Major new tax provisions and the still limping economy had major influences
on tax and accounting practices this year. This has led many firms to examine
their workflow processes and client service delivery methods, with an eye out
for ways to be more productive and to strengthen their practices. For most,
this has included moving to paperless engagement systems. And for some, the
idea of hosted programs for tax compliance, write-up and other services is looking
more attractive, with the potential for lessened IT expenses and maintenance
time, plus anywhere access. Meanwhile, the early adopters are going a few steps
further and embracing cloud-based technologies.
At the same time, many client businesses have contended with shrinking revenues
and tight credit availability, and are also looking for ways that they can be
more efficient and fiscally strong in the current economic climate. Who do they
turn to for advice? Quite often, it’s their most trusted financial advisor:
their accountant. While this may add to your workload, it’s a valuable
relationship, and one that strengthens not only your client’s business,
but your practice, as well.
Our annual Readers’ Choice Awards continue to show a trend toward the
adoption of workflow optimization systems and other technology tools that help
firms and small businesses run leaner and more profitably. The awards are not
a scientific study, but the voting results do offer an informal view into the
professional lives of tax and accounting professionals, their technology and
vendor preferences, and other insights. They are subjective in many instances,
and the loyalty of some professionals to particular vendors definitely comes
through in the results, but this is valuable information, as well, since it
helps to spotlight those technology companies who are keeping their users excited
about their products and vocally supportive, too.
Voting for the awards was open to all professionals through this website during
October and early November. In addition to key technologies used in tax and
accounting firms, such as tax compliance, write-up, research and payroll programs,
the awards also go into the voter’s preferences when it comes to client-side
accounting and management software. While these are programs that their clients
will use, most professionals have strong preferences as to which programs they’d
recommend or prefer these clients run, whether driven by security concerns,
collaboration functions or data integration capabilities. Voters were also asked
about their use of client portals and their knowledge of web-based professional
Federal/State Income Tax Compliance
Drake continues its winning streak in the professional tax compliance
category, more than doubling the next nearest competitive product. While
Drake’s tax system actually accounts for around 10% of actual market
share, its continued strong showing is the result of very loyal users
who love to evangelize the all-in-one tax prep system, which also includes
programs for write-up, practice management, a website builder and marketing
tools. Intuit’s ProSeries and Lacerte tax packages came in second
and third, respectively. Overall, the voting results favored tax systems
geared toward smaller practices, which accounts for most practices in
the United States as well as a large number of our readership.
|Specialty Systems & Tax Prep Tools
This category focuses on the many technologies on the market that are intended
to either fill a niche need that most professional tax programs lack, do
specific tasks or filings more effectively, or offer tax analysis features.
As such, they are used in conjunction with the profession tax system. Since
these programs do not compete against each other, and some may actually
be used in the same practices, voters were allowed to select more than one.
While many voters didn’t have a preference or selected “other,”
more than 20% of our 3,300+ voters did select one or more, demonstrating
that there is still apparently a strong need for these specialty systems.
If you were one of the “other” voters, please send us an email
to firstname.lastname@example.org to let us know what programs you use to enhance your
|Tax Planning Systems
With tax compliance still the major revenue stream for smaller practices
and one of the key areas for mid-sized firms, tax planning seems like a
great way to expand services and strengthen client relationships by providing
proactive advice that helps them realize tangible tax savings. Professionals
are realizing this more and more, too, resulting in an increase over last
year, with more than 40% of all voters citing use of a tax planning program.
Among voters who chose one of the systems listed, Intuit’s Lacerte
Tax Planner took a narrow lead over planning systems from BNA, CCH and Thomson
Reuters planner option.
|Tax & Accounting Research Systems
Once upon a time, tax research involved a library of voluminous tomes of
tax law, rulings and other resources. Technology first dropped this down
to a few computer disks, then almost everything went online. It makes sense,
since the materials can be updated much more frequently (daily, even hourly
at times), it’s more affordable, and practitioners don’t have
to keep up with program updates or other tech issues. The last three or
four years has seen a lot of development and competition among the main
tax research vendors, Thomson Reuters, CCH and BNA, while Intuit’s
TaxAlmanac.org, a free tax wiki (think Wikipedia), has also gained popularity.
With an abundance of subscription and even some reliable free options on
the market, many firms use multiple sources for research (and have favorites
for different topics), so readers were allowed to vote for more than one
product in this category.
|Estate Planning Systems
Although this client service specialty is one that many tax and accounting
professionals refer to legal firms, there is a natural tie-in between the
various planning strategies involved with an individual’s taxes, retirement
and estate/transition. Our voting reflects the general market, with only
about 20% of professionals citing use of a specific estate planning program.
