How to Build a Software for an Accounting Company
In the age of digitalization, bookkeeping is becoming more technologically adopted — 90% of accountants believe it to be one of the main tendencies in the industry.
Plus, the majority of them are convinced that it’s no longer reasonable to avoid using modern technologies as an accountant since it significantly damages the ability to keep up with the competition.
Not to mention that with bookkeeping being time-consuming itself, it’s quite hard to manage all tasks with no stress on time. To make tax management easier, many accountants develop custom accounting software, and that’s for a good reason:
- 91% of accountants report a productivity increase after implementing tax management software into their or their company’s workflow.
- No less than 50% of all accounting processes can be automated with the help of dedicated software.
- With automated invoicing and accounts payable, bookkeepers can save up to 1 hour each day. Plus, it saves up to $16 per invoice.
Even though these numbers greatly represent how beneficial tax management software is, we’d like to be more specific and talk about what makes such productivity increase and cost reduction possible.
In this article, we’ll talk about how to decide whether you need custom software and how exactly tax management software can benefit you. Moreover, we’ll cover what features you might need so as to have functional software, and how to be as precise as possible when budgeting your custom development.
We have two articles dedicated to accouting software development. One is about custom software for companies and their financial departments and this one is for accounting companies who will use the software to keep track of their finance as well as do the bookkeeping of their clients with it. So, if you're closer to the first use case, feel free to follow the link to the corresonding article.
💼 Сustom Accounting Software vs Out-of-the-Box Products
As an alternative to custom tax management software development, there are quite a lot of ready-to-use options on the market. Ready-to-use in the context of accounting software implies:
- A predetermined set of features.
- Fixed or partially customizable UI design.
- A shared server.
- Usually available over subscription.
- Maintenance that’s included in the subscription price.
So, generally, if you already know that you need something fully tailored to your use case, we recommend considering custom development. But if you’d like to get a deeper understanding of the difference between custom and out-of-the-box tax management software before making the final decision, we’ll dedicate this section of our article to reviewing cases when custom development might be a more suitable option.
P. S. If you are working as a private accountant or you’re a really small company, we suggest that you take a look at ready-to-use solutions like Quickbooks or Sage. Surely, each use case is highly individual and every company can benefit from custom accounting software. If you’d like to know our opinion on your specific use case, feel free to reach out — we’d be happy to help!
Case # 1: Functionality 🔧
When buying ready-to-use accounting software, it often includes paying for the whole set of features, whether you’ll use all of them or not. Excessive features might damage the convenience of the software. And generally, paying for something that’s of no use to you isn't the best option in terms of value.
With custom software, you have a 100% personalized product with the chosen features — no more, no less. Plus, it’s beneficial in the long run since you don’t have to constantly pay for something that doesn’t bring any value.
For example, if a software provider offers a full communication set like chat + audio/video functionality, but a simple chat would be sufficient for you. In cases like this, you pay for extra features that are of no use to you.
The situation can be completely opposite — a provider doesn’t have a feature you’re looking for. It can be calculating industry-specific taxes, having an unlimited client list, adding gamification features or animated notifications for motivation boost, etc.
Long story short, if you want to have something not commonly accepted on the tax management software market, you’re not likely to find it. For such cases, custom development might suit you better.
Case # 2: 3rd-Party Integrations 📲
If you use a certain third-party integration (emailing, IP telephony, CRM system, etc.) and you want to keep using it as a part of your future software, the chances that such an integration won’t be available are high.
It’s because adding this kind of integration to a product isn’t like a Google extension — it actually needs to be built into the code. Yet, while using software from a provider, you don’t own the code. This is why you don’t have the right to modify it in any way.
Most software providers make contracts with 3rd-party providers in advance and offer their clients to use it for an additional fee. If you’d like something that’s not on the list, you'll probably get rejected since:
- Integrations take time while software providers surely care about quality but need to be quite fast in terms of setting up the product for clients as well.
- It makes the whole product pricier, but providers don’t need their services to cost a fortune since one of their main advantages is affordability (compared to custom development).
- It also takes up space on the server and storage.
Technically, it is possible to do so even with software providers, but it has to be included in your contract and will cost you extra money. As most companies, they’re user-centric, but they have some rules that can’t be broken even for the sake of a client’s convenience.
Case # 3: Security 🔐
Since storing accounting information digitally requires a great level of security, it’s essential to have a reliable and multi-layered security system.
With tax management software from providers, however, you’ll have to go with what’s offered. And such might not provide the security level you want.
