The Tax Software Checklist: Does Your Accounting Software Check All the Boxes?

Investing in the right technology is critical for accountants for several reasons. They need accounting software that checks all of the boxes, including data protection, ease of use, and scalability. These are just a few essentials on the tax software checklist.  

With a tax software market valuation of $33.6 billion expected by 2030, it is obvious there is no shortage of available tax software on the market. What does that mean for accounting firms?  

Software for individuals is fine for personal taxes. It is not sufficient for business tax preparations or the daily bookkeeping and accounting tasks necessary to run a business. The software appropriate for a small or medium-sized business outside of the accounting sector does not meet the needs accounting firms have for everyday operations. 

Here is a tax software checklist to help assess a firm’s current software and action steps to take to ensure it meets the needs of that organization. 

5 Tax Software Essentials 

Tax software is the core of any accounting firm’s business. However, nobody likes to look at the recurring software bill that comes in every month. 

What many do not realize is that accounting firms actually save money by becoming more efficient, productive, and secure when they have the right accounting software. There are six professional tax software solutions used most often by tax preparers and CPAs, including: 

  • CCH Axcess Tax: CPAs voted this software Best Cloud-Based Software for managing the entire firm. 
  • Drake Tax: Accounting professionals voted this tax program Best Value for Preparing Up to 30 Returns (for businesses or individuals). 
  • Lacerte: Tax professionals voted this program Best Software for Complex Returns, like consolidations and mergers. 
  • ProConnect Tax Online: Accountants agree that this software is the Best for QuickBooks Online ProAdvisors
  • ProSeries Professional: A software tax professional voted Best Overall Professional Preparation Program. 
  • TaxAct Professional: CPAs agree this software is the Best Value for Preparing Unlimited Returns

This tax software checklist will help firms determine if their accounting software checks all the boxes. Here are a few of the tax software essentials. 

1. Security   

By the end of 2020, authorities reported a staggering 36 billion exposed records susceptible to data breaches, making that year the worst ever recorded.  

There is no such thing as too much security regarding financial information. Accounting firms must look for reliable tax software that offers adequate data security features, backup options, and sufficient storage.  

It is also essential that the software allows tax preparers secure access to all their client’s records directly from the software. That includes banking and local, state, and federal liability accounts.  

2. User-Friendly  

If the program is too challenging to use, people will not use it. That means wasted money and resources trying to implement a software solution that no one will work with regularly. If you’re wearing the technology hat for your firm, it’s critical to test out a variety of different software. Fortunately, most tax software companies offer free trials so that you and your team can test it out firsthand before making a large investment.  Your whole team needs to be on board for this investment to be worthwhile. 

Accountants can save time by opting for tax software that is easy to operate with a user-friendly interface.

Not only must the tax software be user-friendly. It must also offer scalability. Seasonal industries, like tax preparation, require a firm to be able to scale up or down as workloads fluctuate throughout the year. 

That’s why firms need tax software that grows with their organization and those of their clients. The last thing any business owner wants is to change accounting firms because their provider cannot handle their expansion.  

Tax professionals need to ensure they can prepare and file tax returns across the country in various states and local jurisdictions. They must also be able to process accounts for a myriad of taxpayers – businesses and individuals. 

3. Interoperability   

Tax software needs to be compatible with the other cloud services and software as a service (SaaS) programs the accounting firm uses. They must work well together to boost productivity and reduce redundant data input. Having several financial services that work well together is a powerful tool for small to medium-sized businesses. In other words, the more integrations, the better!

4. Features  

When searching for tax software, accountants should check if the software has the right features for their specific tax practice. No two accounting firms are exactly the same, and many require services that smaller tax prep offices might not need.  

The CEO of TaxJar (a Stripe company), Mark Faggiano, stated that companies need to “ensure that the tax technology provides the right features for your business.” He goes on to say, “You don’t want to invest in [tax software] technology and then find out that it doesn’t quite do what you need.”  

General features tax software should contain include: 

  • Platform compatibility 
  • Robust functionality 
  • Reasonable pricing 
  • Advanced data security features 

5. Accessibility 

According to economic experts at Upwork, 36.2 million American employees will work remotely by 2025. More than one-third (37%) of accounting professionals worked remotely in 2021. 

Accessing files from anywhere is very essential in today’s remote world. Accountants need tax software that enables workforce members to remotely access documents, files, and communication platforms, no matter where they work.     

Tax Software Transitions for the Modern Accounting Firm 

It might be tempting to continue manually tracking documentation instead of opting for technology. Many working in the accounting sector have been accountants long before technology offered adequate solutions, so it can be overwhelming to transition to modern tax software. 

Also, some firms need professional help when it comes time to upgrade organization-wide software for tax preparation. Yet, many accountants struggle to find the support they need. 

At Tech Guru, we help firms transition to the modern applications they need for their daily operations. No one should waste precious time trying to implement and maintain software solutions for their business. Having the right tax prep software means accounting firms can spend more time focusing on their clients and less time navigating complex computer programs. To find out where your firm is at with its technology infrastructure, feel free to take our Accounting Firm Technology Check-up below.