The Value of Data Storage, Security, and Electronic Signatures in a Remote Tax Office

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As a tax preparer, protecting your clients’ data is one of your top priorities. However, if you run a remote tax office, you have a few extra factors to consider as you work to keep your clients safe. This post covers three things remote tax preparers should consider to keep their tax office running smoothly and safely: data storage, security, and eSignatures.   

Data Storage: Which options are safe for tax preparers?  

The IRS recommends that all tax preparers routinely back up “critical files” to external sources. But what external sources are safe enough to protect your clients’ data? The IRS lays out two acceptable data storage solutions: cloud-based storage or encrypted external drives.  

  • External drives  

If you opt for the external hard drive option, make sure it has multiple terabytes of storage to hold the files from your tax software. Most importantly, make sure that it’s protected with full disk encryption. This type of encryption translates the data on the device into an indecipherable code using a data encryption key (DEK). The data is then decoded when you enter your authentication key. Without the authentication key, anyone who gains access to the external drive still wouldn’t be able to access your clients’ data.  

  • Cloud-based storage  

With the convenience of cloud-based storage, you can access your files anywhere with a secure internet connection. But remember that not all online storage options are created equal. Ensure that the online drive you use is meant for businesses, as these accounts usually come with a higher level of encryption and security. Never store client data in personal drives like your personal DropBox or Google Drive.   

Choosing a cloud-based tax software like TaxSlayer Pro Web can cut out the middleman. It eliminates the need for separate data backups as it automatically provides secure, cloud-based storage for all your client data. The IRS recommends taxpayers to keep their records for at least three years, we follow their guidelines with our data storage for preparers. 

Whatever cloud-based storage option you use, use two-factor authentication so that cybercriminals can’t access your account even if they get your password.   

Security: What extra steps should remote tax offices take?  

All tax preparers are legally required to have a written tax office security plan. And tax preparers who work remotely will need to consider how they’ll protect clients’ data as they access their company network from afar or work from multiple locations on public Wi-Fi. A Virtual Private Network (VPN) can solve both problems, preventing hackers from accessing your data through your internet connection. VPNs are absolutely critical if you ever need to connect to public Wi-Fi while you work. Fortunately, they’re also affordable and easy to implement.  

Remember, if your clients have additional concerns about their security, you can refer them to affordable identity theft protection services for peace of mind.   

Electronic Signatures: How can you collect them while keeping clients’ data safe?  

You already know that electronic signatures are legally binding and recognized by the IRS. But collecting them can present a challenge. Asking clients to print, sign, scan, and email documents is time-consuming and a huge data security risk. While plenty of eSignature software options are available, none are explicitly built with tax documents in mind, making it difficult to get the e-signatures you need without compromising security or convenience.   

What is the best solution? A secure tax software that includes e-signing capabilities for your clients. This feature combines the ease of eSignature software with the security of your tax software, letting you request and collect client signatures, without sending sensitive tax documents through email or eSignature software that lacks proper security features. The TaxesToGo app is one of the most streamlined options you’ll find. Clients can easily send and sign documents within the app, and you can send automatic requests for signatures as you complete returns.  

In conclusion  

Running a remote tax office is a great way to reduce overhead, reach more clients, and work more efficiently. It also comes with a few extra considerations to keep your clients’ data and documents safe. Using VPNs and encrypted, cloud-based tax software with built-in eSigning and data storage can help eliminate the security concerns of remote tax preparation.   

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