The Use of Tax Software for Efficient Tax Management

It is mandatory for every US citizen to file taxes. But filing income tax returns accurately and on time is nothing short of an ordeal.

However, the use of technology can greatly reduce the effort and time required in filing income taxes. In this blog post, you will learn about some of the benefits of IT use in efficient tax management.

Computerized Tax Accounting

Using a tax software can greatly help prepare your taxes. It will make the process more efficient and less cumbersome.

You can use different types of tax accounting software. Here is an overview of the different types of tax accounting software that you can use to simplify the process of tax preparation.

Form-based Tax Software

Form-based tax software is similar to the tax return form. You simply have to fill in the required fields in an electronic tax document. The software will transfer the information on the tax form and submit it for you.

Interview-based Tax Software

Interview-based tax application is generally the easiest to fill out. The question-answer format simplifies the process of submitting the document. The tax software does not require you to make much effort other than to report the income and expense figures provided by the outsource bookkeeping service provider.

Features of Tax Software

A tax software should meet your specific functional and cost requirements. Some of the features that you should look for in accounting software include the following.

Storage

You should select tax software with adequate storage for your accounting data. The cloud storage feature reduces the use of paper in filing documents. It also allows flexible access to tax related information.

Make sure to determine how many years the software allows you to store electronic data. Generally, most tax software vendors allow up to seven years of free tax storage.

Tax Requirements

Understanding your specific tax requirements is also important when selecting an online accounting software. A free tax software with basic features will be enough when selecting a tax software. But you should get a paid version if you require advanced tax preparation services, such as claiming deductions and credits.

You also should figure out if you need the services of an expert in preparing tax files. Some tax software providers also provide tax consultancy services as part of their package. Hiring tax consultancy services can be costly but it is worthwhile for those who don’t have advanced knowledge regarding tax rules.

Data Security

The software should also have strong data security features. Tax documents often contain confidential company information. It is important that the tax software is equipped with robust security features to prevent hackers from accessing your private company information.

Online tax software can be less secure as compared to desktop software. Data stored on remote servers can be hacked. Therefore, you need to make sure that the vendor follows standard security protocols in securing online data. This is the reason you should only select a reliable vendor if you opt for cloud tax software.

Use-Friendly Interface

Cloud accounting software should have a user-friendly interface. Make sure that the tax software can accurately record financial information and is intuitive and can perform without any glitches.

You can know about the user-friendliness of accounting software by checking out customer testimonials. You can also try out the software yourself by taking advantage of the free trial or demo.

Compatibility

You should also make sure that the software supports the forms required to file tax returns. Find out if the software supports the latest version of the tax forms. This is critical; otherwise, you could end up submitting insufficient tax information.

Customer Service

Customer service should not be ignored when selecting tax accounting software. You will require all the help you can get during the initial phases of using the tax software. Moreover, problems can occur during the tax return submission phase. Therefore, it is vital to ensure that the customer service is personalized and responsive.

Avoid selecting vendors that provide automated computerized customer response. A human element is important when it comes to serving customers.

Switching Costs

Switching costs is often ignored when selecting tax accounting software. You need to make sure that the software allows you to easily switch from another tax software when required.

You must do some research to find out how time-consuming it will be to convert data from one tax software to another. Contact a customer representative to find out about data import options. Also, find out if the tax software supports the data export option for local backup.

Computer Compatibility

Lastly, you should make sure that the computer supports the minimum requirements of using the software. Does it support Mac, Linux or PC operating systems? Also, you should ensure that you have enough storage space to run the tax software.

Conclusion

Using the right tax accounting software can greatly simplify the process of filing taxes. Individuals and businesses can use tax software for submitting their returns. But before choosing a software, make sure that it is packed with cutting-edge features that can simplify the preparation of taxes, such as income tax, estate tax, and others, as required. Other features that you should consider include audit protection, tax estimation, document management, refund calculation, and cloud access.

Maxim Liberty provides affordable bookkeeping services for certified public accountants (CPAs) and business owners. We provide virtual bookkeeping services, including bank reconciliation, accounts receivable and payable management services. In addition, our professional accountants can help you with payroll processing and sales tax filings. For more information about outsourcing your bookkeeping services, contact us at (703) 957-6938.