Twenty-five years have passed since the introduction of the first cloud-based accounting software—the Software as a Service (SaaS) we now know as NetSuite. But despite the longevity of cloud-based software, many tax professionals remain reluctant to trade out their legacy desktop software for a SaaS option, even though cloud-based tax prep software may be one of the most useful innovations in the industry.
Cloud-based software is any software that operates on remote servers, allowing users to securely access their applications and data from virtually anywhere with an internet connection.
As a result, cloud-based tax preparation software can offer you the ability to work and stay connected to clients from just about any location in the world on any device while maintaining data security and increasing productivity.
Data Security for Your Tax Clients
Some tax professionals still fear that cloud-based software is more vulnerable to data breaches, so they continue to operate their tax preparation businesses using often cumbersome legacy systems on their desktops.
However, 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.
Work 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 a home office or while traveling abroad on vacation – removing obstacles that might otherwise tie you to a brick-and-mortar office.
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.
Digital Connection
Cloud-based tax software eliminates the need for separate data backups outside your desktop computer, as it automatically provides secure, cloud-based storage for all your client data. The IRS recommends taxpayers keep their records for at least three years, so make sure you choose tax prep software that follows IRS guidelines for data storage for your clients.
It’s also important to choose a cloud-based storage option that employs two-factor authentication so that cybercriminals can’t access your account (or client files), even if they obtain your password.
This type of tax preparation software offers advantages to your clients as well, since it allows them to easily upload and review their tax documents from anywhere, allowing you to meet the evolving expectations of your increasingly tech-savvy clients. Some cloud-based options also feature mobile apps that allow clients to scan documents with their phones and send them to you securely through the app.
While cloud-based software allows you to access client files and work from anywhere, it’s important to keep in mind that not all online storage options are created equal. Make sure the software you choose is meant for businesses and offers high-level encryption and security features.
Personal drives provided by DropBox or Google Drive, for example, do not have the same level of security as professional, cloud-based tax prep software.
Seamless Interactions with E-signatures
With cloud-based tax preparation software, you can easily and seamlessly obtain e-signatures from your clients for any documentation or forms. For over two decades, e-signatures have been recognized as legally binding by the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA).
Having your clients electronically sign a document provides both the convenience and the same legal weight as their handwritten counterparts.
The IRS officially accepts e-signatures for a wide range of tax documents, making it more convenient for your clients to sign and submit tax forms – bypassing the hassle of paper documents while also minimizing the risk of records getting lost in the mail.
Access from Multiple Devices
Choosing cloud-based tax prep software allows you to work across devices with internet access. 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.
Conclusion
Cloud-based tax preparation software offers many benefits, including the ability to work from anywhere and attract a broader client base. Embracing cloud-based solutions can transform your practice, increasing your geographic reach and ensuring you can meet client needs more quickly and efficiently.
