Tax Software Red Flags: How to identify them and what to do next

What to look for in a new tax software program 

What are the must-haves for your new tax software? We've listed a few of them in this checklist:

• Emerging tech. Incorporates generative AI (GenAI), machine learning, and cloud computing 
• Installation. Easy migration and installation process 
• Interface. Intuitive and easy-to-use interface, even for beginners 
• Software updates. Automatic updates don’t disrupt your workflow, even during busy season 
• Regulatory changes. Real-time updates provide regulatory and legislative updates when they occur 
• Affordability. Total costs are commensurate with the value received and don't burden your firm; consider software costs, annual fees, and cost-per-return and cost-per-user fees, as necessary 
• Accuracy. Accuracy rating of the software you’re evaluating is the leader in the industry, minimizing risk and redundant work 
• Integration. Integrates with your research program, your client relationship management app, practice management program, bookkeeping, accounting and audit tools, as well as your clients’ data sources 
• Trusted insights. Access to reliable and accurate resources and comprehensive insights to help you navigate the unexpected 
• Partnerships. Get access to the tools, resources, people, and innovation necessary to meet and exceed your clients’ evolving needs 
• Data importing. Automate some of the data entry, including importing data from QuickBooks or Excel, extracting data from source documents using scan-and-fill technology, and downloading clients’ tax data directly from financial institutions 
• Technical support. Available by phone, email, or live chat technical support when needed
• Diagnostic tools. Reduce the risk of human error with accurate diagnostic tools that check for errors 
• Electronic file sharing and client portal integration. Gather information from clients through an online organizer or questionnaire, and send finalized tax returns to clients digitally via a secure client portal 
• Electronic signatures. Send out tax returns and engagement letters for digital review and signature 
• Electronic payments. Send out a digital invoice for clients to pay electronically 
• Barcode scanning. Scan in documents with bar codes, including Forms W-2 and Schedules K-1 
• Customer reviews. Customers have overwhelmingly positive reviews of the software 
• Continuous investment. A continual focus on incorporating the latest trends and tech

Evaluate tax software through a holistic lens 

While the above checklist is a good starting point, you need to keep your entire firm in mind when evaluating new tax software solutions.

What does that mean? Rather than trying to solve for a single pain point, such as inefficiencies in the data entry or tax prep process, which may inadvertently create additional complications and bottlenecks, consider taking a holistic approach and establishing a technology ecosystem. This helps ensure that everything is integrated, and that every step of the workflow and each application complements the other.

“Is the new tax software you’re evaluating the centerpiece of a technology ecosystem that the vendor might offer? Can you, through either an all-in-one or phased implementation, switch your entire tech stack over to a tightly integrated or seamlessly connected group of programs, rather than just looking at the tax software in a silo?”

It's also important to consider the needs of your staff when evaluating new software solutions. A happier staff means happier clients. It's also a big worry for many companies. 

This means considering all of the factors at play, including the ease and use of efficient tax research and the ability to seamlessly offer flexible work options. Empower your staff to work independently, grow professionally, and differentiate your firm from the competition by leveraging the latest technology solutions.

“Adopting technology that integrates with your staff’s lives, connectivity without sacrificing convenience, can be a meaningful difference-maker,” Greene said

Implementing change 

You're ready for a change and have identified the tax software that will best meet the needs of your firm. That’s great, but now is the real work starts. How can your firm successfully make the switch? When is the right time to do so?

One of the more successful approaches to implementing change is taking a phased approach. When formulating your plan, start with your firm’s vision and then detail the steps needed to realize that vision, which journey mapping and staff and client surveys may support. 