This is double the number from last year and shows a continuing growth in
the client service offering among accounting firms. The numbers above represent
the voting share of those who cited use of an estate planning system.
The 1099/W-2 compliance market is a peculiar one that spans across payables
and payroll, which means the two processes exist in different accounting
spheres, affecting different processes and accounting spheres. For practitioners
managing either client payroll or wage and information reporting as an after-the-fact
service, this conundrum leads to the uniting of these separate functions,
after all, the federal-level compliance procedures are very similar and
happen at the same time each year. All of this has helped create a thriving
niche market, with professional users able to easily manage both processes
simultaneously, and resulting in the success of the many smaller companies
that have developed programs for the combined functions. As with income
tax compliance, the results of voting for this category do not represent
actual market share, but rather a very loyal user base for Advanced Micro
Solutions (AMS), who voted in large numbers. Another small tech vendor,
CFS Tax Software, came in second. Among other notable vote receivers were
CCH’s Small Firm Services ATX, AccountantsWorld, 1099Express, 1099
Pro and Greatland.
| Sales & Use Tax
Is there a market for professional sales tax compliance? Yes. How do you
define it? Well, that’s a little more difficult. The answer is probably
that there are 44 or more markets in the United States for this function,
sometimes called “state and local tax” (SALT), because there
are 44 states with state-level sales tax requirements. Within the six states
that don’t, many municipalities do. It’s probably better to
say there are more than 8,000 markets for the software/service since that’s
about how many sales taxing jurisdictions there are in total across our
country. The result is only a handful of programs that offer total sales
tax compliance across all jurisdictions, and many that offer compliance
for only a few states. The winner in this category this year is eFileSalesTax.com,
an online service for filing and paying California sales taxes, followed
by CFS, which provides compliance for California, New York and Florida.
Often a core service for accounting firms, how a write-up system works and
integrates with client bookkeeping applications can be a major factor in
productivity. Accountants have continued to move to QuickBooks Premier Accountant
Edition because of the simple fact that it offers seamless integration with
the data from their clients’ versions of QuickBooks, along with other
tools for collaboration and import into Intuit’s tax preparation systems.
PCSAI’s Client Write-Up system, Thomson Reuters Write-Up CS and AccountantsWorld’s
Accounting Relief AC led the pack behind QuickBooks. When their votes are
combined, the ATX and TaxWise write-up packages from CCH Small Firm Services
also fared well.
| Trial Balance
Providing a link between a business’ financials and their tax compliance,
trial balance is another important function, but one for which most accounting
firms do not use a specialized program. Of our voters, only 29 percent used
such a system. Of those who did, the CCH ProSystem package
received the most votes.
About 22% of firms reported use of an engagement management system. The
programs continue to grow in popularity, helping firms increase their productivity
through optimized workpaper management and workflow functions. The Engagement
CS system from Thomson Reuters edged past CCH’s ProSystem fx Engagement
in this year’s voting, but the market is still dominated by those
two and CaseWare’s Working Papers.
While generally a service of larger practices, firms that offer audit services
are looking for ways to streamline the intensive process. Capital Confirmation
won the category this year for its Confirmation.com service, which also
received a Tax & Accounting Technology Innovation Award this past June.
Smart e-Practice Aids from Thomson Reuters came in second, with Audit Confirmations
Our largest category by far, the market for payroll technology and service
is booming, with more than 40 vendors vying for the small business and
professional accounting market. The A-T-F system from Advanced Micro Solutions
(AMS) received very vocal voting support from its users, drawing more
than a quarter of all votes cast. Intuit’s QuickBooks Enhanced Payroll
for Accountants came in second, while the hosted Payroll Relief AC system
from AccountantsWorld, PayChex and PayCycle trailed behind. But the top
five programs combined only accounted for about half of the market, with
the rest spread across dozens of other payroll technology providers.
This category is for specialty software that accountants can use to better
understand their clients’ financials and to help them strategize future
business activities based on more sound knowledge of their fiscal condition.
It is a growing field that is no longer dominated by a handful of companies,
but is instead spread fairly evenly across many.
The number of voters responding that they use a business valuation program
has increased to 16 percent, with the PPC Business Valuation system from
Thomson Reuters taking the largest share of votes. Products from NACVA and
ValuSource round out the top three.
