Tax automation software can help small businesses and accounting professionals streamline the tax preparation process. There are many different types of tax automation software on the market, so it’s important to choose the right one for your needs. Here are some things to consider when choosing tax automation software.
1. Does It Support Your Tax Filing Method
According to Deloitte, automation software can save businesses anywhere from 15% to 90% of their current advisory costs.
Different tax automation software packages are designed to support different filing methods. Some of them support many different methods, while others specialize in a certain file type.
Tax automation software that supports many different filing methods can be a good choice for small businesses that use multiple accounting systems, or who work with clients who use a variety of tax preparation processes. This kind of flexibility may also come in handy if you have to switch accountants, because your new accountant should be able to use this software as well.
Businesses that rely heavily on specific accounting systems may want to look for automation software designed specifically for their systems. For example, you can use accounting software from QuickBooks to prepare your taxes, but you may want to use specialized tax automation software to import that data and process it.
The best way to decide which filing method is right for you is to talk with your accountant. She can help you choose the right type of file that will make tax automation software most useful.
However, if you are an individual taxpayer who uses a complicated tax system, then you may want to choose a tax automation package that has a lot of built-in support for different kinds of files and data formats.
2. Can It Export Your Data
Not all tax automation software can export your data from within the program itself. In addition to exporting your data, you need a file format that most tax automation software supports.
For example, we have tested several Microsoft Excel-based tax automation software packages and found that they can export the raw data and provide users with the ability to import this data into other programs.
More sophisticated tax automation software can export your data in multiple formats – by both file type (such as CSV files) and by specific accounting system. If you plan to use these types of systems in the future, then it is important that your tax automation software supports them now.
A good way to find out if your tax automation software can export your data is to ask the company directly. In some cases, they may just be able to tell you whether they can export your data or not. However, if you are going to use the tax automation software on a daily basis, then it makes sense to contact them and ask them up front.
3. Can It Help You Fill Out Your Return
When choosing a tax automation software package, make sure that you can view and print the information that is sent out by the program for you – for example, your federal income tax form 1310. You should also have the ability to edit this information and/or create new forms from within the program.
Lots of tax automation software packages can help you fill out forms, but there are some that specialize in different types of forms. For example, many programs can help you complete your 1040EZ form and your credit card payments, but there are more programs available for more complex forms such as Schedules C, D and E.
4. How User Friendly Is It
The most helpful tax automation software is the one that doesn’t require a lot of user input – it does most of the work for you. Look at a couple examples of different types of programs to see which one is the easiest to navigate and understand.
Success stories about particular brands may also reassure you about their user friendliness. For example, Intuit is the top-selling tax automation software company in the world, and some customers praise their product for being easy to use.
Depending on your level of experience with tax preparation software, you may also want to look for a program that helps you learn as you go.
5. How Fast Is It
According to a PricewaterhouseCoopers (PWC) analysis from 2017, robotic process automation (RPA) costs less than half the price of offshore processing.
Everyone wants to get their taxes done quickly, but this doesn’t mean that tax automation software is always faster than manual processing. The best approach is to find out how long it will take your accountant to prepare your taxes if she uses the best tax automation package that’s available.
If it takes her longer than two days (preferably less), then you could consider using automated software instead. If you are in a hurry, then your best bet is to talk to your accountant and see how long it would take her to process your return.
As you can see, there are lots of things to consider when choosing tax automation software. However, if you keep these five things in mind, then it should be a little easier for you to find the best program for your specific needs and situation.
Benefits Of Tax Automation
As tax leaders continue to face pressure to improve tax calculation accuracy and efficiency, many are turning to robotic process automation (RPA) to automate tax processes. RPA can help tax authorities by reducing the time and resources needed to complete tax processes, improving accuracy and compliance, and providing real-time visibility into the tax process.
Automation solutions are becoming increasingly popular for tax departments and teams. By automating repetitive and time-consuming tasks, tax personnel can focus on more strategic tasks and provide better service to taxpayers. Tax professionals are also able to work more efficiently and effectively with the help of automation.
1. Accuracy
When you are doing your taxes yourself, you may make a mistake. On average, one in every eight tax returns are audited by the IRS. These audits can be extremely time consuming and costly. Tax automation software is designed to be as accurate as possible to cut down on the possibility of human error.
