Published: July 20, 2021
20 min read
Last updated: May 2, 2022
💼 Сustom Accounting Software vs Out-of-the-Box Products
❓ FAQ on Custom Tax Software Development for an Accounting Company
⚙️ Top Tax Software Features
🤖 Tech Stack for Accounting Software
💰 What Affects Accounting Software Development Costs
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:
SaaS for managing taxes and financial business processes has features like risk assessment, revenue tracking, or even credit issuing, but the it’s still limited to what service providers offer (image by Dimas Wibowo ◎)
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.
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:
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!
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.
Tax software development is highly useful when managing financial and tax-related business processes (image by Shahin Srowar🚀)
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.
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:
When using custom software developers services, you can integrate multiple 3rd-party programs during your tax software developement (image by Emy Lascan)
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.
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.
Custom tax software development services allow you to add any security feature or even build a highly secure dedicated mobile application (image by Nicolas Solerieu)
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.
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.
During custom tax software development, you’re not limited in terms of storing as much customer data as you want (image by tonik)
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.
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:
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.
Tax software development can include features like credit issuing, revenue tracking, mobile application dedicated specifically for your software, and many others (image by Peter Jouret)
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:
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!
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.
Tax software development can include a mobile application developed specifically for software and functionality like revenue tracking or credit issuing (image by Dmitriy Mir)
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:
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.
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.
Nowadays, security features that protect access to the software (or it can be enabled for storage as well) are really diverse.
Tax software developers can build in any feature you need from tax return templates to credit issuing and business processes automation in general (image by Kevin Dukkon)
The multi-factor authentication system can include:
For higher security, you can combine several features and create a multi-layered system.
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.
Tax software developers can build you a mobile application developed for the tax software specifically or enable many other features like credit issuing, tax return templates, revenue tracking, and many others (image by Emy Lascan)
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.
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).
Software developers can enable a security testing system along with other features like tax return or credit issuing (image by Nitel)
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.
In this section, we’ll talk about features you might need for your tax software.
To manage all your clients’ accounting, it’s convenient to have a dedicated flow in your software for centralized and structured customer management.
A dedicated mobile application development can be a part of software developers’ service along with enabling features like revenue tracking (image by sri)
The flow can include:
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:
How to Build a Custom CRM Software for Your Business
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.
Make sure to research all possible service options that there are on the market before choosing between custom and ready-to-use tax software (image by Anastasia)
This flow can include:
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:
Document management is also an important part that your software developers can enable (image by Kevin Dukkon)
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:
How to Make Sure Your App or Website is HIPAA, PIPEDA & GDPR Compliant
For centralized control over your workflow, it might be a good idea to add features for corporate finance management.
It’s reasonable to talk about features that you want in your app to your software developers and research the opportunities yourself (image by Johar)
Financial management functionality can include:
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.
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.
To build a tax software, it’s important that your software developers add revenue tracking features (image by YesYou Studio)
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.
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.
Invoicing automation can greatly benefit your business (image by Vishnu Prasad)
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:
Which BaaS Provider to Choose?
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 flow in a tax software (image by Sanja Zakovska)
Tax management can include:
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.
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.
You can assess your business performance with the help of analytical features (image by Umar Aji Pratama)
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.
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:
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:
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:
If you need any help with the development or have some questions, feel free to contact us. We’d be happy to help you!
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