Plus, security often implies compliance with specific certifications and standards, which are highly diverse depending on the industry. Because of that, providers would most likely comply with the most widely-used regulations. If you’ll need something industry-specific or more than they offer in general, it’s likely that your request won’t be implemented.
Additionally, tax management software providers mostly use shared servers — multiple software on a single server. It increases exposure to bugs and breaches since breakdowns of other products might impact the whole server.
Sure thing, software providers’ intent isn’t to damage their customers. Most of them definitely care about the security system and build it in a proper way. The thing is, compared to custom development, you can’t be in control of this process.
Additional security features or extra compliance is rarely an option. So, if you decide to go for a specific provider, you either deal with what you have, or try to negotiate system modification, or simply don’t purchase this software.
Custom development allows you to add any security feature and comply with any regulation. Since security is highly important, we’ll talk about that in detail a bit later.
Case # 4: Limited Customer List 📋
Some software providers limit the number of customers you can have in the software. Thus, if you need to store a higher number, you won’t be able to do so. And it might be inconvenient since you’d have to find another place to store this data or consider working with fewer clients.
With custom tax management software, you can have as many clients on your list as you want simultaneously. Additionally, you can create a customer profile in any way that you want.
❓ FAQ on Custom Tax Software Development for an Accounting Company
During tax software development, it’s important to plan certain things in advance so you have time for proper research. This way, you’ll be able to find the most suitable solution for your use case.
So, in this section, we’ll talk about 3 development aspects:
- Integration with an existing product.
- Data storage.
How to Integrate Tax Software with a Current Solution
To build something into your tax software, you or your development team would have to work with a code. So, technically, it is possible if both products are built using the same framework or at least programming language. If this requirement isn’t fulfilled, products are likely to be incompatible.
Additionally, the type of the product matters. For example, it’s not reasonable and often impossible to take the code of your app and use it as a part of your web-based tax software.
Yet, we shouldn’t be talking about the possibility only. Whether it’s reasonable and beneficial or not matters as well. For example, in case your current product doesn’t function as flawlessly as you want it to, it would be easier, in many cases, to write the code anew rather than fix or integrate an old one.
If the current product works well, is compatible with your tax software, and you’re satisfied with it, an experienced development team would be able to perform the integration.
To conclude, there are 3 ways of how it can be done:
- Writing the whole code anew.
- Adjusting the existing solution’s code to make it suitable for your use case and then adding tax management functionality.
- Using a part of the current product’s code to integrate it into the tax software. It looks like it’s the same as the second point, yet, it will impact the way your development team will perform the integration.
If you’d like to learn more about what are the options for your specific use case, you can contact your development team regarding this question or reach out to us!
Digital Data Storage: What to Choose & How to Use
So, there are several options for how you can store the data. It can be a cloud server or an external media. Before we take a closer look at cloud servers (an option we recommend), let’s review physical storage.
External media can include SD cards, flash drives, FTP servers, etc. These might be a little safer since they don’t have access to the internet, yet, they’re kind of outdated.
As for an accounting company, there can be several use cases of such storage. For example, if you need to store information on a certain client but don’t have enough space on your cloud server or you won’t need it for a couple of months, you can use an SD card to transfer this information there. Or they can be used as backups.
As for cloud storage, they’re normally subscription- or pay-as-you-use based. For a subscription, you get a certain amount of space and maintenance for a fixed price. With a pay-as-you-use model, your fee would depend on how much space you used over a certain time span.
It has quite a lot of benefits:
- Access to the data from any place and device. You only need security codes and an internet connection.
- Maintenance is included in the subscription fee.
- The amount of storage isn’t limited since you always can get extra for an additional cost.
Yet, since cloud servers are connected to the internet, it increases exposure to data leaks and hacker attacks. But if you have a secure approach to using the server, there’s nothing to worry about.
To begin with, limit the number of people who have access to the storage. Plus, not all employees need the same amount of data, which is why you can limit each employee’s access to an extent that’s sufficient for a great performance.
In case giving each employee personalized access sounds problematic, you can create different levels of it and categorize each worker according to it.
It’s also good to encrypt the data stored. For this purpose, one of the most widely-used encryption protocols is _Advanced Encryption Protocol (AES). _It provides you with 3 encryption layers — 3 encryptions and 3 decryptions.
How to Enable High-Level Security for Tax Software
As we promised, in this section, we’ll talk about how you can enable a great security system for your tax software. Apart from security techniques for cloud storage use specifically, you can add multi-factor authentication features, enable constant monitoring, and perform security tests.
# 1: Multi-Factor Authentication
Nowadays, security features that protect access to the software (or it can be enabled for storage as well) are really diverse.
The multi-factor authentication system can include:
- A password system like passwords for logins, codes for one-off access, etc.
