How to Build an Accounting & Tax Management Software

The ancient art of accounting and taxation has been a sore spot for many companies. Plus, in multiple countries, the requirements in this field aren’t standardized. That’s why accounting and tax management might seem complicated and confusing without a highly experienced specialist.

Luckily, with the whole world being rapidly digitized, accounting and taxation can be almost fully automated with the help of relative software or functionality.

Furthermore, software providers may not necessarily offer certain specific features. That may include some industry-specific taxes, animated notifications, or 3rd-party integrations.

So, if you think you might need uncommon features, custom accounting software might be more suitable.

Case # 2: 3rd-Party Integrations

It often happens that companies use third-party integration for emailing, IP telephony, as a CRM system, etc. However, ready-to-use software options rarely allow integration with 3rd-party services — more often than not, they either have a predetermined set of APIs/SDKs or don’t offer anything at all.

The thing is that integrating something into a software isn’t just about installing it. To use an API/SDK, you need to modify the code of your product.

That is why 3rd-party providers don’t have such options:

• They are all about giving you a product as quickly as possible.
• It increases costs of the package and their №1 advantage is comparable affordability.
• It takes up additional storage space.

With custom accounting software, it’s possible to add any new 3rd-party services, build your current ones into the software, change the service provider, or give up using it at any time.

So, if you’d like to keep using your integrations or add new ones, custom development is a more sustainable option to go for.

Case # 3: Security

When storing accounting information digitally, it’s ideal that you have a great security system. It can have multiple security features as well as be compliant with several regulations.

However, when using an out-of-the-box accounting software, you have security features that the provider offers, and they might not suffice. Additionally, they are most likely only compliant with the absolutely necessary certifications. So, if you need something extra, the chances you’ll get it aren’t high.

Moreover, 3rd-party providers normally use shared servers, which means higher data leaks and exposure to breaches, more potential bugs, and a possible decrease in performance.

We don’t want to give the idea that using third-party providers is totally unsafe. Our point here is that the security system and its structure isn’t up to you — you just have to take what is offered if you decide to use it, unless your subscription model offers the opportunity to modify the software. But surely, it’s possible that you’ll find it sufficient even if that’s not the case.

Still, with a custom accounting software, you can add any security features or comply with any regulations. In the next section, we’ll talk about how to ensure a high-level of security.

Case # 4: Corporate Expense Approval

In most big companies, it’s quite difficult to spend money using a corporate bank account since such expenses should be approved by several employees or departments. Thus, approval becomes multi-layered and requires a custom approach.

On the one hand, with an out-of-the-box accounting software, it’s quite difficult to find a provider who’ll allow building such a system. On the other hand, custom software doesn’t restrict you in any way when it comes to structuring this process.

So, if you need a corporate expense approval system, consider custom development as a more suitable option.

Case # 5: Diverse Expense Tracking

It may happen that your business will require a complex expense tracking system. For example, if you have several branches in different countries and work in the retail industry.

Firstly, to be able to unify new and old functionality, they should be written using the same framework, or at least in the same programming language. Otherwise, in most cases, they won’t be compatible.

Plus, it really depends on what type of product you currently have. For example, if you have an app but want to build a web dashboard, your development team’s not likely to reuse the app’s code.

Moreover, the current product might not be developed in a way that you find “functional” enough. If you want to have a well-developed accounting software but you’re not sure that your CRM is such, then you could either develop the software separately or consider rebuilding the current product to meet your needs.

In case everything is perfectly fine with compatibility and you’re satisfied with the current product’s quality, it won’t be a problem for an experienced development team to integrate the software with it.

To sum up, there are 3 ways of performing an integration:

• Rewriting the code from scratch.
• Modifying the current product’s code for it to be more suitable for your particular use case and adding accounting functionality.
• Taking a part of the existing code and integrating it into the new software. It’s similar to the second one but will change your development team’s approach.

For more information on your use case specifically, discuss it with your development team or simply contact us!

Where and How to Store Digital Accounting Data?

To begin with, the data has to be stored on a certain server. Most companies with software use different types of cloud servers, which we also recommend.

Cloud storages are normally based on a subscription model where you pay a fixed price once a month/once every 6months/once a year. Alternatively, storage providers can also use a pay-as-you-use model, which literally just means that you pay for the amount of storage that you use over a certain period of time — no more, no less.

It’s a convenient option since:

• You can access the data storage from anywhere and on any device with an Internet connection.
• The subscription price often includes additional costs like maintenance.
• It’s easy to store as much data as you need, so there are practically no limits.

Unfortunately, cloud storages have a higher exposure to breaches and leaks because of their accessibility over the Internet. But the good news is that it’s highly secure with the right approach to storing the data.

First of all, only a limited number of people should have access to it. Those with access should have it to an extent that’s enough for them to perform their duties. Additionally, you can set up different levels of access instead of defining them for each employee separately.

You should also enable data encryption. Currently, many companies use the Advanced Encryption Protocol (AES). It has 3 layers, the data is encrypted and decrypted once on each of them.

How to Enable High-Level Accounting Software Security?

One of the key benefits of custom accounting software development is the ability to enable an excellent security system. There are three main options you can combine: multi-factor authentication, monitoring, and security testing. Let’s review them.