Practice Management/Time & Billing Systems
Whether professionals bill by the hour or on a flat rate structure, practice
management and time-based billing systems can provide valuable insight
into productivity. Unfortunately, about half of our voters still don’t
use such a system. The following stats are for those who did report use
of a program.
|Document Management & Document Storage
Document management and storage is a cornerstone of the paperless process,
providing firms with tools for optimizing their workflow processes as engagement
materials are routed through the practice. Nearly 65% of all voters cited
use of a program, with the popular Drake Software system gaining the vast
majority of votes due to its active user base. The Drake Document Manager
is included in the vendor’s tax compliance system.
|Tax Document Automation
As a part of the modern practice, tax document automation is helping to
revolutionize the way tax data is acquired, allowing users to scan common
forms and have line information automatically extracted for use in their
compliance system. The Source Document module in Thomson Reuters’
FileCabinet CS solution has proven popular, as have systems from Copanion,
CCH and SurePrep.
What is workflow? It varies in every practice, but the change to paperless
processes has caused some disruption, as professionals learn new electronic
management methods for client engagements and business management processes.
|Website Builders for Accounting Firms
Tax and accounting pros love free/bundled services, as evidenced by Drake
Software’s continued dominance in the website builders category. Once
again, its very loyal users voted up a storm, resulting in a win for the
company, which includes a basic website development tool and free hosting
with its tax software suite.
A new category in this year’s awards, the use of portals for client
collaboration and file sharing has grown incredibly in the last few years.
AccountantsWorld’s CyberCabinet system won this year’s voting,
with Intuit’s Online Document Exchange just a tiny fraction behind.
ProSystem fx Client Portals and NetClient CS followed.
CLIENT-SIDE ACCOUNTING SYSTEMS
Insight: Still the 800-pound gorilla,
Intuit’s QuickBooks and QuickBooks Enterprise systems are, by far,
the dominant client-side accounting programs for small and mid-sized businesses
Over the past decade, accountants have increasingly adapted the professional
version of the program, resulting in a snowball effect that has the professionals
recommending the system to their clients because of the integration benefits.
Adding to the snowball is that, since the program is so widely used, there
is no shortage of experienced users on the market, and there are many
training, implementation and educational options available for QuickBooks
users, such as The Sleeter Group Consultants Network.
For small, mid-sized and construction-focused businesses, the primary
challenger to QuickBooks continues to be Sage Software’s Peachtree
line, while for non-profits, Sage’s MIP Fund Accounting program
is the second most popular.
As professionals go paperless, they are spreading the concept to their small
business clients, most of whom use QuickBooks. New innovations have been
coming to market that help streamline document processes and collaboration
with the professional, while also aiding the small businesses.
|Fixed Asset Management
The Fixed Asset Manager system, an add-on to Intuit’s ProSeries tax
package, continues as this year’s most popular asset management program.
Systems from Thomson Reuters and Sage are providing some competition, while
CCH has two offerings that are drawing significant votes.
GENERAL BUSINESS TECHNOLOGIES
Outsourced Technology Services
Outsourcing doesn’t have to mean sending jobs or client data overseas.
In fact, it usually just means using a respected third party for tasks
that aren’t your firm’s specialty but that the other party
is, and can do more efficiently. And just as accountants have referred
clients to lawyers and other professionals for some services for many
years, firms are also realizing that by handing off some of their everyday
and tax season in-house processes, they can better use their time on more
profitable services or new business development.
Laptop & Desktop Computers
the move to more and more web-based programs, the number of Apple users
in the professional space is starting to rise a little, and the trend
may continue. But most users are still overwhelmingly on PCs, with Dell
and HP leading in the vote tally as they did in previous years.
professionals can’t live without their Smartphones these days. Providing
constant access to email, work data, GPS, and entertainment functions, they’ve
become almost mission critical, but also fun. The iPhone has certainly taken
the world by storm over the past two years, but it hasn’t unseated
the BlackBerry, at least not with our voters.
Printers & Scanners
the continuing paperless movement and changes to firm workflow, the scanner
has become a critical part of firm productivity, providing the starting
point for many activities, including document management and storage,
and tax scan/populate systems.
|Office Supply Store
do you buy your office supplies? While online shopping is popular for many
products, when it comes to paper, toner, binders and other day-to-day office
gear, most professionals still use the major office stores or delivery services.
Favorite Form of Physical Exercise
Apparently tax and accounting professionals have a sense of humor, or
at least those voting in our awards do. The number one response in this
year’s voting was, “Who has time?” Well, maybe that’s
exhaustion and not a joke. For those who do like to work up a sweat, voters
chose jogging/running first, followed closely by other aerobics exercises.
NEW TECHNOLOGIES FOR PROFESSIONAL FIRMS
New technologies continue to shape the tax and accounting professions, from
client service functions to internal management processes. The Readers’
Choice Awards gives us a snapshot of what technologies and vendors these professionals
are embracing and welcoming into their firms.
Thanks again to all who participated in this year’s voting. If you know
of a technology or vendor that was not included in one of the categories, please
let us know so that we can include them in next year’s awards process.