Tax Management Software

What is tax management software?

Tax management software is a software solution that helps freelancers, independent contractors, and businesses manage and automate tax-related tasks such as calculating taxes and preparing and submitting tax returns forms. It simplifies the process of filing taxes, ensures tax compliance, and reduces human error.

The software assists with tax planning by forecasting your tax liability based on your income, expenses, and deductions. It also ensures compliance monitoring by generating compliance alerts when deadlines are approaching. Some tax management solutions integrate with third-party accounting tools to help simplify expense and income tracking for your business.

What are the common features of tax management software?

• Audit trail: Supports tax auditing by providing documentation and assisting with tracking changes in tax records and paperwork.

• Tax calculation: Provides a breakdown of all taxable income streams, and calculates taxes after recording deductions and expenses.

• Tax compliance: Monitors compliance with state and federal tax laws and regulations and notifies users about any potential issues or problems.

• Tax filing: Helps prepare and file tax forms, such as income tax returns, sales tax returns, and payroll tax returns.

• E-filing: Helps file tax returns and payments online, eliminating the need for paper filing.

• Data import/export: Imports and exports information from invoices, bills, and tax reports to and from the software.

What are the benefits of tax management software?

• Increases accuracy and efficiency while calculating and filing taxes: Tax management software helps minimize human calculation errors by automatically tracking income and expenses from your invoices and populating tax forms with accurate data. It also automates the tax preparation process by handling time-consuming tasks such as data entry, tax calculations, and form filing.

• Improves tax compliance: Maintaining tax compliance can be challenging due to frequent changes in laws and regulations. Tax management software keeps you updated with local, state, and federal tax regulations and ensures compliance with applicable tax laws, reducing the risk of fines or penalties for your business.

• Makes tax planning efficient: Tax management software identifies your tax liabilities from various sources such as income, sales, and payroll. Insights into your business’s taxational liabilities allow you to strategize how to plan and file taxes to reduce liability and save money.

• Offers a centralized dashboard: Tax management software provides a centralized dashboard to store and manage tax-related documents such as receipts, invoices, and tax returns, making it easy for your finance team to search and retrieve crucial paperwork during tax filing. 

How much does tax management software cost?

Most tax management software products on the market are priced on a “per month” basis, and their entry-level pricing plans range from $8 to $107* per month. An enterprise product that’s priced higher may include additional features such as employee management, tax filing schedule creation, and compensation management.

*The pricing included is for the entry-level/lowest-priced offerings found on vendor websites as of March 14, 2023.

Key considerations when choosing tax management software

• Identify your taxation needs. The types of taxes you need to pay depend on whether you’re a freelancer, an independent contractor, or a business. If you’re an independent contractor, you’ll need software that can help you file and submit W2 forms. But if you’re a business, you’ll have to focus on filing property, sales, and payroll taxes. You should also consider the availability of crucial features such as tax planning, tax forecasting, audit protection, and reporting. 

• Check the frequency of updates and availability of customer support. Software that gets regular updates and complies with current tax regulations will help reduce the chances of fines and tax penalties. Also, ensure your team has access to multiple customer support channels, such as chat, email, and phone support, so they can quickly find answers to common tax regulation questions. 

• Assess tax report functionality. Shortlist a tax management platform that lets you create nonstatutory reports for audits as well as general reports on tax liabilities, payments, and overall expenses. Also, ensure the software tracks the status of your tax refunds and alerts you when you receive them.

Sources

Products evaluated for the pricing calculation were taken from GetApp’s tax management software Category Leaders report. The pricing ranges exclude freemium versions of the products. The features highlighted were identified based on their relevance and the percentage of products in GetApp’s directory that offer them.