White paper

Tax software and your growing firm

What every small tax practice needs to know

From affordability to functionality, small tax firms have specific needs when it comes to tax software. To make the most of your investment, it’s important to have a clear understanding of the role technology can play as your practice grows and faces increased competition in today’s challenging environment.

As a small firm with limited staff and resources, practitioners often find themselves wearing many hats as they go about the day-to-day operations of the firm, work to keep up with the changes and complexities of tax laws, and remain competitive to attract and retain both staff and clients. Having the right technology in place can help alleviate some of the pressures facing small firms and level the playing field.

To help small firms find the tax solution that will best fit their needs, this white paper explores how the right software can transform workflows and help deliver greater value to clients. Let’s take a closer look.

Transform your workflow

Tax software is the cornerstone in which you build your entire practice so it is very important to find a solution that will immediately optimize your workflow, drive greater efficiencies and, ultimately, improve the bottom line.

One of the greatest and most immediate ways the right tax software can improve workflows is through greater automation and data sharing. Your time is valuable. If your firm is spinning its wheels on time- and resource-consuming tasks like repetitive data entry then a change is in order.

Levering a solution that has powerful and comprehensive data sharing capabilities can move your firm to one-time data entry or even to zero-time data entry.

A few additional examples of the data sharing capabilities you could enjoy with the right solution in place include:

  • After changing the address in one return for a taxpayer who is also a partner in 10 different partnerships, the software updates all returns automatically.
  • Each time you enter the TIN for an employer or employee, the most current data from your client database is completed for you.
  • Form 8615 Kiddie Tax info is automatically transferred between the appropriate returns.

Capabilities like these can quickly add up, enabling you to move efficiently through the tax prep process and save countless hours during the busy tax season.

Furthermore, empowering staff, including admin and new hires, with owning the data gathering process can also help small firms improve their workflow. For instance, leveraging a sophisticated and integrated online tax questionnaire/organizer enables firms to request data more easily from clients. Also, a preparation checklist, which outlines all items still needed from the client, can prove very helpful in data gathering.

Elevate your research capabilities

Tax laws and regulations are constantly changing, so it comes as no surprise that keeping up with the changes and complexities is a top concern for smaller firms. Staffing Remains Top Concern for CPA Firms, AICPA Survey Finds.” AICPA, 13 June 2019, Without the right solutions in place, tax research can be extremely time consuming, inefficient, and can expose the firm to greater risk of errors.

Too often, firms rely on search engines for answers on unreliable or unverified sites, which increases the risk of inaccuracies and also leads to more time spent verifying answers.

Even turning to a trusted source, like IRS.gov or a state web site, for information presents inefficiencies because tax professionals must then apply that information to the specific situation their clients are facing. It also opens the firm up to the risk of misinterpretation of that information.

Firms that are using paper resources for tax research must remember that these resources have significant limitations. They are not scalable, and they are not timely as rules and regulations are constantly changing.

Implementing a tax solution that integrates with an innovative tax research tool and has robust diagnostics empowers staff and translates into improved workflows, greater efficiencies, and reduced risk.

Integration with a robust tax research system is important. This enables preparers to quickly find answers to their own tax questions and efficiently find the supporting documentation needed as they prepare returns.

This can prove especially beneficial for smaller firms when you consider the fact that these firms often bring on seasonal help to ease the workload during busy tax season. Ensuring that seasonal staff have the tools and resources needed to be self-sufficient, rather than turning to a firm partner for assistance, is critical.

Furthermore, with dynamic diagnostics in place the solution can flag additional missing items and send your client a reminder email of what they still need to provide to you. It can also drive awareness and alert you to items in need of closer attention, such as an abnormally large or abnormally small charitable donation amount for the client’s income.

Better serve clients

In today’s digital environment, clients not only desire but expect a greater customer experience and have grown used to the conveniences that technology can provide (think, for example, online shopping, banking, bill payments, booking reservations, etc.). Firms that have the right technologies in place can better compete and deliver the experience their clients have come to expect.

Added Greene, “In this age of instant gratification and digital fluency, even at a small firm your clients have moved onto this digital age. It’s in their everyday lives. … I challenge you, as a firm, to think about the tools that you’re offering [clients]. What is the experience that you’re offering to your clients beyond just the work that you’re providing?” said Greene. “If they can find an answer somewhere else … faster than they can get an answer back from you, then they’re going to do that. They’re going to go those routes, and often times that is going to lead them to inaccurate answers.” (Greene, Corey, phone interview, Sept. 30, 2021)

Failing to provide clients such digital capabilities as client portals, e-signatures, online client organizers and mobile apps means that you are delivering them a lower level of client service than they are used to receiving in other aspects of their lives. Also consider the time savings that such capabilities can provide to both your firm and your clients.

