will affect my personal life (as if I had one before). Time is at a premium. It is hard finding tax professionals who burn as hot as I do. No bragging, experience gives me an edge. Most tax pros either retire by now, burnout (a real risk for me), or devolve into data processors.

Thirty years ago my practice was a tax office. Ten to fifteen years ago it evolved into an accounting office with CPAs offering tax, accounting, payroll, bookkeeping, and consulting. Today my practice is turning into a quasi-communications company with tax and consulting the focus.

It has been a hell of a ride. Many of the changes I never imagined until they dropped in my lap. Life (and business) are like that. You have to go with the flow and be ready for anything. Demand for my time is the highest it has ever been. In the past I would speak publicly maybe five times a year; I get that many requests a month now and the pace is quickening. I enjoy public speaking so no problems there. The real issue is determining what I give up to do the speaking.

And I am slowly learning to use the word “no” a lot more now. I hate it with a passion. But it time for me to grow up.

Elizabeth Mayfield Crane

Sunday 18th of February 2018

I need more information. I know it is tax season, and so a tax business consult is not very likely a possibility... but tell me where to send the check that gives me my uniquely structured set of solutions for my overflowing tax office.

I have a serious problem— and I am having a hard time figuring it out. I have to limit my clients, but I don’t know how to say no, because it doesn’t make sense that I can’t help everybody- even though I don’t necessarily have the time. I need an on line appointment scheduled or something with. A set price. I need a mentor... I need a coach. I need feedback on how my business is doing in its 5th year.

Where can I get an operations manual that we can follow that is the right fit for my organization?

Matt Lucas

Wednesday 21st of February 2018

Based on my experience helping build and modernize a firm the biggest impact is to figure out the clients you really want to work on. Go ahead and rank your clients A-F, with A - clients you enjoy the work, they pay and listen, D - they don't listen argue bill, etc.. Then if you can afford it drop the D clients or better yet learn how not to bring them on. If you can't say no then raise your prices until it says no most of your D clients will respond to price. Beyond that push yourself to go paperless (scan as soon as it's in the door) and use a practice management program or tax software tracking or at least excel to track returns it forces you into a process which will save time. If someone is starting out a practice it's tough to spend on software, but it can really save you time and there are some decent prices for cloud based tax applications if you under 5 people.

Good luck.

Keith Schroeder

Sunday 18th of February 2018

David Channell

Tuesday 13th of December 2016

I recognize your tax software and was wondering if you use their document manager program and or portals?

Keith Schroeder

Tuesday 13th of December 2016

Both. We use Drake DDM as our electronic filing cabinet. We modified it to match our needs, ie. we have separate areas for business clients, bookkeeping, and payroll versus tax returns and supporting documents. We use the portal connected to our website, managed by CPA Site Solutions.


Saturday 29th of October 2016

Hey Keith, I like these specific walk-through type posts! I'd love to read something from you on setting up an accounting system for a small business (or even better, rental property business). Basically, they why your ideal client keeps his or her books. Secret benefit to you: if your current or prospective clients read the post and follow the instructions, it could make your work more efficient to handle more clients or gain more free time!

Keith Schroeder

Saturday 29th of October 2016

Awesome idea, Todd. I have it in the queue for a future writing assignment. It's also about more than making my job easier; it is about cutting taxes. Good books are tax efficient.

John McCarthy

Friday 28th of October 2016

Thanks for the article. I am adjusting my practices now as well. About 50% of my clients are virtual. I started using Gruntworx last year to organize the scanned files and import numbers into my tax software, saving some of the clerical time spent on returns. I also brought on my first contractor this year who also works remotely. Much different than the public accounting staff job I had 15 years ago!

Keith Schroeder

Friday 28th of October 2016

Glad it helps, John. Gruntworx is expensive so consider scanning and attaching to returns when possible to save on cost.