Cloud-based software has existed for more than two decades, though its propulsion into mainstream business operations took off during the COVID-19 pandemic.
Even though a lot of workers have since returned to the office, the preference among businesses for cloud-based software to manage daily operations continues its upward trend. 94% of companies worldwide use cloud computing in some way.
The world of tax preparation is no different. Most tax preparation software solutions today include cloud-based options that are mobile-friendly. But just because cloud-based computing has gone mainstream, that doesn’t mean it’s the right option for every business.
How do you know if cloud-based tax preparation software is right for your firm? Here are four key questions that can help you make the best software choice for your office.
What is Your Office Setup Like?
The first thing to consider is what kind of office you have or would like to have. Do you operate a brick-and-mortar office where clients come to you? Or do you typically travel to your clients’ offices or homes? Might you need mobility for other reasons? Do you want to work from home or while you travel?
While an on-premise tax prep solution may work fine for a conventional brick-and-mortar tax office, many tax professionals prefer greater flexibility. One of the biggest advantages of cloud-based tax preparation software is convenience. With cloud-based storage, you can access your client files from anywhere with a secure internet connection. You can work remotely, whether from home or while traveling, removing obstacles that might otherwise tie you to a brick-and-mortar office, particularly during busy tax filing season.
Not only does cloud-based tax prep software provide you with options to achieve a greater work-life balance, but it also means you can work with clients who reside anywhere in the world, increasing opportunities for building your professional tax business.
What Type of Computer Do You Use?
Again, if you work exclusively in a brick-and-mortar office on a desktop, then on-premise tax prep solutions may work just as well for you as cloud-based. But if you work across multiple devices or want to be able to access client files from your laptop at home, then cloud-based tax preparation software is a better fit.
Tax prep software based on the cloud allows you to work across any device you want, be that your laptop, tablet, or smartphone. As long as you have internet access, you’re in business from anywhere.
Cloud-based software allows you to start the tax prep process on your office desktop, send your client a signature request via your phone or tablet, and follow up via your home laptop later.
What Does Your Client Management System Entail?
Another consideration when choosing tax software is how you keep your clients’ data safe. Do you still use paper files? Do you keep client files stored on your desktop or an exterior hard drive?
It might surprise you to know the chances of a data breach with cloud-based tax preparation software are often lower than with traditional methods, where tax preparers store data on a single local device with limited security protocols or maintain paper documents that can easily get lost or stolen.
In addition to providing greater security for sensitive client information and documents, when you store data on the cloud, you’ll know it is continually backed up, ensuring it won’t be lost even if your computer is lost, stolen, or damaged.
Most cloud-based tax prep software is equipped with advanced encryption and security technology that often exceeds what many small tax firms would be able to provide on their own, including:
- Multi-factor authentication
- Data encryption in transit and at rest
- Regular security updates
Cloud-based tax software also provides automatic data saves, ensuring your clients’ information is encrypted and stored securely on the cloud.
What Does Your Budget Look Like?
While you want to find the best and most affordable software available for your tax preparation needs, it’s important to remember that the “list price” for a tax prep software package may not provide you with a true indication of cost. So while it’s important to know your budget (and its limitations), also understand what tax prep software, whether desktop or cloud-based, costs.
Find out if the listed pricing includes fees for filing a large number of returns. Chances are, you want a cloud-based tax prep solution that offers “unlimited filing.”
Also, be wary of prices that seem too low to be true, as it may mean the software’s functionality is limited and may lack the forms, features, or bank product integrations you need. If you have to buy additional software or integrations to make your cloud-based solution work, you may end up spending more money than you bargained for.
Conclusion
Cloud-based and desktop-based tax software have many similarities, and most tax preparers could work well with either one. Deciding between the two is usually a matter of where and how you prefer to work.
But if storage and security are top priorities, you may prefer the unlimited data storage, automatic data backups, and software updates that come with cloud-based solutions. If you’re considering making a switch from desktop to cloud-based tax preparation software, take advantage of free demos to try the software out for yourself first.