As you embark on your journey, be sure to remember these helpful tips:

1. Share the firm’s vision. This helps ensure that everyone within the firm understands the vision and is aligned on how to get there. You want to make sure there’s complete buy-in throughout the firm, and that everyone is moving in the same direction. 
2. Assign champions. Action items must be well-documented and should have assigned champions or owners to help ensure follow-through and drive engagement. 
3.  Communicate how roles are impacted. Consider the impact of the technology solution on your staff. Does it significantly change what their current roles are? Support your staff, especially those who have had significant time working in the legacy product. Convey that they aren’t valued by the knowledge they have about the old technology solution. This is crucial messaging, as buy-in to the change is critical to the success of the overall transition. 
4. Set deadlines and define milestones. This is important to help ensure that you continue making progress once the wheels of change are set in motion. Breaking the process down into smaller, digestible steps can also make the change seem less cumbersome and intimidating. 
5. Celebrate milestones. This can help ensure that staff remain energized and engaged throughout the process.
6. Be prepared to pivot. This will be a learning process, and you'll know more tomorrow than you did today. Therefore, it's important to remember that plans aren't etched in stone, and you must be prepared to pivot. 
7. Don’t reinvent the wheel. Make the transition less stressful and easier for your firm by using the resources that are available. This means, for example, connecting with peers that have gone through a similar transition or are well-equipped to provide guidance, reaching out to industry consultants, and working with your technology partner. Why reinvent the wheel if you don’t have to? 
8. Determine the impact of efficiency gains. Evaluate staffing needs given the efficiency gained by implementing the new software. Depending on your plans for staffing, be clear and direct about the impact on the staff. 
9. Don’t wait. Timing is another factor to consider. How do you know when the time is right to make the switch? Unfortunately, there’s no easy answer, especially as the downtime between client deadlines increasingly dwindles. This means that firms need to make the time — now.

Ready for a change in tax software?

 There’s no doubt that change can be scary. Fortunately, migrating to a new tax software solution doesn’t have to be. 

Recognizing that it’s time for a change and what to look for when evaluating software solutions are important starting points, but it doesn’t end there. Partnering with the right software provider can truly set your firm apart and provide you with the guidance and resources to succeed in a new era of tax technology. 

As you assess your options, look for AI-powered tax software that transforms your daily workflow and enhances the overall efficiency and accuracy of your firm’s tax processes. By automating repetitive tasks, you can save time and shift your focus to more profitable activities like tax strategy and analysis. 

Contact us if you’re ready to harness the power of AI-powered tax software.

Recommended solutions from Thomson Reuters 

Professional tax software for tax preparers and accountants

A professional tax software that automates your entire tax workflow and delivers powerful, time-saving tools, UltraTax CS seamlessly integrates with other Thomson Reuters solutions. This includes CS Professional Suite, SurePrep 1040SCAN, and SPBinder, so you never lose any billable hours to manual processing. Meet all your tax workflow needs with a customized, end-to-end solution built on cloud computing, advanced data sharing, and paperless processing.

The tax software of choice for large firms and corporate tax departments, GoSystem Tax RS is relied on by the top 100 CPA firms and is designed to support all tax return types with unrivaled scalability. GoSystem Tax RS seamlessly integrates with other Thomson Reuters solutions, including CS Professional Suite, SurePrep 1040SCAN, TaxCaddy, and SPBinder. 

CoCounsel Tax

The trusted agentic AI assistant for tax professionals, CoCounsel Tax is designed to simplify tax research while automating complex workflows. By using CoCounsel Tax, you can significantly elevate your firm’s productivity. CoCounsel combines the latest agentic AI technology and deep industry expertise to deliver precise, trusted answers to complex tax questions. By automating tedious tasks, CoCounsel Tax allows professionals to focus on strategic insights and high-value client work.

Take your tax and accounting firm wherever you, your clients, or staff may go

Use Onvio Firm Management for comprehensive, cloud-based software that lets you run your accounting practice more collaboratively than ever — from anywhere. Your firm can create the perfect client communication hub by combining document storage with secure online client accounts. Your staff and clients will always stay in sync with centralized data management and real-time updates. Plus, you’ll be able to work from anywhere using convenient mobile apps.