Traditional accounting practices are being challenged by a number of factors. Constant updates of law and compliance can make it difficult and time consuming for accountants to keep on top of the most current information. Another challenge is that all industries are moving into a more digital space, so most of their data is held online. And finally, there is a higher prevalence of variable expenses, therefore adding to an accountant's workload.
What is Cloud Tax Software?
Cloud tax software allows you to store, connect, and manage all your tax related data from multiple locations. Cloud tax software also makes it easy to download documents – like a bank statement– directly into the software so you can quickly compare it with your business’ financial records and ensure all the accounts add up.
The software is stored on a remote server instead of in your business’ location, therefore granting you access to records from anywhere and on any device that has an internet connection. All you need is an app or web browser.
The software functions entirely in the cloud, this means you don’t need to install or maintain software on multiple computers in your company. Your employees can input data into the exact same version of the software as you check the accounts in real-time.
Differences Between Cloud Tax Software and Traditional Systems
The main difference between cloud tax software and traditional desktop tax software is the accessibility you have to access information. With traditional systems the software is only installed on an individual computer at a time, so the only way to access information is through the exact computer(s) that have the software installed. Additionally, the program or data contained within traditional tax software will not stay current for very long.
With traditional software that is only installed on individual devices, data is normally shared through methods such as email or USB key, therefore compromising the security of sensitive data.
Another key difference is that in traditional methods, bills, invoices or bank statements are manually entered into the system, and the desktop accounting software performs little to no integration with any other data reports relating to the business – unlike cloud tax software.
Advantages of Using Cloud Tax Programs
Since all financial data is saved on the Cloud in a single database, team members or employees can collaborate smoothly. You will eliminate the need to manage and create multiple versions of the same file or copy data onto thumb drives to share it with others. Employees can work together from anywhere, as long as they have internet access. This can accelerate the process and simplify other tasks, such as forecasting.
Here are some other advantages of using cloud tax programs.
Cloud based tax software grants authorized users the freedom to log in from any location 24/7 through a web browser, so you are not confined to restrictions of your office space. Meaning you will be able to prepare and file taxes without having to wait until you get back to the office in the morning, or after the weekend.
Accounting team members are always able to access the most current financial information and real-time analytics. Since all data is stored in the same cloud-based system, it’s easier to share electronic documents among staff who are working at home or on the road. You also do not need to purchase additional software to access true cloud software.
The auditor will guide you to EFILE, where it will show you any issues and warnings with your files. Issues are any problems that will block you from EFILING. While warnings won’t block you from EFILING, they could be pointing to some fields that will need to be looked over.
Additionally, if you are looking over someone else's return, you will be able to see a review of their document in the Auditor. Meaning you will see if their return has any issues or warnings that need to be addressed.
Cloud tax software, such as Quickbooks Accountant Pro Tax, offers a broad range of integration opportunities. This includes business applications that share the same central database. Since all systems will work from the same database, you will be able to simplify your tax process.
As your practice grows, you can add features through app integration that help streamline your workflow in almost every area. Such as:
- Client on-boarding
- Client payments
- Client collaboration and advisory
- Balance client books
- Create journal entries
- Managing employees
One of the pillars for productivity is efficiency, which can be achieved through automation. Cloud tax software automates many accounting and banking tasks, eliminating or reducing the amount of manual work, such as:
- Manual data re-entry
- Importing/exporting files
- Switching between apps
Once you finish your trial balance and work papers for self employed clients or corporate clients, Pro Tax will automatically take that data and sync into the proper form, so you're not fidgeting with two pieces of software to complete your tax returns.
After finishing your trial balance, it will sync directly into your T2125 for your self employed clients or to your s100 or s125 form if you're doing a corporate tax return.
Additionally, cloud tax software can automate domestic and international tax calculations, which will help ensure compliance with all applicable tax regimes. Some leading cloud accounting solutions even automate revenue recognition to comply with accepted accounting standards.
Since the software is in the cloud, you will always have the most current version because it automatically updates
The lack of a lengthy installation and setup process doesn’t only save you time. It will also save you money. Accountants who have traditional software on their computers have to not only pay for the initial product but the ongoing maintenance and upgrades that they need. With Cloud based programs, the software development is handled entirely in-house by the provider, so they take on the costs. All you have to pay for is access to the software.
Makes compliance easy
Using tax software means you will have the tools you need to stay organized to stay up to date with regulatory changes, and remain compliant with the CRA. With the help of software, you can focus on getting all of your year-end documentation sorted and keeping on top the ever-changing world of tax compliance in Canada.
Disadvantages of Using Cloud Tax Programs
Unfortunately not everything can be flawless, however, near perfect can come pretty close. Here are some of the disadvantages of cloud tax programs.
The key disadvantage for cloud storage versus on-site storage is that it only works with an internet connection. Your cloud tax accounting software will only run as fast as your internet connection allows. So if you have a weak connection this may inhibit your ability to complete tasks quickly.
Although, most situations in work and life provide for internet access, there are places and times when this just isn’t possible. Thus, you run the risk of not all parties being able to work on the same project.
Yes, Cloud accounting is much safer, but that’s only true if you put the practices in place that ensure you and your team aren’t leaving your systems vulnerable. Every business and employee have some responsibility to ensure they are doing their part in keeping that crucial data secure. This might include teaching practices such as password safety and not leaving workstations logged in and unattended.
Those in more senior, administrative roles are wise to make use of the access control features, to ensure that every individual employee or team only has access to the parts of the cloud accounting system that is directly relevant to them.
Training employees on new software
If you or your employees are used to more traditional methods it will take some time to get used to the new system. Therefore a slow integration into the new cloud tax software, involving training, should help ease you in. Fortunately, there are many online tutorials that will help guide you through the process.
Switching Client Tax Canada Software to the Cloud
When making the switch cloud-based software timing is key. You want to choose a time that will account for minimal disruptions to your practice. Here are some considerations:
- Before tax season starts, staff will have more time to invest in a new project.
- In the middle of the year, there is less transactional data to migrate.
- Plan the changeover well in advance: larger organizations should aim for a 6-month run-up process to allow enough time for the procurement process. Smaller organizations could be up and running in a matter of weeks.
It is also important to ensure that your current data is as organized as possible. This is a good time to clean up unwanted data and rectify any transactions that you have been meaning to correct so that you don’t carry them forward into the new system. Make sure customer and supplier payments are matched to invoices and reconcile your bank accounts so they are up to date.
When you choose QuickBooks Accountant as your cloud tax software you will be simplifying your workflow as well as feeling secure because your work is being automatically saved as you work. You may even find it useful for filing T1, T2 and T3 returns online. Try it today and up your professional game this tax season.