- CAPTCHA tests.
- Biometric authentication: fingerprinting, voice recognition, face ID, retina scan, and many others. Web-based software isn't that suitable for biometric features, but you surely should talk about it with your development so they can offer you a suitable solution.
- Security questions like mother’s maiden name, first teacher’s middle name.
- Phone or email verification.
- Security tokens. It’s a small device with each owner’s data on it. It gets scanned and gives access permission.
- Digital signature & others.
For higher security, you can combine several features and create a multi-layered system.
# 2: Monitoring & Compliance Auditing
Monitoring can include registering all log-ins as well as identifying new and old ones. Plus, you can record actions performed on certain data. It can be exporting, changing, transferring, etc.
This way, you can easily track where a breach or data leak comes from if such occurs. What’s also great is that you can spot the primary reason for the issue and eliminate it as well as prevent the same problem from happening again by strengthening the weak point.
You can additionally audit your software so that it’ll be fully tailored to standards that regulations you comply with provide. You could also research the regulations for updates so that you stay up-to-date with cybersecurity and privacy policies.
As a part of auditing, you can make up a set of criteria that you’ll use to evaluate your software’s security once in a while.
# 3: Security Testing
When updating your software or adding even small changes to the code, it’s essential to check if it impacted the performance in any negative way — caused new bugs, weakened a security part of the software, etc. If you’d like to automate a big part of this process, you can consider adding Continuous Integration and Continuous Delivery (CI/CD).
As for CI, it can be used for bug scanning automation. When you apply changes to the code, CI scans it to spot any issues on the replicated code in the library. If something is wrong, the CI system won’t let the update happen. Surely, you will be notified of the issue so your development team can fix it.
Once the problem is fixed, you check it through CI tools once again. In case everything is flawless, CD delivers and applies all changes to the actual software’s code.
⚙️ Top Tax Software Features
In this section, we’ll talk about features you might need for your tax software.
# 1: Client Screen 😀
To manage all your clients’ accounting, it’s convenient to have a dedicated flow in your software for centralized and structured customer management.
The flow can include:
- Customer list.
- Each company’s profile, which itself can consist of the name, type (LLP, OPC, PLC, etc.), number of employees, contact details,
- Quick access to other company’s data (like expenses, income, tax return, or previous tax forms, etc.) from the profile, status.
- A chat with a customer (if you want such functionality).
- “Create Invoice” button.
For higher convenience, you can categorize companies and create several lists or tabs. For example, you can create tabs by companies types or statuses (active, archived, closed).
Additionally, you can place some important deadlines on each company’s profile, which we’ll talk about in the next section. You could also have tools to manage access rights to give customers access to overview certain processes or so they can approve payments.
Access rights feature highly depends on how you build up relationships with your clients and what your workflow looks like.
By the way, we have an article dedicated to building a custom Client Relationship Management system where we go into building customer management flow in more detail:
# 2: Task Management 📅
When working with multiple companies, it’s essential to keep track of all tasks and deadlines. So that it’s not that overwhelming, you can add structured task management features to your tax software.
This flow can include:
- Task dashboard where you can overview tasks for a certain day/week/month. You can add various tabs like “Done”, “In progress”, “Next month”, etc. Plus, you should be able to change the status right from this screen. You might also need a “Create a new task” button here.
- Calendar integration.
- Task screen. Here, you should be able to access all information regarding each specific task: deadline, assigned employees, “Create a new task” button, task description, sub-items of a task, a bar for notes, progress bar. All of that should surely be customizable.
# 3: Document Management & Compliance 📚
To keep track of all accounting-related records and documents and create reports, it’s essential that you have a well-structured document management system.
The functionality can consist of:
- Tax report templates.
- Tax return forms.
- File uploading and exporting.
- Diverse filtering system to easily look up previous documentation with filters by date, document type, company, etc.
- Tabs & folders for an easier search. You can create tabs for each company separately, for example.
- Creating new documents or reports & others.
Another important thing to take care of is making sure that each clients’ documentation is generated according to regulations and standards. Plus, if you work with multiple companies, it’s likely that you create different types of reports and forms for different enterprise types.
For instance, when paying VAT, the report needs to be created in accordance with the given requirements. Therefore, you can make all templates customizable so if there are any requirement updates, you’ll be able to adjust them.
It might also be a good idea to generate templates for the most popular company types in advance. Many of them are available on the Internet, after all, so, you can download and upload them to your software.
We’d also recommend paying attention to being compliant with data protection regulations like GDPR or PIPEDA. In fact, we’ve reviewed these two documents in detail if you’d like to learn about it more:
# 4: Money Turnover Tracking (For Your Company) 💱
For centralized control over your workflow, it might be a good idea to add features for corporate finance management.
