The Future of the Tax Preparation Industry & How to Thrive

Posted at: June 07, 2021

If you're a tax preparer wondering whether there is a future for you in this business, you have a reason to feel concerned. In the past few years, tax preparation has become far more accessible to regular taxpayers than ever before. Online platforms, desktop software, and even mobile apps have contributed to this change in the landscape.

But there's still a bright future ahead for many tax preparers! Technological innovation brings benefits to the tax preparer poised to adapt. One only needs to learn how the industry has changed and how to respond to that. In doing so, a tax preparer can not only survive but thrive as well.

One way to ensure success in the new landscape? Equip your office with top-notch software tools⁠—such as ProClient, an office management dashboard made for tax preparers. Tools like ProClient will help you stay competitive in the years ahead.

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The Tax Preparation Industry: Then and Now

Tax preparation for individuals and businesses has commonly required professional assistance. This can come in multiple forms, which are:

  • Hiring a Certified Public Accountant (CPA) or Enrolled Agent (EA)
  • Acquiring the services of a tax preparation firm like H&R Block, Liberty Tax, or Jackson Hewitt.
  • Or Going to a tax preparation office. Though not certified, their experience can outweigh their certification.

If they chose to skip professional assistance, taxpayers would be stuck with preparing their own tax returns. Such a task was beyond the capabilities of most people.

Until now, many taxpayers have to deal with complicated returns that are very hard for a person to prepare on their own, with no professional help! This describes taxpayers who receive business-related income, belong to a partnership or corporation, or practice day trading. Such folks are generally better off getting professional assistance.

Recently, consumer-grade tax software has become available on the market. The software makes it possible for many people to prepare tax returns without hiring a professional.

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A New Paradigm

Let's look at how the availability of tax software and other changes have affected the industry.

Taxpayers who file simple returns benefit the most from using consumer-grade tax software. Many programs are available now and come as either desktop or cloud-based applications. Some programs support both types of platforms.

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In addition, the IRS has made the electronic filing process easy and convenient for many people. They can access the IRS Free File service, allowing someone to prepare and file returns via IRS partner sites.

Not everyone is qualified to use this free file service. Folks earning incomes above $69,000 do not qualify for the service. But they can access electronic federal tax forms, which can be filled out and filed at no cost.

The IRS has also enabled the e-filing of state returns for free! That makes the electronic filing process an even more appealing option for taxpayers.

With all these options readily available to taxpayers, the tax preparation industry finds itself at a crossroads.

Tax preparation businesses are not only competing among themselves for clients. They are also competing against consumer-grade tax software products and the IRS-enabled free tax filing platforms.

Why People Still Need Tax Preparers

Change is part and parcel of any industry. Shifts in the marketplace tend to offer up challenges. They especially affect tax preparation businesses that have an established way of doing things.

But there is good news. Tax preparers who can adapt to change face an excellent chance of success. They can get ahead of those businesses that stick to a traditional path.

Even with the availability of consumer-grade tax software, a tax office has much to offer. By itself, the software cannot turn a person into an expert tax preparer.

If they only need to file simple income tax returns, then sure, they can get them done using software. But a lot of people have to contend with complex returns. Consumer-grade tax software will not magically grant them the expertise to prepare complex tax returns without error!

Likewise, the IRS Free File limits free access to tax preparation services to taxpayers with an adjusted gross income (AGI) of $69,000 or less. Those who have a higher AGI do get to use free federal tax forms, but as the IRS website itself notes:

“If you choose this option, you should know how to prepare your own tax return.”

Taxpayers above the AGI cutoff can afford to hire a tax preparer to accomplish return filings without error. They won't be spending their valuable time taking on the task themselves.

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Responding to Changes in the Marketplace

There are still many people who can benefit from hiring a preparer to do their tax returns. Even with tax software and the IRS online filing service, people demand someone with the expertise to file returns without errors.

But in addition to offering their expertise, today's tax preparers will want to do more. They should also provide a convenient, fuss-free way of delivering results to clients.

If they can do that, tax preparers will be offering many of the benefits that consumer-grade tax software gives, if not more.

Now, don't you think a lot of people would rather pay a tax preparer to handle their returns? Rather than paying for software and also spending the time and effort required to prepare returns correctly?

Tax preparers can capitalize on that mindset!

They can promise their clients a stress-free filing experience. That's a major advantage over consumer-grade tax software. And tax preparers can also offer an excellent customer service experience on top of that.

Now, it's not enough to make such promises. One must deliver on them. A tax preparation service competing with consumer-grade tax software has to be able to achieve accurate results.

To ensure that, today's tax preparers have to incorporate professional-grade software solutions into their workflow. These specialized programs will reduce the burden from handling masses of client documents⁠—and decrease the likelihood of error.

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Remarkable Efficiency Improvements

Another advantage of using software to streamline your workflow? Increased efficiency. You can deliver results in a more timely manner. The result? Satisfied customers who are more likely to become returning customers. Customers will also stay with you if you have a pleasant customer experience and a customer portal with their returns and history.

And with faster delivery of services, you will be able to accept more clients without overworking yourself. That means increasing your earnings!

With the right software, you can keep track of client records easily. You'll waste less time looking for what you need. You'll make fewer errors, and when you do make a mistake, a good program will be able to warn you in time.

What software do you need to create a more efficient workflow?

You might want to start with a professional document management platform designed with tax preparers in mind. A platform that makes it easy for clients to send you their files securely, and keeps you on task with a scheduling system.

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A Professional Software Solution

ProClient offers all that and more! It makes tax office management easier⁠—thus making your life easier!

You'll get a client resource management system that keeps everything properly organized! Plus, a secure client portal that lets you request and receive documents remotely. And it ensures the safety and security of all files in cloud-based electronic storage.

ProClient's built-in scheduling system can replace Calendly, Schedule Once and similar apps. As it is a system designed by tax preparers for tax preparers, it is a welcome improvement over other calendars.

When documents are stored using ProClient, you'll be able to access them from anywhere with a web connection. Plus, you won't have to worry about losing any files due to disk failure or some other unfortunate event. Files can be tagged and indexed with ease, so you can pull up exactly what you need in no time!

ProClient features Office 365 and Google Suite integration - powerful team management tools give you total command of all user accounts. You can grant secure access to others, with customizable permissions.

And all ProClient activity can be tracked and logged for future auditing by you!

Want more? Select customers can grab ProClient in a package that includes a FREE copy of UltimateTax professional tax preparation software! Check out this link for more info.