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There is accounting software. There is practice management software. And then there is tax software. And all three should talk to each other and seamlessly work together.
Tax Software
Tax software doesn’t get much limelight. Many of us on Xero just use the free version of Xero Tax and don’t think much about it, until we outgrow it. But once we do, there is a plethora of options.
And it is these options that Alan FitzGerald will discuss with you in this episode. You might have heard of Alan FitzGerald before since he has quite a few media appearances about tax and accounting software and works closely with associations like the Chartered Accountants Australia and New Zealand.
Here is a very short exerpt of what we learned, so please listen in as Alan explains all this in a lot more detail.
To listen while you drive, walk or work, just access the episode through a free podcast app on your mobile phone.
Cloud
The discussion is no longer whether your tax software should be in the cloud or not. Of course it should. Cloud-based tax software gives you efficiency gains that you just can’t get out of desk-top or server-based software.
So the question is not cloud or not. The question is which cloud-based tax software. There are so many options.
Which Tax Software
There is APS, MYOB AO and AE, Handysoft, Xero Tax, LodgeIT, CCH, TaxLab and Comply – just to name a few. There are so many that eventually some will have to go.
With all these you get what you pay for. Free solutions like Xero Tax give you a lot less than paid-for versions. The question is what you need? If you don’t need it, no point in paying for it.
Tax software that started in the cloud has an immediate advantage over those that migrated to the cloud. Take Xero v MYOB as an example.
Data Analytics
The next big step will be data analytics. Traditionally auditing used random sampling for further analysis. New tax software allows you to analyse every transaction, so you get a complete set of audited accounts feeding into the tax return system.
Analysing tax data will allow advisers to easily identify the need for further advice.
AI
Clustering plays a big role in Artificial Intelligence (AI) and hence tax. Clustering is the primary technique used in tax data analytics and can reveal insightful behavioral traits of individuals and companies.
AI is good at recognising patterns, it is not necessarily good a recognising context. Only a human can add the context.
So tax software will result in more and more automation. But you will also need a human to manage the input and interpret the output.
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Disclaimer: Tax Talks does not provide financial or tax advice. All information on Tax Talks is of a general nature only and might no longer be up to date or correct. You should seek professional accredited tax and financial advice when considering whether the information is suitable to your or your client’s circumstances.
Last Updated on 08 December 2020
Tax Talks spoke to Alan FitzGerald - Fractional CTO at PracticeConnections - for more details.
