Tax Prep Technology: Where to start in choosing the right fit


Tax technology is its own beast. For professionals, there are the major players, the minor players, and the direct to consumer players trying to play in the tax preparer space. Each software does certain things well and other things not too well. There are plenty of articles going into the pros and cons of each software, so how do you choose what is best for you?

I believe each tax preparation firm has its own personality; what you focus on might be completely different than what other firms focus on. As such, everyone needs to evaluate the software for themselves, using the right requirements. The process I will outline assumes you have already streamlined your process behind the technology.

As with everything, I have a process to ensure I am making the right choices, and yes, it does involve a spreadsheet! In fact, I use the basic spreadsheet so much I have it saved as a template on my computer. AND, since I love you all so much, here it is for download.

Step 1: Gather requirements.

First and foremost, I document all the requirements for the system. I document these on an ongoing basis with every team member that is affected by the technology. If you keep a running list, then you are certain to capture everything that matters. This is easiest to document while you are improving processes before you implement new technology. [See last week’s post on process here.]

Big surprise – I do this in the spreadsheet! Down Column A, I list out all of my requirements.

Step 2: Research the alternatives.

Make a list of every program that does what you need. For tax preparation software, there are only a few products and no central location to find out about them. I use a combination of Google, reading articles reviewing tax software, and the ever-present debates on tax forums as a starting place. As I research the programs, I check the boxes in my spreadsheet for what it does and does not have.

If there is a feature that you do not need, but exists in the program, I create a secondary section below the requirements to note these features. I call this the “sexy feature” section.

Make a line at the bottom of the spreadsheet for price. This factor is the most variable and impacts many buying decisions.

Step 3: Review.

I use a trio of factors to review:

  1. Does it meet all of my requirements?
    1. Are there sexy features that will save time and make it worth the extra price? Because, let’s be real, all of those sexy features are expensive.
  2. Can I afford it?
  3. Is it worth the pain to switch to a new technology?

I narrow down the search field to only the programs that meet these three factors, and then I discuss it with other people in my firm. To determine if something meets #3, I calculate the time savings the new tool would provide at the appropriate level of salary, the extra time to switch to the new tool, and then I see where the break-even is. If it’s in year one, I always say yes, it’s worth the pain. If the break-even hits in year two or three, it’s a judgement call. However, many tax preparation softwares have teams that will help you migrate client data.

Step 4: Implement new technology!

As always, consider the three pillars of change management: communication, sponsorship, and training. Ensure that all affected parties know what is happening, the timeline for the transition, when they will be trained, and general expectations around the transition. Keep open lines of communication, including prescheduled check-in meetings. Make sure firm leadership is all supportive of the change and you have identified an internal Sponsor to manage the change communication and training.

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Liz Mason is a serial entrepreneur, a giant nerd, and an involved accounting vanguard. She is the Founder of High Rock Accounting, Rebel Rock Accounting, TheDepartment.Tax, and a few other related brands. Liz speaks on a national stage, guests stars on podcasts, and writes frequently. To further her passion for the advancement of the accounting profession, Liz currently serves as a Xero National Ambassador and as the Content Strategist for Tax Practice News. Liz started her career in tax at Grant Thornton (at 20) and automated a portion of her job landing her in the national tax practice. She spent a decade in large public accounting firms working on highly technical tax consulting before branching off on her own. Liz utilizes her creativity and passion at her company to uproot traditional practices and replace them with innovative concepts. She finds joy in efficient technology and her core belief is that everyone and everything can continuously improve (she says "be better" too often). When Liz isn't planning world domination in accounting, she is a die-hard skier, down for any adventure, plays the ukulele, reads everything, and has a good sense of humor. If you're looking for her, you can find her traveling the world and enjoying new food and cultures with her young son. Follow Liz and High Rock Accounting on Twitter at @LizzyNorMa and @HighRockCPAs.