Tax software red flags and what to do about them

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In today’s competitive landscape, leveraging technology—from automation to AI—can be a game-changer for accounting firms. If you find yourself questioning the effectiveness of your current tax software, it may be time to consider an upgrade.

Switching tax software might seem intimidating, but it doesn’t have to be. Making a change now could open up significant opportunities to improve efficiency, increase profitability, and enhance client relationships.

Let’s take a look at how to identify warning signs with your current tax software, what to look for in a new solution, and how to successfully make the transition.

When is it time for a change in your tax software?

The first step for any firm that needs to switch tax software is recognizing a need. However, it is not always obvious that change is needed. Often issues can be written off as simply ‘the way it is.’

If you are uncertain about whether your firm needs to rethink its software strategy, check out this list of red flags that signal it may be time for change.

Tax software red flags  

1. Re-keying data and repetitive manual entries.
   If you’re spending time manually entering or re-entering the same data because your software does not integrate properly, this is a major sign it’s time for a change.
2. Tax return review redundancies.
   If your firm is checking returns many times to catch errors and update information, switching to a more comprehensive tax return preparation software solution will save you an immeasurable amount of time.

3. Limited investment in emerging technology.                                                                                Is your current tax software provider investing in new technology like AI? If not, you could be missing out on increased efficiency and data-driven insight that can lead to new revenue opportunities.
4. Cumbersome on-boarding.
   When training new members becomes a hassle due to non-user-friendly tax software, it is probably time for change. Easier onboarding leaves room for growth and reduces wasted time. This is especially impactful in offices with many remote employees.
5. Disruptive software updates and software crashes.
   Do not let your workflow be interrupted by faulty tax software. Good tax software will save your business time and money by limiting crashes, freezes, and stalls and makes updates easy.
6. Manual updates.
   If your tax software updates require an IT manager and disrupt your workflow, it’s time for a change. Updates should be automatically downloaded from the cloud to all the computers on the network. This is especially important for large teams.
7. No seamless integration.
   If your tax software doesn’t integrate with other software or third-party programs used by your firm, you are likely restricting workflow and limiting collaboration.
8. Low utilization.
   If you are noticing a low utilization rate or see a trend of a decrease in billable utilization, this may be a sign of faulty software.
9. Security breaches.
   If your software has been hacked, putting your firm and clients’ information at risk, it is time to look for new software with proper security. If the software has not been hacked, but there are no security measures to prevent this from happening, making the change now could prevent a catastrophe.
10. Not mobile friendly.
    Do not let your tax software leave you in the past. Your tax software must be mobile-friendly to accommodate all clients and whatever devices they use.
11. User limitations.
    You want your firm to be able to work collaboratively. If only one person is able to access the file at once, and a manual save is required after each use, productivity is limited. Software that saves on the cloud allows for better collaboration and increased efficiency.
12. Microsoft Excel.
    If your firm is using Microsoft Excel as its go-to software to keep track of things, it is time for a change. Specialized tax software makes integration easy.

Even if some of these issues do not jump off the page as problems your firm is facing, ask your team and survey your clients before deciding whether your current software is working. Compiling a list of wants and needs from your team is an excellent way to evaluate if there is a need for change.

What to look for in new tax software 

If you find yourself saying, “Yes, this is me,” when reading through this list, it’s time for a change.

When selecting a new tax software, look for these key features and attributes:

• • Integration of emerging tech (i.e., generative AI)
  • Easy installation
  • Intuitive interface
  • Automatic updates
  • Real-time legislative and regulative updates
  • Fully integrated with all other software
  • Electronic file sharing and customer portal
  • Electronic billing and signatures
  • Data importing
  • Technical support
  • Continuous investment in the latest trends and tech

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3 reasons to embrace AI-powered tax software

There is no doubt that AI-enabled tax software presents a host of benefits for accounting firms. But what are they and how do they offer a competitive advantage?

1. Efficiency through automation. Traditional accounting tasks, such as data entry, reconciliations, and report generation, are often time-consuming and prone to human error.

• • By leveraging AI-powered tax research tools and software solutions, these mundane tasks can be automated with remarkable accuracy and speed, freeing up valuable time for you to focus on more strategic activities.

2. Data-driven insights. AI is revolutionizing the way accountants analyze data and extract actionable insights.

• • By harnessing AI-powered tax software, your firm can uncover hidden patterns and correlations within financial datasets, enabling more informed decision-making and predictive analytics.

3. Stronger client relationships. With the dawn of AI, clients are demanding more than just number crunching—they seek proactive guidance, strategic foresight, and advisory services from their accountants.

• • AI enables your firm to meet these evolving needs and deliver a more personalized client experience.

Implementing changes 

Implementing new tax software is most successful as part of a phased plan. Start with your company’s vision and create a multi-step strategy that facilitates a smooth transition. Consider these steps.

1. Share the firm’s vision.
   Share your vision for the firm and how your new tax software will improve your services and make life easier for your team. Make sure everyone is bought into the changes and moving in the right direction.
2. Assign champions.
   Your implementation plan should be well documented, and each step assigned to champions is responsible for a different piece of the plan.
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? With an AI-powered tax solution, your staff may have an opportunity to transition from tedious data entry tasks to client advisory services—and that’s something to be celebrated.
4. Set deadlines and define milestones.
   Break down the seemingly complex and cumbersome process into easier digestible steps. Measure these steps and track your progress.
5. Celebrate milestones.
   Celebrate the progress you make in the transitional period to keep your team energized and dedicated to making the changes work.
6. Be prepared to pivot.
   Although it is best practice to have a plan and stick to it, be ready to pivot. You will learn more about the new software and how your team is adjusting to the change as the process progresses.
7. Don’t reinvent the wheel.
   Make the process as simple as possible by utilizing your available resources. If you know other firms making similar transitions, ask how they formulated their plan. Your implementation plan should be simple and effective, but it does not need to be entirely new.
8. Determine the impact of efficiency gains.
   Your new tax software will greatly increase your efficiency as a firm. For example, an AI-powered tax research solution can enable junior staff to answer client questions on their own and with confidence.
9. Don’t wait
   Waiting for the right time to make a change may sound like the right idea. Truthfully, this right time may never come. Make time for the changes now so that in the future your firm will benefit from the positive impacts of your new tax software.

Set your firm up for success

Recognizing that it’s time for a change in tax software 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 AI-powered era of tax technology.

Learn more by exploring our white paper below:

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White paper Tax software red flags: How to identify and what to do next From automation to AI, the power of technology in today’s competitive landscape can be a game-changer. If you’re wondering whether or not your current tax software is up to snuff, it might be time to consider making a change.

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