How to Select the Right Tax Software for Your Business?

Tax laws go through constant alterations every year, which complicates the tax filing process for taxpayers. According to a report by USA Today, more than 600 changes took place under the Tax Cut and Jobs Act since 2017. These changes often lead to tax filing errors. To ensure accuracy and ease in the tax-filing process, tax software comes as a rescue.

There are various tax software solutions in the market, but how to select the best one for your business?
Each tax software is different compared to another in terms of the services it provides, and it is crucial to analyze which tax software suits your situation. Herein are the points you must consider for the right selection of tax software.

1. Analyze the Ease-Of-Use of Tax Software

Tax software should be easy to use. The layout of the user-interface should be good, and the navigation and configuration of the software should be user- friendly. Choice of the tax software depends primarily upon the overall user experience.

Various tax software products use multiple options for smooth navigation. For example, tax software like Lacerte and Drake have keyboard shortcuts, which makes them easy to use.

2. Make Sure the Software Covers Key Features

If you are a tax preparer or a taxpayer, understand what all features you need in the software for convenience in the tax filing process. This method helps to narrow down the choices you have for tax software.

Essential elements of tax software include e- signatures, e- payments, error diagnosis, data importing, and reference material for tax laws and tax research. Some of the popular Tax software offering e-signature feature in exchange for additional fees include:

• ATX
• TaxWise
• Lacerte
• CCH ProSystem fx
• ProSeries
• UltraTax CS

Moreover, Integrated Tax Research is available in software like ATX, CCH ProSystem fx, Drake, and UltraTax CS.

3. Check for The Compatibility of The Software with Add-Ons

It is crucial for tax software to integrate with other applications for increased functionality. Most common tax software integration includes accounting software, client portal, electronic signatures as well as electronic payments. Lacerte tax software is one such example that integrates with QuickBooks accounting software to increase your efficiency.
However, integrating your tax software with any other application requires additional hardware resources such as RAM, storage, etc. To avoid buying high-end hardware for your office, you can opt for cloud hosting, which offers flexibility to integrate any number of third-party add-ons with the tax software.

4. Ensure the Tax software Supports All Tax Forms

Depending upon your requirements, check for tax software and packages which support the various tax forms. Most common IRS tax forms filed are:

• Form 1040
• Form W-2
• Form W-4
• Form 1099
• Form 1098
• Form 1095- A, B and C

If you need to register for your state’s tax return, make sure the software includes the state tax form. Price of tax software like Drake Tax and Lacerte have inclusive state tax return in their packages.

5.Look for The Option of Concurrent Users Support

If you have a team of tax preparers, now and then, there will be a need to bring them on the same platform. For instance, software such as ATX has the option to add up to 6 concurrent users as per the plans, whereas Drake doesn’t provide such an alternative.

6. Learn About the Device and OS Compatibility of The Tax software

Does your system cover the basic requirements of a particular software? If not, it could lead to considerable inconvenience. You must check for system requirements of a tax software before opting.
For instance, users using MAC OS face the compatibility issue with tax software like Drake and UltraTax CS. Many users shift to cloud hosting to fill-in the hole of any- device and any platform compatibility for a seamless tax filing process.

7. Search for Customer Reviews

Customer satisfaction and surveys help build trust with the software and understand the product from a consumers’ point-of-view. Customer reviews help in deciding how a particular product or service is better than its peers and is value for your money.

8. The Product Pricing Should Be Flexible

Pricing of a software product is one of the significant factors in making the decision to choose one. The tax software and the package you opt for should be customizable according to your needs so that you pay for what you use. Look out for the hidden costs and additional fees for add-ons and other services.
Choose packages and the software which would fulfill all your requirements. Tax software such as Drake has a transparent, all-inclusive pricing system, and UltraTax CS software has made-to-order pricing plans according to your needs. Therefore, you need to contact customer support to know about the price and the procedure.

9. Check for Automatic Update Options with the Software Provider

Changes in tax laws and regulations are released regularly. It is essential to stay up to date with these releases. Moreover, there are new features introduced regularly to streamline your tax filing process. Therefore, your tax software must provide regular software updates.
Drake is one such tax software which offers regular software updates in case of any changes along with explanatory release note for the same.

10. Test Before You Buy the Product

You must check out trial periods and demonstration options for the product. It is better to try out the tax software before investing your money in it. Drake, Lacerte, ATX, and ProSeries provide free evaluation software before you buy the actual product.

To Wrap Up!

Every year tax preparers need to file the tax returns, and tax software saves your time by providing quick and accurate tax filing. So, analyze the tax software based on the type of support you need.
Choice of tax software also depends on the fact if you are an individual or a tax professional as well as comfortability of your team of CPAs, accountants, and tax preparers with the software. Always ensure your team is on- board with your decision.

The product you choose reflects your work, so choose wisely!

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