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Help for Tax Season: Tax Technology

by Margot Carmichael Lester, Staples® Contributing Writer

Most of us rely on all kinds of technology to run our businesses. Yet many of us don’t make good use of tax technology to make tax season less, well, taxing.

“Technologies that are readily available today to small business owners aren’t expensive, and [they] simplify, organize and automate the financial processes,” explains Jonathan Barsade, CEO of Exactor, the Philadelphia-based developer of sales tax software. “By not taking advantage of these technologies, many small business owners leave their compliance efforts to the last minute, and, more often than not, beyond the last minute, resulting in additional and unnecessary fines and penalties. With these inexpensive technologies, the process of tax compliance is fully automated. Not only do they save time in having to deal with taxes — something no one wants to deal with — they also save money.”

Hardware Solutions for Tax Season

Many independent business owners realize significant efficiencies using devices like mobile phones and tablets to record and access financial data required for tax filings. “Mobile devices can be used to capture images of receipts, etc., and have them automatically uploaded to your accounting system,” Erik Asgeirsson, CEO of the American Institute of CPAs’ technology subsidiary, CPA2Biz. “And all small business offices should have a scanner to help maintain a truly paperless environment.”

Software & Cloud-Based Tax Technology

There are many boxed and cloud-based software options available for bookkeeping/accounting, billing, tax prep and sales tax management, including TurboTax®, QuickBooks®, TaxJar, Bill.com and Exactor.

Asgeirsson is an advocate of cloud-based tax technology for a number of reasons, including the ability to have a single, continuously updated set of financial information, quicker recovery time if there’s ever a disaster that shuts down your business, and higher-level analytical capabilities so owners can get a sense of what’s really going on in their operations and make better informed business decisions.

Tax Tech Checklist

There are several key considerations when evaluating tax technology:

Scope: “Ensure that the tax technology provides the right features for your business,” says Mark Faggiano, CEO of TaxJar in La Jolla, CA. “You don't want to invest in technology and then find out that it doesn't quite do what you need.”

Action Item: Schedule a brief meeting with your accountant or financial advisor to determine your enterprise’s specific tax season needs and identify options that meet them.

Security: You can never be too secure when it comes to financial information. Look for tax technology with adequate backup and storage options that are easy to use and reliable. You don’t want to have to re-create all that work at the last minute. Also verify that the software allows you to securely access your bank accounts directly from the software or app.

Action Item: Check online reviews and ask around to make sure the provider you’re considering hasn’t experienced any storage problems, data breeches or miscues.

Scalability: Choose business tax software that can grow with your enterprise. Barsade recommends choosing a service with “the ability to generate and file tax returns across the board, in all the tax jurisdictions, state and local — county, city — across the country. The last thing a business owner wants to do is to have to change their provider when they grow and expand.”

Action Item: Consider your growth and expansion plans and choose solutions that can accommodate them easily.

Ease of Use: If the hardware or software is too difficult to use, you won’t use it. That means you’ve wasted money and are making a lot of work for yourself when you finally do need to compile everything for tax season. Save additional time by choosing a solution with automatic upgrades so you don’t have to take the time to do it or pay a tech expert to.

Action Item: Test-drive hardware and computer software before buying it, and ask others how easy it is to actually use.

Integration: “Some cloud services are designed to work well together, which can really boost productivity and cut down on repetitive data input,” Asgeirsson says. “When you have several financial software services working together, it can be a powerful tool for small businesses.”

Action Item: If you’re not using a suite of business tax software solutions that’s made to work together, determine whether each component plays well with the others.

Get Professional Help

Given everything else you have to do to run a successful small business, Asgeirsson suggests getting an assist from your accountant. “There are plenty of tech-savvy advisors out there who can help,” he says. “CPA firms may be best known for their tax and audit work, but a growing number have expanded their practices to include assisting clients in technology adoption. CPAs take great pride in being known as trusted business advisors and, in today’s business environment, technology is considered a component of that equation.”

For example, Asgeirsson says many CPA firms are taking the lead in moving their clients to the cloud. “This can be through an advisory role or through a more active role in installing and overseeing a suite of cloud services for the client.”

More Time to Focus on Your Business

Using technology to make tax tracking and preparation easier gives you more time to focus on the rest of your business — and can make or save you money.

“The biggest mistake is not choosing tax technology at all,” Faggiano says. “The number of small business owners who still rely on stacks of receipts and manual methods for keeping track is mind-boggling. If you find you're spending a lot of time manually keeping track of receipts, income, etc., ask your friends or a CPA if there are technologies to help. I guarantee you can increase accuracy and save time with technology.”

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