More and more, legislators leverage big data technology for the study and reform of important tax issues that affect businesses. In addition, accounting experts use technology to inform their decision-making when analyzing and debating tax reforms.
When running an enterprise, there are many things to consider. Taxes are one thing, however, that you want to set up and do correctly, right from the start in your business. Accordingly, enterprises are leveraging big data technology to come out on top during tax season.
Using Data to Mitigate Tax Risks
The IRS maintains a massive database that holds all the tax filings submitted by the nation’s enterprises. The database is freely accessible through the IRS Statistics of Income (SOI) website. Tax specialists use the database to assess clients’ risk for tax audits and to conduct research for client engagements.
Big data systems allow enterprises, such as the IRS, to capture and analyze enormous amounts of information.
However, tax specialists must have familiarity with the database as well as knowledge of how to use big data systems in order to make the most of this information. Business advisors and accountants are strategically positioned to take advantage of emerging big data technology. In fact, the largest accounting firms employ dedicated teams that use big data analytics technology to solve complex financial issues.
The companies that use big data analytics presents an abundance of opportunities for accounting professionals skilled in using big data systems. Organizations – such as the American Institute of Certified Public Accountants (AICPA) and the American Accounting Association – provide continuing learning in this regard. For example, the organizations host yearly big data conferences in addition to seminars and webinars aimed at teaching accounting professionals how to leverage big data technology.
Keeping Things in Order
Today, figuring out how to manage large amounts of data is one of the biggest challenges faced by enterprise leaders. As an example, Walmart completes over 1 million transactions per hour, generating more than 2.5 petabytes of information. That’s equivalent to 25 million gigabytes of data generated every hour of every day.
Tax experts express that the business environment is growing increasingly complex, as the world becomes progressively globalized, and new financial laws continue to emerge.
Due to these changes, organizations generate an astonishing amount of information. To remain competitive, they must have the ability to manage the relatively recent windfall of business and consumer data as well as quickly adapt to legislative changes. Some accounting professionals, for instance, need ways to leverage a large volume of information captured from emails and documents to comply with the Foreign Account Tax Compliance Act (FACTA).
There are two kinds of information from which finance specialists must draw this data: structured and unstructured. Structured data encompasses the type of information that big data systems can analyze easily, such as numbers and statistics. Unstructured data, however, consists of information such as the emails and documents that accounting experts need to comply with FACTA.
Unstructured data may also include non-text information such as audio, image and video files. Now, the latest generation of big data systems allow specially trained accountants to find meaningful insights by evaluating unstructured information that is inherently difficult to scrutinize.
The Future of Corporate Tax Management
Today, executives increasingly recognize the value of data-driven decision-making. Using data to make decisions also applies to finance departments that manage complex tax issues. Using big data technology, financial specialists can help organizations overcome challenges such as navigating complicated international transactions or mergers and acquisitions with global partners. Big data systems allow them to intricately analyze these kinds of complex transactions and accurately predict how they will impact an organization’s finances, legal standing and operations.
Historically, accounting professionals who are responsible for tax compliance have struggled to manage information stored across various company networks and systems.
Thanks to advanced imaging technology, however, information specialists can now collect and evaluate physical documents to produce meaningful reports and build centralized repositories. For organizations that want to bring their accounting systems into a new era, merging their financial information into a centralized database is a powerful first step. Data warehouses eliminate redundancies and errors.
For financial professionals, the data warehouse can be part of a company’s legacy network or a dedicated system explicitly used for accounting. Paired with a database extract, transform, load (ETL) function, which standardizes information collected from disparate sources, big data systems automate the gathering, storing and analysis of mission-critical intelligence for features such as tax analysis.
Moreover, data mining technology allows financial specialists to find tax-related opportunities, identify risks and avoid the negative impact of uninformed decisions. These kinds of meaningful insights are only possible with the aid of modern big data technology. Big data systems that automate critical financial processes free personnel from tedious manual analyses.
Contrary to widely held belief, however, the technology does not place financial professionals’ careers at risk. Instead, it presents an opportunity to use new skills to help organizations make powerful strides toward achieving desired outcomes.