New Advisory Firm Buyer's Guide: What to Look For
A practical guide for new advisory firms on what to look for when buying or upgrading tax software, with a comparison of top options and costs.
Starting an advisory firm means making dozens of purchasing decisions, and tax software is one of the most critical. The right tool saves you hours during tax season, reduces errors, and keeps clients happy. The wrong one can cost you time, money, and credibility. This guide breaks down what to look for in tax software for a new advisory firm, compares the leading options, and gives you concrete steps to choose the best fit for your practice.
What to Look for in Tax Software
Before comparing specific products, understand the core features that matter for a new advisory firm. These are non-negotiable:
- Tax preparation and e-filing: The software must handle federal and state returns for individuals, partnerships, corporations, and trusts. E-filing should be included or available at a reasonable cost.
- Client management: You need a dashboard to track client status, deadlines, and documents. Look for built-in organizers and secure document portals.
- Integration: Your tax software should integrate with your accounting software (QuickBooks, Xero), practice management tools, and possibly your CRM. Seamless data transfer reduces manual entry.
- Scalability: As your firm grows, you’ll add clients and services. Choose software that can handle more returns and users without a major overhaul.
- Support and training: New firms need responsive customer support and accessible training resources. Look for live chat, phone support, and a knowledge base.
- Security: Client financial data is sensitive. Ensure the software uses encryption, multi-factor authentication, and complies with industry standards.
- Pricing model: Understand whether you pay per return, per user, or a flat annual fee. For a new firm, per-return pricing can be cost-effective, but flat fees may offer predictability.
Comparison of Top Tax Software Options (2026)
Here is a comparison of five leading tax software platforms commonly used by advisory firms. Prices are annual and based on current market rates for a small firm (1-2 preparers, up to 100 returns).
| Software | Best For | Starting Price (Annual) | Key Features | Limitations |
|---|---|---|---|---|
| Drake Tax | Cost-conscious firms | $1,500 - $2,000 | Unlimited e-filing, comprehensive forms, good support | Interface feels dated, learning curve for complex returns |
| UltraTax CS | Firms needing robust features | $4,000 - $6,000 | Deep integration with Thomson Reuters suite, powerful workflow tools | High cost, requires annual contract |
| ProConnect Tax (QuickBooks) | Integration with QuickBooks | $2,500 - $3,500 | Seamless QuickBooks integration, cloud-based, pay-per-return option | Per-return costs add up, limited for complex entities |
| Lacerte | Mid-sized firms | $3,000 - $4,500 | Strong for individual and business returns, good diagnostics | No unlimited e-filing at base price, add-ons cost extra |
| TaxAct Professional | Budget-friendly | $1,000 - $1,500 | Low cost, includes e-filing, simple interface | Limited support, fewer advanced features |
Prices vary based on modules, number of returns, and add-ons. Always request a quote for your specific needs.
Practical Steps to Choose Your Tax Software
Follow these steps this week to make an informed decision:
- List your requirements: Write down your expected return volume (e.g., 50 individual, 20 business), entity types, and must-have integrations. Use this list to filter options.
- Request demos: Contact sales reps for a live demo. Ask about workflow, data import, and how they handle multi-state returns.
- Use free trials: Most vendors offer a free trial or a test drive. Upload sample client data and run a mock return to see how it feels.
- Check user reviews: Look at forums like Reddit’s r/taxpros or CPA Practice Advisor for real-world feedback. Pay attention to support quality and bug reports.
- Calculate total cost: Factor in not just the license fee, but also e-filing costs, add-ons, and renewal increases. For per-return pricing, estimate your annual volume.
- Talk to peers: If you know other advisory firm owners, ask what they use and what they’d change.
FAQ
Q: Can I start with a cheaper option and upgrade later? A: Yes, but consider the cost of migrating client data and learning a new system. If you expect rapid growth, invest in a scalable solution from the start.
Q: Do I need tax software that integrates with my accounting software? A: It’s highly recommended. Integration reduces manual data entry and errors. If you use QuickBooks, ProConnect or UltraTax CS are strong choices.
Q: How much should I budget for tax software in my first year? A: For a new firm, budget $1,500 to $5,000 for software, plus $500 to $1,000 for e-filing and add-ons. This range covers most small firm needs.
Q: What if I only prepare a few returns? A: Consider pay-per-return options like ProConnect or TaxAct. You’ll pay only for what you use, keeping initial costs low.
The Bottom Line
Choosing tax software is a strategic decision for your new advisory firm. Focus on features that support your workflow, integration needs, and growth plans. Compare options using the table above, but always test with your own data. Start with a free trial and calculate the true annual cost. With the right software, you’ll streamline tax season and build a solid foundation for your practice.