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 have listed several in this checklist:

• Emerging tech – incorporates generative AI, 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 the busy season.
• Regulatory changes – real-time updates provide regulatory and legislative updates when they occur.
• Affordability – the total costs are commensurate with the value received and do not burden your firm; consider software costs, annual fees, and cost-per-return/cost-per-user fees, as necessary.
• Accuracy – the accuracy rating of the software you’re evaluating is the leader in the industry, minimizing risk and redundant work.
• Integration – technology integration is critical in today’s digital environment; your tax software should integrate with your research program, your client relationship management application, practice management program, bookkeeping, accounting and audit tools, and 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 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 you need it.
• 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 digitally send finalized tax returns to clients 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 must keep your entire firm in mind when evaluating new tax software solutions.

What does that mean? Rather than trying to solve 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 approach helps ensure that everything integrates and every step of the workflow and each application complements the other.

 “If you’re thinking about switching tax software, consider how the new options impact your firm’s administrative tasks and your ability to collaborate with your clients in the way that they want to work with you. Think about how well the different tax software options connect to all the other applications your firm uses in its day-to-day workflow,” said Corey Greene, Senior Product Marketing Manager, Outbound at Thomson Reuters Tax and Accounting. “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 is also important to consider the needs of your staff when evaluating new software solutions. Not only does a happier staff mean happier clients, but the ability to attract and retain top talent remains a leading concern for many firms, and it shows little signs of slowing.

All factors, including the ease of using efficient tax research tools and the ability to seamlessly offer flexible work options, must be taken into account. 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 are 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 when the rubber meets the road. How can your firm successfully make the switch, and when is the right time to do so?

One of the more successful approaches to implementing change is 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 or staff and client surveys may support.

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

• Share the firm’s vision. Doing so helps ensure that everyone within the firm understands the goals and aligns on how to get there. You want to ensure there’s complete buy-in throughout the firm and that everyone is moving in the same direction.
• Assign champions. Action items must be well documented and should have assigned champions or owners to help ensure follow-through and drive engagement.
• Communicate how roles are impacted. Consider the impact of the technology solution on your staff. Does it significantly change their current roles? Support your staff, especially those who have spent significant time working on the legacy product. Convey that you don’t value them based on their knowledge about the old technology solution — this is crucial messaging, as buy-in to the change is critical to the success of the overall transition.
• Set deadlines and define milestones. Doing this is essential 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.
• Celebrate milestones. Doing so can help ensure that staff remains energized and engaged throughout the process.
• Be prepared to pivot. All of this will be a learning process, and you will know more tomorrow than you do today. Therefore, it is important to remember that the plans are not etched in stone, and you must be prepared to pivot.
• Don’t reinvent the wheel. Make the transition less stressful and easier for your firm by leveraging the available resources. This means, for instance, connecting with peers who 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?
• Determine the impact of efficiency gains. Evaluate staffing needs given the efficiency gained by implementing the new software. Depending on your staffing plans, be clear and direct about the impact on the staff.
• 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 knowing what to look for when evaluating software solutions are vital starting points, but they don’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. 

If you’re ready to harness the power of AI-powered tax software, check out our tax and accounting solutions.

Recommended solutions from Thomson Reuters 

UltraTax CS

UltraTax CS professional tax software automates your entire tax workflow and delivers powerful, time-saving tools. UltraTax CS seamlessly integrates with other Thomson Reuters solutions, including 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.

GoSystem Tax RS

GoSystem Tax RS is the tax software of choice for large firms and corporate tax departments, relied on by the top 100 CPA firms and 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.

Checkpoint Edge

Checkpoint Edge is a next-generation research and guidance tool delivering the latest in artificial intelligence, cognitive computing, and machine-learning technologies, combined with our editorial staff's tax and accounting expertise. Spend less time searching and more time doing what matters for your practice. It enables you to find fast, accurate answers with a more fluid and intuitive user experience. See how AI and Checkpoint Edge can transform your tax and accounting research.

Onvio Firm Management

Onvio Firm Management is 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 the convenient mobile apps.