Starting a new tax preparation business and overwhelmed by your professional tax software options? Or maybe you’ve been in practice for a while and you’re finding that your “starter” software isn’t cutting it anymore? In either case, you can simplify your search by starting with these five basic criteria that get at the heart of what matters in your tax software selection. Start with the following considerations, and you’ll avoid getting caught up in comparing the minor features of every available software and instead, quickly narrow down your choices to those that work for your business’s needs.
Step 1: Format Matters: Desktop vs Cloud-Based Tax Preparation Software
To help you narrow down your choices, start by deciding between desktop and cloud-based tax software. Each has its advantages, and the choice depends on your specific business requirements. Do you work mostly in the office or from home? Do you keep up with backing up client data regularly and downloading the latest software updates?
Desktop software offers the advantage of being installed on a local computer, providing a sense of control and security. Some desktop-based software supports more types of IRS forms than their cloud-based counterparts (more on form support below!) If you prefer to keep your data stored locally and know that you’ll be diligent with software updates and data backup, this option may be for you.
On the other hand, cloud-based tax preparation software has gained popularity for its convenience and remote accessibility. With the ability to access your data from anywhere with an internet connection, cloud-based solutions let you work from home or on-the-go. This is particularly beneficial for businesses with multiple locations or remote teams.
Step 2: Which Forms Do You Need Supported?
When you’re just starting out as a tax preparer, it’s easy to assume that any professional tax software will support the IRS forms you need to file your client’s returns. But in reality, many software providers’ baseline packages only include the forms needed for most individual tax returns. If you plan to serve small business owners or individuals with complex tax situations, make sure your tax software supports the relevant forms.
Make a list of the specific forms your tax practice commonly deals with and cross-reference it with the capabilities of the tax preparation software you are considering. You may find that you need to choose upgraded packages or even look into different providers altogether. This proactive approach will save you from potential headaches during the tax season.
Step 3: Consider Your Price Range
Cost is always a consideration, especially for smaller firms or solopreneur tax preparers. When evaluating tax preparation software, make sure to consider not only the upfront cost but also any additional fees, such as per-return charges or hidden costs for support and updates. Some software providers offer tiered pricing plans based on the number of returns processed, while others may offer a flat-rate yearly subscription. For smaller operations, it might make sense to opt for software that offers per-return pricing structures. For any full-time tax preparer, however, an all-inclusive pricing package will almost always be more cost-efficient than a per-return model.
Step 4: Convenience for Your Clients
Any cloud-based tax software will let you work from any place that has an internet connection. But does your software offer your clients the same convenience?
Software that includes a remote tax preparation app for clients gives you an edge in the modern market, letting you cater to clients who prefer not to come into the office. Look for options that allow your clients to securely snap a picture of their documents, send them to you, e-sign documents, and send messages, all through the security of the app. This process is not only simpler than scanning and emailing documents, it’s far more secure.
If the app is capable of automatically uploading your clients’ information into your software or sending them updates on the status of their return, even better! These features not only enhance the client experience but also streamline your workflow, reducing the time spent on administrative tasks.
Step 5: Integration Capabilities
Does the software you’re eyeing integrate with products like audit protection, identity theft protection, and bank products? Even if you aren’t sure that you’ll offer these products to your clients yet, it’s wise to choose software that leaves you the option to do so.
When you’re ready, you can add them to your offerings to diversify your income and help attract a wider client base. When your software is capable of integrating seamlessly with these products, it eliminates the need for manual data entry across multiple platforms, saving significant time and reducing the risk of errors. Whether it’s syncing client data to an application for a refund advance or adding built-in audit protection for clients worried about their return, product integration lets you meet the needs of your clients as efficiently as possible.
The right tax software does more than prepare simple returns. It lets you work the way you want to work, serve the clients you want to serve, and ultimately helps you grow your tax practice. Take the time to research and compare your options in terms of price, form support, and additional features like remote work capabilities and integration with other products. With a little effort upfront, you’ll avoid the headaches of tax software that doesn’t meet your business’s needs and enjoy the efficiency and ease of tax software that does.