For example, how many times have clients called you seeking answers to basic questions like: Can you send me another copy of my tax return? What is the mailing address for this estimated payment that I must mail? If they can log into a client portal, for instance, to get answers to basic questions that equates to happier clients and it means you have more time to spend on growing your business.

Or think about the time and cost savings online questionnaires/organizers can provide. Smaller firms may not have the administrative team needed to print, package, and deliver client organizer packets. Leveraging online questionnaires/organizers can help firms with limited resources save time and, in the long term, save money by eliminating the need for printing and mailing.

Find the right fit

What should small tax firms should look for in tax software? Let’s do a quick review of some key features and benefits to look for:

  • Make sure the solution is easy to use. As a small firm with limited staff and resources, practitioners often find themselves needing to wear many hats. This means there could be areas of the program you rarely use and, if you need to relearn those areas, it is time-consuming and disruptive to have to retrain yourself. Having a program that is easy to use also means a shorter ramp-up time for those not as familiar like seasonal and administrative staff.
  • Find a tax program that will grow with you. Tax software is the cornerstone in which you build your entire practice so it is important to find a solution that is scaleable and can grow with you as your firm grows and expands.
  • Look for strong digital capabilities. Make sure it provides clients with digital collaboration options like a client portal, online questionnaire/organizer, e-signature and mobile app. This will not only provide clients with the level of experience and convenience they expect, but also saves your firm time and money.
  • Look for robust data sharing capabilities. Data sharing between returns should not require additional work to set up and should link returns together automatically using Tax ID numbers. Never waste time linking your 1120S, 1065 or 1041 returns to the member 1040 returns. Plus, the next time a 1040 client moves who is a member of multiple pass-through returns, enjoy peace of mind knowing that you will only have to change his or her address once.
  • Make sure it delivers dynamic diagnostics. Dynamic diagnostics can give you an instant preparation checklist to start each year, providing you with a list of all fields where you had entries for your client in last year’s return but have not yet made an entry this year. You can even flag additional missing items and send your client a reminder email of what they still need to provide to you. This not only saves your firm time but helps empower staff, especially admin and seasonal help.
  • Integration with a robust tax research tool is a must. This enables preparers to quickly find answers to their own tax questions and efficiently find the supporting documentation needed as they prepare returns. Think of the time savings to be gained by automatically navigating from the return to the appropriate research area within the research tool, as well as being able to link to relevant tax guidance in a matter of seconds.
  • Leverage the cloud. If you think implementing a cloud solution is too expensive for your firm, think again. There are a variety of flexible licensing options available today that can give you the software you need at a price you can afford. For instance, you can purchase the software and have the solutions provider host it at their secure data centers, or you can lease software on a monthly basis and access it over the web via the vendor’s data center. And when using a cloud-based solution, you’ll also enjoy the benefits of zero maintenance. All the work of installing and configuring each new release and all of the software updates and backups are done automatically by the solutions provider.

Implement best practices

Change can be hard and just the thought of implementing new tax software can seem overwhelming. The good news is that there are steps firms can take to help make the transition easier. Some implementation best practices to consider include:

  • Focus on the end goal. Procrastination is not only easy but also common. Keeping your end goal in mind can help you stay on track and make the necessary change sooner rather than later.
  • Timing is key. Avoid making significant software changes during busy times.
  • Make it manageable. This means breaking the implementation steps down into bite-sized, manageable pieces. Begin by considering a trial of a tax software solution you’re interested in or reaching out to the vendor and requesting a demo.
  • Seek assistance. Lean on your solutions provider for support, training and help with implementation.
  • Leverage training. Keep in mind that the training and consulting your solutions provider can provide isn’t just about the basics of how to use the software, but also understanding best practices in using and optimizing the software for a firm such as yours. Therefore, it is important not to underestimate the value of training.


Smaller firms not only have limited resources but also specific needs when it comes to tax software. To make the most of your investment, it’s important to have a clear understanding of the role technology can play in helping you grow your practice.

The good news is you don’t have to embark on the journey alone. Turn to a solutions provider, like Thomson Reuters, that can help your firm find the right tax software that will grow with you and enable you to better compete in today’s challenging environment.

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