Do you know that within 6 weeks of a significant cyberattack, almost 60% of small business owners shut down in the U.S. This statistic is most common for small and mid-sized CPA accounting companies. No firm, be it small or large, is safe from data breaches, ransomware or phishing scams as cybercriminals continuously change their methods. If you run a firm or use accounting outsourcing services, protecting client data is as essential to you as your business itself.
As a CPA firm, you manage sensitive financial documents, payroll, tax filings and even social security numbers. That makes you a prime target for cyber attacks. In this article, we will explore the best cybersecurity practices for small accounting firms in easy-to-follow steps so you can create a security wall even if you don’t have a tech degree.
Why Are Small and Mid-Sized Accounting Firms Prime Targets of Cyber Attacks?
The idea is simple. Larger firms are tougher to breach but smaller ones typically lack the same security system and therefore are a lot easier to attack. This is why you are at more risk:
- Limited IT resources.
- Outdated software.
- Absence of cybersecurity training.
- Digitally stored high value financial data.
Whether you are a solo CPA or operating a small firm with limited employees, taking essential cybersecurity measures safeguards your name, your clients and your company.
Best Cybersecurity Practices for Small and Mid-Sized Accounting Firms in USA
Here are some of the best practices for small and medium accounting firms in the USA:
1. Strong Password Protocols
A weak password opens your system to hackers. Using admin123 or your birthday is asking for trouble.
Some best practices in this regard are:
- Use long passwords (12 characters with numbers, symbols and upper/lowercase letters).
- Stay away from divulging your name or company.
- Create and store passwords safely using a password manager.
- Change passwords often.
- Never ever reuse passwords between personal and work accounts.
Why it is effective: Weak passwords are a top reason behind data breaches. Among the simplest ways to boost cybersecurity in accounting is by developing strong password rules.
2. Employ Multi Factor Authentication (MFA)
Passwords are no longer enough. Cybersecurity for CPAs must be beyond single point security.
What's MFA?
Multi Factor Authentication adds an additional stage after you type in your password. This might be:
- A text message code.
- Fingerprint scan.
- An app notification (Google Authenticator).
Why it is effective: In case somebody steals your password, they can not sign in without having the second factor. It is a basic yet powerful defense.
3. Keep All Softwares Updated
Outdated software is like leaving your office door open. Keep updating regularly for better security patches to avoid the loopholes hackers exploit.
What to update regularly:
- Accounting software.
- Antivirus & firewall program.
- Operating systems (Windows/Mac).
- Browsers/plugins.
Automate updates if possible to reduce the risk of skipping one. This step is essential in cyber risk management for mid-sized accounting companies.
4. Invest in Cybersecurity Software
Generic antivirus may not be sufficient in case you're managing sensitive information every day. Look for tools designed for accounting companies specifically.
Recommended software:
- Practice Protect: Cloud security for accountants.
- Bitdefender or McAfee: Strong business antivirus.
- Firewall tools: Blocks unauthorized access to your network.
Tip: Choose software with real time threat detection and client data encryption to safeguard information during transit and at rest.
5. Encrypt All Client Data
Client data encryption turns readable data into codes to stop unauthorized access. It is a must for accounting companies storing:
- Tax returns.
- Financial statements.
- Banking details.
- Social Security Numbers.
Types of Encryption To Use :
- Email encryption: Proton Mail or Outlook 365 Business Premium.
- Cloud encryption: Services like Dropbox Business or Google Workspace which provide encryption as standard.
Why it is effective: Encryption makes information unreadable by hackers even if information is stolen.
6. Regular Backups
If ransomware locks your files, your best defense is a clean, recent backup.
How to backup:
- Use cloud backups (Carbonite or Acronis).
- Schedule every day backups.
- Keep backups offsite and on another network.
- Backups also protect you against cyberattacks, deletions, or system crashes.
7. Develop an Incident Response Plan
Nobody wants to think of worst-case scenarios, yet planning for them is an element of cybersecurity best practices for small accounting firms.
Your plan should contain :
- Whom to contact (internal & external IT support).
- Steps to isolate infected systems.
- Notification plan to affected clients.
- State or federal reporting requirements (if applicable).
Having a basic plan helps avoid panic and speed up your recovery from such a situation.
8. Train Your Team on Cyber Awareness
What is the weakest link of cybersecurity? It's often human error. Your team needs regular training on phishing scams, social engineering tricks and suspicious downloads.
Train your team on:
- Identifying fake emails and sites.
- Safe internet surfing.
- Password cleanliness.
- Locking devices unattended.
You don't need expensive courses as most resources are free or inexpensive. Try a 30 minute quarterly refresher with your staff for basic training.
9. Use Audit trails
Audit trails record all user activity in your systems. That means you can track:
- Exactly who accessed which files.
- When changes were made.
- What systems were logged into.
This helps with spotting unauthorized access, looking for blunders, or completing audits or IRS reviews.
For CPA accounting firms, this also means maintaining openness and trust with clients.
10. Lock Down Physical Devices
It isn't always the digital threats. Your data is in danger if somebody walks out with an unlocked laptop.
Best Practices:
- Lock computers after 5 mins of inactivity.
- Use screen lock passwords or even fingerprint authentication.
- Don't let printed documents be open to access with client info around.
- Secure office networks with guest Wi-Fi isolated from your primary system.
Final Thoughts
Cyber threats are not decreasing and small and medium sized accounting firms in the U.S. are in the spotlight for such attackers. You don't need a huge IT department to be safe. Even if you just stick to the basic and efficient tips here, from establishing strong passwords and encrypting information to carrying out regular audits and backups, you can protect yourself from inside as well as outside cyber threats.
Make cybersecurity a priority as you grow your business or invest in accounting outsourcing services. Your clients offer you their most personal information, so give them reason to maintain the trust. Speak with our experts at The Fino Partners for more information.
