6 Things Tax Professionals Should Look For in a Tax Preparation Software

As a tax professional, tax preparation software is foundational to the success of your business. A good one helps you work efficiently and accurately through the hustle of tax season. But if you end up with software that doesn’t meet the needs of your tax practice, you could face major disruptions to productivity as you work or, even worse, inaccurate returns. As tax laws continue to evolve and clients demand features like remote tax preparation, tax professionals need a robust software solution that meets the specific needs of their practice. So how do you know if a software makes the cut? We’re delving into the key considerations tax pros should prioritize when choosing a tax preparation software.

Web-Based vs Desktop Format:

The first decision tax pros face is whether to opt for web-based or desktop-format tax preparation software. Web-based solutions offer the advantage of accessibility from any device with an internet connection. This flexibility is critical for tax preparers who want to work from home or on the go or for teams that work remotely, allowing them to work seamlessly from different locations. Some cloud-based software also comes with apps that allow your clients to securely upload photos of their tax documents, letting you cater to taxpayers who prefer not to meet in person. And despite what you may have heard, any reputable cloud-based software is just as secure as their desktop-based counterparts. Advanced encryption and automatic backups in the cloud mean that your clients’ data is just as safe as it would be stored on local hardware (and significantly safer than it would be with paper-based systems).

On the other hand, desktop-format software may be preferred by those who prioritize offline access and prefer that sensitive client information be stored locally. Desktop-based software is compatible with local networks, so if you prefer to work in the office with your team on a secure network, this may be the better choice for you. Finally, some desktop-based software supports more forms than cloud-based options, such as forms for small businesses or state taxes. Ultimately, the choice between web-based and desktop-based software depends on individual preferences, workflow requirements, and the forms your practice needs to support your clients.

Forms Supported:

A tax software solution could check all the boxes, but if it doesn’t support the specific forms you need to serve your client base, it isn’t the right option for you. Whether it’s individual income tax returns, business tax forms, or specialized forms for certain industries, make sure the software includes the forms you need. Some software solutions offer package options, typically including all of the most common individual forms in their base package and offering a suite of business forms or state tax forms as add-ons. 

Integration Capabilities:

Your tax software may be your practice’s most important tool, but it isn’t the only tool you use. Seamless integration with other tools and software helps you streamline your workflow and maintain efficiency. If you plan to offer your clients auxiliary products such as refund advances, audit protection, or identity theft protection, make sure your software is compatible. When your software can integrate smoothly with these tools, you’ll streamline workflows, reduce manual data entry, and minimize the risk of errors. Ideally, you would be able to easily add these products while you are in your tax preparation software, and your clients’ data would automatically transfer seamlessly.

This not only allows you to offer your clients a smoother, faster preparation experience, it also lets you offer products that increase your bottom line without increasing your working hours. 

Security Features:

Given the sensitive nature of tax information, protecting your client’s data should always be a top priority. Make sure your software is keeping up with the latest developments in data protection, including advanced encryption protocols, secure data storage practices, and multi-factor authentication. If you opt for desktop-based software, make sure that it makes the process of updating your software and backing up client data easy. (Cloud-based software will automatically take care of software updates and data backups.) Understanding the software’s security features and ensuring compliance with industry standards can safeguard against data breaches and instill confidence for clients entrusting their financial information to the tax professional.

User-Friendliness and Training:

The learning curve associated with tax preparation software can impact a professional’s ability to adopt and maximize its potential. User-friendly interfaces and intuitive design mean you won’t face a steep learning curve with your new software – this is especially important if you’re purchasing software shortly before tax season. Reviews or free trials can help you evaluate a tax software’s user-friendliness. It’s also a good idea to look into the availability of training resources, such as video tutorials or onboarding calls for new users with a live customer service rep. A software provider that invests in user education demonstrates a commitment to their customers’ success and ongoing satisfaction.

Updates and Compliance:

As any tax pro knows, tax laws are subject to frequent changes, and your tax software should stay up-to-date to ensure compliance. Regular software updates that reflect the latest tax law changes are crucial for accurate and reliable tax preparation. Look into the frequency and ease of software updates, and ask if the software will allow you to file returns without the latest updates. Ideally, your tax software should notify you that updates are available and prevent you from filing returns with out-of-date software.

In an industry where precision and efficiency are non-negotiable, the right tax preparation software is not just a tool; it’s an investment in the success and growth of a tax professional’s practice. By evaluating factors such as user-friendliness, supported forms, cloud-based vs. desktop-based formats, integration capabilities, and more, tax pros can find a software solution that helps them serve their clients as quickly and accurately as possible.