Evaluating Tax Preparation Software

Efficiency and accuracy are critical to accounting businesses of all sizes. As you position your practice for growth, choosing the right tax preparation software is an important step towards making your business scalable.

With dozens of software packages available on the market, making a decision can be a daunting process. The program you select will become the backbone of your practice and will represent a significant investment in terms of dollars and time invested in learning the ropes and training your staff.

In order to make the right choice, consider these questions as you evaluate your options.

  1. What features of the software are mission-critical for your practice?

Every firm is different, and software package offerings vary to reflect that. What elements of the solution are most important for your firm? For some professional practices, remote access is key. For others, integration with other software packages can make or break the decision. Consider the type of clients that you serve and the typical complexity of returns you prepare.

Depending on the profile of your practice, the list of best-fit solutions will vary. For example, TaxAct Professional software may be the best fit for a small tax-focused firm or a sole preparer. Intuit - Lacerte Tax is great for accounting firms with both business and individual clients, complex and inter-related returns, and those who wish to integrate the tax preparation solution with the QuickBooks accounting software.  By defining your needs first, you will remain focused on mission-critical solution components – so that you don’t get lost in technical details that may or may not matter.

  1. Can the tax preparation tool be integrated with your other software?

Manual data entry is slow and prone to errors. How will the tax preparation software integrate with other programs that you use? Software companies add new integrations frequently, and you may ask the vendor about your specific technology tool stack to find out whether those integrations are on the near-term development roadmap.

The ease of migrating data from your legacy system to the new system is another important consideration. Ideally, the new tool should absorb historical data so that you don’t have to continually invest money and energy to keep both systems running in the parallel.

  1. Do you like workflow organization and transparency?

Your team will rely on the program’s workflow to ensure that no returns fall through the cracks. Assess the convenience and transparency of the main dashboard. Will the dashboard help your staff work together efficiently and accurately, or will it become a source of confusion?

Look at the reporting functionality of the system as well. Dashboard alerts and reports can help you prioritize and manage your day, which can create a real advantage during the busy season when every hour counts.

  1. What is the cost of the program?

Cost can be an important consideration, especially for firms on a tight budget. Many tax preparation tools come with bundle pricing options. Some offer budget-sensitive options without all the bells and whistles, as well as per-return price structures for lower-volume preparers. Consider how the overall cost will fit into your budget and how quickly the software will pay for itself.

  1. How intuitive is the interface?

There is a learning curve associated with every system. However, some interfaces offer a more intuitive user experience, while others may look busy, clunky, or awkward. A live system interface demonstration, which is available through most vendors’ websites, will give you a good sense for the ease of use and convenience of layouts. Remember that evaluating the user experience is a subjective task: it is acceptable to prefer one simply because it fits your esthetics or workflow habits.

  1. Is tax research integrated into the tool?

Integrated research functions can streamline return prep by saving you and your staff valuable time. In addition to a high-level index of tax forms, does the software offer line-by-line form instructions and additional research capabilities? The latter could either come built into the database or be made accessible through a reference library.  An well-visited online community forum for users can offer additional resources.  

  1. How good is the customer service?

Most software solutions come with live chat and phone support service. Ask the vendor about the specifics, as well as typical response time.  Various surveys of tax preparation software packages are available online, and quality of customer service is often one of the metrics. In addition to reading online reviews and comparisons, consider reaching out to your network for real-life feedback. After all, customer service will be your lifeline if something goes wrong with the program during your busiest time.