Financial management functionality can include:
- Income & expenses dashboard. You should be able to track income and sources of it, overview infographics, add transactions manually.
- Transactions tracking. You can structure it by creating tabs and adding a filtering system so that you can easily find what you’re looking for.
- Various payment options (if you have several).
- Report generation & others.
To easily record all transactions and conduct payments, it might be a good idea to integrate the software with your banking account so they’ll be automatically displayed on the dashboard. With such an integration, you can also set automatic payments for utilities and office supplies, for example.
# 5: Money Turnover Tracking (For Clients) 💸
To enable one of the key functions of tax software for your use case, you can add a diverse set of features. Firstly, it can be money turnover tracking itself. For each client, there should be a screen where you overview all their transactions and cash flow as well as manage it.
For this purpose, it might be useful to integrate customers’ accounting with the software so all transactions would be automatically recorded. Plus, if clients already have books, they can provide you with access to it so you can help them with that as well.
If we’re talking about the cash flow, your clients can simply take a photo of the receipt and attach it to any transaction. Plus, it makes communication easier since they won’t have to explain different transactions for you.
You can also have a filtering system to quickly search for transactions. You can add filters by income/expense, date, category, bank account or cash, amount of money spent ($0-$1000, $1000-$10000), etc.
# 6: Invoicing 💲
To make invoicing more convenient, you create templates and then fill out blanks like name or fee. However, you can add the “Create invoice” button right in each client’s profile and enable auto-filling of all company-related data. It might be a good idea to add several payment options: debit and credit card, PayPal, Google & Apple Pay, etc.
The invoicing itself can be automated as well. Once it’s generated, you can either set the sending date and time. Or, surely, you can send it manually straight away. Consider adding the “Pay now” options so it’s more convenient for users to access one of their accounts right for the invoice.
To accept payments, you need to integrate the software with your banking services. It can be done through the so-called Banking-as-a-Service (BaaS). They provide you with banking infrastructure including digital branded card issuing and money lending. Some of the most reliable providers are Solarisbank, Treezor, and Railsbank.
In case you want to learn about available options and what they provide in detail, we recommend reading our article dedicated to this topic:
# 7: Tax Management 📝
With tax management, custom solutions are great since every country or sometimes even regions in the country have different requirements for taxation reports and taxes in general. Additionally, there are industry-specific taxes, and software providers can’t cover all of them.
Tax management can include:
- Tax report templates.
- Taxation calculator.
- Tax returns.
- “Withdraw” and “Create New” buttons.
- Manual and automatic fill out of gaps.
- Payments set-up & others.
Additionally, if your client needs you to send a tax payment confirmation to the financial department or governmental authorities, you can set up automatic receipt or confirmation forwarding.
# 8: Metrics & Infographics 📊
Various metrics are great when it comes to helping to understand each firm’s performance, to improve it, detect strong and weak sides, and make data-driven decisions.
So you can track dynamics and detect tendencies instead of looking at raw data, you could add infographics like charts, graphs, and tables, to visualize the data. This way, you can perform budgetary forecasting and improve strategies that you use for risk management.
🤖 Tech Stack for Accounting Software
It’s not always necessary to write every single feature of your software from scratch. Sometimes, you can enable them with the help of APIs/SDKs:
- A calendar can be integrated using Google Calendar, Zoho, Nylas.
- Braintree, Stripe, Solarisbank can provide you with BaaS services. If you’d like to learn more about integration payment systems, feel free to read our article on this topic.
- If you’d like to develop a web-based tax software, push notifications aren’t an option. As an alternative, you could add desktop notifications by using iZooto or Sendpulse.
- For feedback collection, Twilio or Lumoa are worth considering.
💰 What Affects Accounting Software Development Costs
When budgeting your development, it’s quite complicated to calculate the exact number. Yet, there’s definitely aspects that should be taken into account during this process:
- Number & complexity of features.
- Whether you need 3rd-party integrations.
- Software design.
- An hourly rate or fixed fee of your development team.
Having a tax software as an accounting company to manage your clients is highly beneficial in multiple aspects from workflow automation to deep performance analysis.
To sum up, let’s briefly summarize what you should take to develop tax management software:
- Choose between custom and ready-to-use solutions.
- Decide if there are any existing solutions or integrations you want to integrate with tax software.
- Think about features you potentially want in your software.
- Think out your security system.
- Find a Tech Partner to start building the software!
If you need any help with the development or have some questions, feel free to contact us. We’d be happy to help you!