Tax preparation is a crucial part of any new business. You’ll be working your way through a host of tasks, like completing your IRS registration, looking for clients, pricing your services, and most importantly, choosing the right tax software.

You might be tempted to stick to tried and tested methods to file your taxes, like a pre-installed application on your desktop. But with the sensitive data you’d be handling, a basic software program just won’t cut it. Fortunately, tax software providers have several cloud-based options that compensate for the shortcomings of traditional desktop tax filing.

Cloud-based tax software programs offer innovative solutions such as automating your tax filing, simplifying bookkeeping, keeping track of tax returns, and protecting your company from IRS audits. Businesses are also aware of these benefits — spending $29 billion on cloud services in the first quarter of 2020 alone.

We walk you through some other features and benefits of cloud-based tax filing software and explain why it outperforms traditional local applications.

1. No installation needed

Desktop-based tax filing software programs must be installed on every computer or device, which is a time-consuming and tedious process.

However, cloud-based software lets you access the software via the internet. As such, you don’t need to install it on the computer to access it. By removing the installation process, cloud-based tax software becomes available for use instantly.

2. Data security

In the age of cyber threats, data security is the foremost concern of every business, and rightfully so. Data security is even more important when it comes to the sensitive financial data of your business. Thus, you need a robust software program to shield you from cyber threats when filing taxes online.

Cloud-based software stores all your data remotely in a secure data center. Plus, your tax software provider ensures that the data is protected via firewalls, antivirus, antimalware, data encryption, and multi-factor authentication. This way, you know your business’ and clients’ sensitive information is as secure as it can be.

3. Improved accessibility for employees

Desktop-based tax filing tools can only be used on office desktops, which is a roadblock for small businesses that encourage work from home. Remote employees and tax accountants need to be able to function just as efficiently as on-site employees.

Cloud storage holds the data in remote servers that you can access via the internet. This means that your employees can access cloud-based tax software from any device. There is no compatibility issue since all they need is high-speed internet and a web browser.

And since cloud-based tax filing software can be accessed from anywhere without compromising on its features, CPAs working from home can help you with your tax and income reporting without a hitch. This improved accessibility also offers employees and collaborators a better work-life balance and reduces the hours spent in long commutes. 

4. Scalability

Your business will not remain the same forever. All your business plans aim to expand your reach and customer base. Given this, it only makes sense that your tax software also accommodates your business’s growing needs.

Most desktop-based software is designed for a specific size of the organization. A change in the size implies that you need to change the software, leading to an additional burden on your IT team.

Luckily, cloud-computing technology makes tax and accounting software flexible enough to scale with your business. You wouldn’t have to search for another cloud-based tax filing tool when the size of your business changes. You only need to upgrade or downgrade to a different plan.  

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5. Round the clock customer support

Picture this: it’s tax season. You’ve had your CPA review the numbers and are ready to file your taxes online. Just as you’re about to press the ‘send’ button, your software freezes and stops working altogether. There’s no IT whiz kid around you to get the problem fixed, the deadline to submit your tax returns is fast approaching, and you’re in deep trouble.

With cloud-based tax software companies, you don’t have to live out this nightmarish scenario. Most software providers offer 24/7 customer support. Since the software is not limited to your office desktop, it is much easier for support teams to fix the issue remotely. These features enable small businesses to file their taxes on time. 

6. Automated backup

Losing hours of income tax filing work because you forgot to save your work is a disheartening and painful experience. Cloud-based tax software automatically backs up your data at regular intervals. As such, all your data and hard work will be perfectly secure.

7. Automatic updates

Software programs need regular updates to fix bugs or offer new and improved features. If you use desktop-based tax software, you need to manually download the new version each time it’s released, which translates to additional work for you and your employees.

You can’t afford to miss these updates, either — they’re required for the greater efficiency of your tax filing program.

In contrast, cloud-based software programs automatically undergo updates and fixes at the central server, thereby protecting your business from major IT-related complications. In some cases, you won’t even realize that the software has been updated. 

8. Cost-effective

Desktop tax software programs are often more expensive than their cloud-based counterparts. These applications often charge hefty installation and maintenance fees.

Moreover, you cannot download the software once and replicate it for your employees, which means you’ll be paying to get it installed on each computer in your office. These factors only add to the already sky-rocketing costs of a small business.

Cloud-based tax filing software, on the other hand, is almost always cheaper than desktop versions. Part of this is because the makers only create one version of it that works across all devices. And since software hosting providers allow you to customize your payment plans, you can control how much you want to invest in these tools.

9. Easy integrations

Every company needs multiple software programs to keep track of various aspects of the business. Many of these may work on the same data set. In this case, cloud-based tax filing software can easily integrate with your existing financial management, accounting, and ERP programs. This eases the process of gathering the data required for computing taxes.

In conclusion

Cloud-based tax software is the future-centric solution to many of the problems that plague traditional desktop applications. It is versatile, robust, scalable, cost-effective, and supports multiple devices. As a result, every organization — big or small — stands to benefit tremendously by shifting to the cloud for their tax filing needs.


Intuit’s TurboTax is a perfect example of a cloud-based tax software program for small business owners. Its user-friendly features and tailor-made packages make it extremely easy and convenient to run your business. The company’s excellent customer service is an added

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AvatarBryan Kesler

Bryan Kesler, CPA is a passionate CPA exam mentor with a mission of helping all CPA Candidates struggling to pass the CPA exam find success. As a business owner and licensed CPA, his priority was to find a firm that could manage his accounting and provide him with CFO services. He understood that if he was to stay focused on his singular goal of helping as many CPA candidates pass the CPA exam, he shouldn’t be the one to handle his accounting or tax services.