Searching for tax compliance software can be confusing.
Dozens of vendors claim to have the solution that will save you time and hassle. But with so many options how do you know which software is right for your business? You don’t want to choose the wrong tax forms software and end up with frustrated users and penalties from the IRS.
Let’s set the stage:
Businesses and individuals paid the IRS $84.1 billion in civil penalties in 2024. Yes you read that correctly. Because of compliance mistakes Americans poured BILLIONS of dollars into the IRS that they could have been investing back into their business and employees.
The upside?
Tax compliance software keeps things accurate and on time so you don’t have to worry about expensive penalties. Good forms software automates the filing process so forms are generated correctly and e-filed to the IRS on time without stressing your team. Solutions like AMS 1099 forms software allow you to easily prepare, manage and file essential year-end tax documents while remaining compliant with federal and state rules.
In this post you’ll learn:
- Why You Need Tax Compliance Software
- Tax Compliance Software Features Checklist
- Selecting The Right Platform For Your Needs
Why You Need Tax Compliance Software
Tax compliance isn’t getting any easier.
Every year it seems like there’s a new form or updated filing deadline. Keep up with it manually and you’ll constantly run the risk of penalties and fines. If a form is filed late, you can be assessed a penalty of 5% per month on any unpaid tax. That penalty caps out at 25%. That’s seriously eating into your bottom line.
Doing taxes by hand is tedious, time consuming and prone to errors. Input a wrong number on a W-2 or 1099 and watch the IRS come knocking with audits and notices. No boss wants to deal with that headache.
That’s where forms software steps in. Automating tax compliance takes the stress out of filing season. Your forms get prepared correctly, on time and e-filed automatically. No stressing about forms. Employees and contractors get their documents when they need them and your business stays compliant. It’s not nice to have, its need to have.
Tax Compliance Software Features Checklist
Not all tax compliance tools are created equal. Some services are bare bones minimum while other platforms are robust and enterprise ready. When it comes to choosing tax compliance software these features should be near the top of your list.
Automated Form Creation & E-Filing
This is key.
Automated form generation takes the guesswork out of preparing taxes. Your software should be able to spit out W-2s, 1099s and any other required forms with just a few clicks. E-filing functionality is also important. Your tax forms software should be able to e-file right to the IRS and state agencies.
Why?
Manually creating forms is a huge source of errors during filing season. Taking the manual out of manual allows you to process hundreds of forms in minutes instead of hours. Look for bulk form creation and batch e-filing capabilities.
Error Checking Capabilities
It only takes one simple mistake on a tax form to get you penalized.
Report an incorrect address or wrong dollar amount and the IRS will catch it. They will bill you. And they will make you pay dearly. Built-in error checking should be a must-have in your tax software.
Some things to look for:
- TIN verification. Software that verifies TIN numbers with the IRS before filing.
- Data validation. Automatically checks for missing fields, formatting issues and data discrepancies.
- Duplicate checks. Identifies if there are any duplicate submissions that will cause double filings.
This functionality can save you hundreds, if not thousands of dollars. It also prevents those unnecessary headaches.
Multi-State & Multi-EIN Support
Here’s a cool feature many people forget to look for…
If you’re a business operating in multiple states or have more than one business/entity you pay taxes under you’ll need software that can handle that. Filing taxes for multiple entities statewide can get complicated. Each state has their own rules for filing deadlines and requirements.
Software you choose should be able to:
- Support multiple EINs from the same platform.
- Accommodate state specific form variations.
- Handle different filing deadlines by state.
You don’t want to be stuck using multiple services or manually creating forms. That’s a one-way ticket to frustrating audits.
Integrations With Other Platforms
Your tax software shouldn’t live in a silo.
You’ll want the ability to integrate with other payroll and accounting software. Pulling information directly from QuickBooks or Sage instead of entering it manually will save time and eliminate unnecessary errors. Form management solutions should at least offer integration with these popular programs.
If your business hosts hundreds, if not thousands of contractors you’ll also want a solution that allows for CSV uploads. This will make it infinitely easier to enter bulk data.
Regulatory Updates
This almost goes without saying but your forms software should automatically update when tax regulations change.
Tax rules and regulations are always changing. When they do, that could mean there are new forms to file or updates to the current forms being used. Automatic regulatory updates will ensure your software has the most current IRS and state compliance requirements.
Another huge benefit of regulatory updates is knowing you have the latest features and functionality. Companies that provide automated tax compliance should be updating their software quarterly if not monthly. You want your tax forms software to stay as up to date as the provider’s app store.
Selecting The Right Platform
You’ve got options when it comes to choosing the right tax compliance software for your business. Don’t over think the process and try to find features your business doesn’t need.
Take these steps to find the right software:
- Make a list of the forms you know you’ll need to file (i.e. W-2, 1099-NEC, 1099-MISC, etc.).
- How many of each forms will you need to file?
- Do you need support for multiple states/entities?
- Can this software integrate with your existing payroll/accounting software?
- Compare pricing. Make sure theres no hidden fees for e-filing or support packages.
Finding the right forms software for your business is about finding software that fits your business requirements. Don’t spend money on features you won’t use. But also don’t skimp on the essentials.
Trial runs are your friend. Take advantage of free trials and run your data through the software. Most reputable software providers offer this. You want to see how the software performs with your information.
Wrapping Things Up
Tax compliance is not optional but it doesn’t have to be a headache.
By choosing the right tax software you can automate most of the leg work that goes into filing taxes. The right tax compliance software will provide your business automated form generation, error checking, support for multiple-states/entities, integrations to other platforms your business is using and automatic regulatory updates.
Once these features are in place you’ll experience…
- Less time preparing taxes.
- Fewer penalties and headaches.
- Peace of mind that taxes are being done correctly and on time.
Take control of tax season with the right tools. Your business (and your sanity) will thank you.
