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    Cloud Tax Software: Answers To 4 FAQs

    Posted by CrowdReason on Apr 6, 2022 4:15:01 PM

    Cloud Tax Software: Answers To 4 FAQs

    Cloud services are expected to be the backbone of almost all organizations by the year 2025, with the public cloud market estimated to be $124 billion by that time. A public cloud is one where multiple organizations share third party-managed computing services and infrastructure. Software-as-a-service (SaaS) solutions such as cloud tax software fall under this domain. This software provides tax teams, consultants, and individuals with tools and features that help address a multitude of tax concerns.

    While cloud-based tax preparation software is applicable to multiple audiences, this article focuses on answering questions pertinent to tax teams.

    4 FAQs About Cloud Tax Software

    1. What’s the difference between using on-premise vs. cloud tax software?

    “The fundamental difference between on-premise and cloud tax software is that cloud-based software is hosted and managed by a third party, including all necessary physical and digital resources,” says Matt Shirley, a technology consultant in the financial services industry and lead content writer at Splinter Economics.

    Imani Francies, tax expert at USInsuranceAgents.com, agrees with Shirley, noting that you can easily access cloud-based tax preparation software from your laptop or mobile device through a web browser or app, assuming the provider has built one. “The best thing about the cloud is you can access it from anywhere you have internet service, while on-premise software requires local installation on devices, limiting organizational flexibility.”

    Shirley says being in the cloud means that the organization can access the resources as and when they are needed, typically only paying for what they use. “Cloud computing is scalable and helps businesses reduce costs, making solutions like cloud tax software an ideal choice.”

    In contrast, Shirley explains that on-premise tax solutions are deployed and maintained in-house. While these solutions were the only option in years past, they’re generally outpaced by their more cost-effective cloud counterparts. “Not only are on-premise solutions heavy on power consumption, they’re also time-consuming to keep up with over the long term—both of these elements drive up costs.”

    Dymtro Serhiiev, a professional tax consultant and co-owner of PDFLiner, agrees, noting that on-premise solutions require expenses related to hardware, software, and ongoing maintenance by knowledgeable, experienced IT personnel. “Costs can quickly run high, especially when you need to scale up these resources.”

    Serhiiev says cloud tax software is usually based on monthly and yearly plans or cost-per-transaction. In addition, the tax engine is hosted on the provider's side along with backup data centers that are expensive, regardless of the company’s size. “But you only have to worry about the monthly pricing you agree to, which will undoubtedly be less expensive than managing these aspects yourself.”

    2. Why has cloud tax software become more popular in recent years?

    “With no need for installation or upkeep, it’s no surprise so many organizations have turned to the cloud,” says Francies. “Add to that other burdens they don’t have to deal with, such as updating software, automating backups, ensuring uptime. These elements are all handled by the solution provider. Who doesn’t want a convenient experience when it comes to technology upkeep?”

    Shirley reiterates the scalability factor for cloud tax software’s rising popularity. Organizations today are growing quickly, meaning their needs can change from month to month, not just in the next calendar year. In times of growth or strained resources, the cloud provides organizations with the flexibility to scale up and down as needed.

    For example, consider the pandemic. Its impact was felt quickly and strongly, forcing many businesses to reduce staff and limit spending. Subscribing to cloud services gave many businesses more—and more immediate—options than on-premise solutions. They could simply select a lower subscription plan or similar service reduction and reduce their costs as opposed to being stuck with expensive equipment and IT salaries.

    Security is another area that Shirley says contributes to business interest in cloud tax software. “It's a common myth that on-premise solutions offer better security than cloud computing, but that’s not true. Cloud systems are typically designed to offer advanced data protection measures such as end-point scanning, active vulnerability scanning, multi-factor authentication, and encryption.”

    Serhiiev notes that SaaS solutions are usually much more “user-friendly and don’t expose businesses to common tech-related threats and expenses. All the headaches of tech costs and security are carried by the service providers.”

    3. How do cloud providers address concerns about security and unauthorized access?

    “Providers must disclose their data security practices and guarantee data security,” Serhiiev explains. “You should look for practices and policies such as encryption, two-factor or multi-factor authentication, ISO 27001, SOC 1 compliance, single tenancy, data loss prevention, data backups, and so on.”

    SOC 1, or Service Organization Control 1, is a particularly important element in a financial context as it assures clients that the provider has appropriate and reliable controls in place to protect the client’s financial information. SOC 1 reports were established by the American Institute of Certified Public Accountants (AICPA).

    4. Does cloud tax software improve a tax team’s efficiency?

    Francies says a typical tax process involves time-consuming administrative tasks and necessitates the storage of paper files. “There's a greater risk of sensitive information being lost, stolen, or destroyed due to spills or tears with paper documents. You can avoid these by storing financial data and preparing your taxes in the cloud.”

    Shirley seconds this perspective, underscoring how all data is automatically backed up in the cloud. “Tax returns can be very time-consuming, so it’s reassuring when you work with a system that constantly saves your information.”

    “Another major advantage of cloud tax software is the ability to work from multiple devices,” says Shirley. “With these popular SaaS applications, any tax preparation work isn't stored locally on a single computer. This means that multiple users can access the same documents and work on them collaboratively from anywhere in the world.”

    Serhiiev says the most helpful aspect of cloud tax software is how it can ask you leading questions to fill in complicated forms. “In addition, it allows you to enter your contact information only once and then have all the forms auto-filled to save you time. This same information is ready for next year as well—just make sure to update it if there were any changes since your last filing.”

    Interested in making the switch to cloud tax software?

    CrowdReason offers cloud-based professional tax preparation software tailored for a specific need: property tax planning for companies. It streamlines the entire property tax cycle, making it easy to address return filing, appealing valuations, and paying tax bills.

    We provide the solutions—and the support—you need to conquer the entire property tax process. Not only do our solutions help you keep important tax documents organized, they also keep you on schedule.

    For example, TotalPropertyTax (TPT) helps you track deadlines with an integrated calendar feature. It also helps identify assessment reduction opportunities, reduce return filing time, and make more informed tax decisions. MetaTaskerPT makes data entry a thing of the past. Combined, these solutions help you generate unparalleled efficiencies in the property tax cycle.

    In addition, we ensure your sensitive financial data is protected, backing up all your data every 15 minutes to ensure you’re never at risk of losing a whole day’s worth of work. We also have controls around how long your data is retained for audit purposes, and security protocols around who can access the data for customers who deploy SaaS. Lastly, we operate on a single-tenancy model, and are SOC 1 compliant.

    Come join the team of happy clients who are taking charge of their property taxes with our tax automation software. Schedule a demo today.

    Schedule A CrowdReason Demo

    Topics: Business Personal Property Tax, Property Tax Management, Tax Technology & Trends

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