# 1: Multi-Factor Authentication

Multi-factor authentication is intended to protect access to the software itself. You can add:

• A password system that can include complex login passwords or one-time passcode generation that’s connected to a certain email/phone number.
• Biometric authentication like fingerprinting, face ID, voice recognition, etc. For web products, it’s harder to enable such features, so, you should simply talk to your development team — they’ll offer you a solution or an alternative.
• Personal security questions.
• Verification over phone/email.
• Security tokens — small hardware (physical) devices with each owner’s personal information. Access is given through scanning.
• Digital signatures & many others.

Surely, you can combine features to create a multi-layered security system.

# 2: Monitoring & Compliance Auditing

It’s essential to enable regular monitoring — register log-ins and spot new ones. Sensitive data might require extra attention so you can keep track of actions performed on such information.

So, just in case there’s a data leak or breach in the system, you’ll easily be able to track where it came from. Additionally, you’ll be able to find out what the primary cause was and eliminate it or strengthen the weak point.

Auditing is another great way to prevent data leaks and breaches. You can check if there are any updates in regulations that you comply with or technologies that your security system consists of.

Plus, you can create a set of criteria to evaluate your company’s security system from time to time.

# 3: Security Testing

So, when writing or updating the code, it’s important to perform tests so there are definitely no bugs or breaches. To automate some parts of this process, you can enable Continuous Integration and Continuous Delivery (CI/CD).

As for income filtering, it’s pretty similar. You can have filters by categories (deposit, investment, income from project, etc.), date, amount of money, bank account, destination, etc.

Apart from these features, you can also enable multi-currency transactions. With the help of the integration of banking services, you can add automatic categorization of your money turnover. Plus, transactions from and to your banking account can be also tracked automatically.

# 2: Reporting 📈

This feature allows you to build and access any data by using report templates. What’s great about it is that you don’t have to wait until a certain date for a report to be ready since it’s formed automatically. This way, you can have an overview of any general situation or a specific KPI at any time.

For quick access to previous reports, you can also add a filtering system or enable marking files as important, for example.

Plus, it’s essential to make reporting forms customizable. That can be adding or removing tabs and columns, adding and changing formulas, leaving comments next to reporting files, comparing actual and budgeted numbers, etc.

You can also add budgetary planning and analysis so that the software can forecast it and advise you on where to make improvements. Additionally, you should enable sharing and exporting features so as to easily share data.

Another great idea might be to add a block/unblock feature. For instance, if there’s a report that you want to archive and make editing impossible for unless you unblock it first.

Moreover, you can allow your employees to send screenshots and receipts of their expenses that you then cover. You can dedicate a separate screen to each employee so that all information is well-structured and easily accessible.

# 3: Payments & Invoicing 💲

Firstly, you can create an invoice template and simply fill out the blanks like amount of money, name, etc. For a more convenient payment process for both parties, you should add several payment options like debit and credit card, Apple & Google Pay, PayPal, and others.

You can also automate invoicing through emailing, for instance. Once the invoice is formed, you can set the date and time when it should be sent. It might be a good idea to add a “Pay now” button so clients can pay right when they receive their invoice.

If your business model includes requesting a certain % of the fee as a deposit before you actually start working on the project, you can enable such a feature within your software as well.

So that all financial information can be centralized in your software, you can connect it to your bank accounts. This way, you can be a “sender” of payments as well. You could set up automatic payments for utilities, food supplies, payroll, etc.

You can additionally build in a calendar so it’s easy for you to have an overview of all the important payment dates and deadlines.

Such features can be integrated with the help of BaaS (Banking-as-a-Service) providers like Solarisbank, Treezor, Railsbank, etc. Basically, any banks or fintech companies that provide other companies with their financial infrastructure.

If you’d like to learn more about the available options, what exactly BaaS can offer, and how to choose the most suitable provider, you can check out our article on this topic:

# 4: Inventory & Items Tracking 📚

With inventories like current assets, capital assets, etc., being a huge part of accounting, your dedicated software should have a separate feature for keeping track of them.

First, that can include tracking stock items like the quantity of each one, its location (if you have several warehouses), etc.

Moreover, you can also keep a record of sales within the inventory tracking, It doesn't necessarily have to be physical items — whatever it is you offer to your customers can be recorded. You can also keep track of your office supplies, short-term equipment, and other capital assets.

# 5: Analytics & Infographics 📊

To deeply understand your company’s performance, determine strong and weak points, analyze customer behaviour, and generally improve your business strategies, you can enable analytical and infographic features.

So, this can include:

• Tax report templates.
• A tax calculator.
• “Calculate New” and “Withdraw” buttons.
• The opportunity to fill in numbers both automatically and manually.
• The setup of payment date & others.

If you decide that you want to connect your bank account to the software, you can enable automatic tax payments right in the software. You can also allow choosing the bank account from which the payment will be performed.

If you need to send payment confirmation to your accountant, financial department, or the authorities, you can set up automatic forwarding.

Documentation Management & Compliance 📑

Accounting software is really helpful when it comes to managing digital tax documentation. The functionality can include:

• Tax report templates.
• Tax return forms.
• File uploading for scanning documents and storing them digitally.
• A filtering system to look for archived tax reports by date, type of tax, etc.
• Creating new documents and deleting old ones & others.

You can also allow creating new tabs and multi-layered folders for customizable document system’s structure.