2. Speed
According to an ACCA poll, “just 25% of respondents across the Big Four considered their position provided a good work-life balance, compared to 38% in mid-tier organisations and 49% across all sectors.”
It takes a fraction of the time to do your taxes with tax automation software than it does to do them manually. For example, an average return can be done in about 15 minutes with most tax software packages, while it takes about three hours without the help of automation software.
3. Minimized Stress
With tax automation software you can get your taxes done in a fraction of the time and minimize your stress levels.
4. Better Return Preparation
Most people make common mistakes when completing their taxes. This can be embarrassing and cause you to lose money. When you use tax automation software you can avoid mistakes, minimize your tax returns and pay less in taxes each year.
5. Money
Tax automation software is cheap compared to hiring an accountant to complete your taxes for you every year. Even if you do your taxes manually, having tax automation software will help reduce your stress and make it easier to complete your return once it’s time to do so.
7. Safety
The IRS recommends using tax automation software because it is less likely to leave out a detail or tax credit than you are. It also can’t be bribed, which is a concern for many taxpayers when dealing with an in-person tax professional.
If a company doesn’t want to get audited, then they aren’t going to risk submitting incorrect information on your return. You also won’t have to worry about loosing critical information with tax automation software because your data will be stored securely on your computer and not in the cloud where it could be hacked.
8. Flexibility
When using tax automation software you are less likely to make a mistake when entering your information. Your data will be stored in a secure cloud, so even if it is hacked you won’t lose any financial information.
This gives you the freedom to re-enter your information or update it when needed without having to worry about losing all of the hard work that went into preparing your taxes last year.
Key Features To Look For In Tax Automation Software
85% of respondents saw technology as a means of freeing up time so that they could focus on more value-added possibilities.
The tax function is responsible for tax compliance, tax calculations, and sales tax. They work with the finance team to ensure that all taxes are paid on time and accurately. They also work with the sales team to ensure that all sales tax is collected and remitted to the proper authorities.
1. Easy-To-Use Interface
Tax automation software that is easy to use will make it easier for you to prepare your taxes. The easier the program is to navigate, the more likely you are to actually fill out your return. This is important because the more complicated programs are, the less likely you are to use them.
2. Automatic Updates
Most tax software companies update their products at least once a year. Some programs update your tax forms for you and make it easier for you to see how updated their program is at a glance.
Make sure that the program that you choose will automatically update itself so that you don’t have to worry about missing out on anything important when it comes time to file your taxes in April.
3. Comprehensive
RPA may save up to 80% on overall costs and results in almost no money spent on modifying current or new systems.
Choosing a comprehensive program will save you money in the long run. If you purchase a program that does everything for you, then you won’t want for anything when it comes time to prepare your taxes.
4. Accuracy And Security
As mentioned earlier, accuracy is important if you choose to do your taxes yourself. As long as tax automation software is accurate it will make filing much easier, especially if you are new to doing your own taxes every year.
Security is also something to consider, as we live in a digital world where all of our information can be hacked or stolen. With tax automation software your data will be stored in the cloud but will be secure and not accessible by anyone else unless they know your username and password.
5. Affordable
It is important to consider how much the tax automation software costs and whether or not you think it will be worth the money. If you are new to doing your own taxes every year, then it may be worth investing in a comprehensive program that can answer any questions you may have as you go along. Tax automation software can save you money, as long as you choose one that is affordable.
Final Note
The IRS (Internal Revenue Service) estimates that a business taxpayer spends an average of 23 hours preparing and paying their taxes in the United States.
Tax automation software is a new but growing industry and continues to grow as more people begin to understand the benefits of using automated software instead of manually preparing their taxes each year.
Most of the major tax preparation companies are investing in new technology that will make the overall experience better for both their customers and themselves. For example, Turbo Tax was the first company to offer a secure cloud-based version of their tax software and now seven out of ten taxpayers use this option when doing their taxes.
As more people do their own taxes they will continue to demand automated programs and expand into every state, until all income tax filing is done electronically.
Last Updated on October 11, 2023 by Priyanshi Sharma
