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Tax Projections: Software vs. An Accountant’s Expertise

January 29th, 2024 | 7 min. read

By Bryan Cremeen

Small businesses can owe a lot of taxes! If you’re worrying about the future, getting a projected tax return is a great option. 

There’s projection software for the DIY-ers, or working with an accountant for those who want guidance. Which is better for your business? It depends!

CSI Accounting & Payroll has advised small businesses with their tax strategy for over 50 years. In all that time, we’ve heard lots of the same questions about tax projections, including:

  • What are the benefits of tax projections?
  • What are the pros and cons of tax projection software?
  • What are the pros and cons of getting tax projections from an accountant?

Benefits of Projected Tax Returns

A tax projection, or projected tax return, is a complex process of adjusting your last tax return for changes that are occurring this year, and these inputs are used to calculate your estimated tax return ahead of time.

Projections help:

  • Reduce your tax liability
  • Eliminate tax season surprises
  • Guide your business decision-making

One thing that’s often overlooked is that projections allow you to avoid making tax decisions that would pay off in the short-term but cost you big in the long-term.

You’ll want to get a tax projection whenever there’s been a large change in your finances or a change to tax laws. The more complex your situation is, the more projections you’ll want. Often, this means one or two projections per year to make your tax season go smoother.

Pros and Cons of Tax Projection Software

Does tax projection software exist? Yes. 

Is it geared toward small business owners? Not really. 

Is all projection software able to do tax projections? Nope. 

Regardless of the option you choose, projection software output is only as good as the input. If your books are wrong, your projections won’t be accurate. It also has to be set up correctly, or you’ll have a mess on your hands.

Software is smart, but it’s not that smart! It only looks at certain numbers and doesn’t consider other factors. For example, a human may know more about tax law changes before software even gets the chance to update.

Do your research on the software options below, but don’t forget to read the section about accountants offering tax projections, too.

Projection Software for Small Business Owners

Let’s use some popular software options as examples. These are three that we hear about a lot, and they’re all subscription-based:

The only issue is that while they do projections, they don’t do tax projections to show how much tax you might owe. They predict your revenue and expenses for the year, for example. It’s all about dashboards and forecasting.

Tax Projection Software for Accountants

There is a tax projection software that we’ve heard good things about: Tax Planner Pro. It actually does do tax projections, but it’s aimed toward tax professionals. 

It’s an annual subscription of $1,300 per year, and it’s designed to be used by an accountant who is using it for multiple business clients. 

If you still think it’s worth the price for just your business, you’ll find much more value in working with a professional instead.

Pros and Cons of Tax Projections From an Accountant 

Getting a tax projection from an accountant depends on the option you use: an annual tax accountant or a monthly accountant.

Tax Projections From an Annual Tax Accountant

When it comes to tax projections from annual tax accountants, they may not be good – or they may not even be offered.

Lots of annual tax accountants claim to offer tax projections, but if they’re just comparing a prior tax return to this year's tax return, it's not a proper tax projection based on complete and accurate data. Others don’t offer this because most annual tax accountants have small firms and deal with a lot of annual taxes, so they don’t have the time

Otherwise, if you work with big-name financial institutions, most legally can't give tax advice.

Annual tax accountants probably won't even mention tax projections because they only meet with you when it’s already tax time.

Plus, if you do your own books and they’re wrong, an annual tax accountant won’t catch errors. They can only work with the numbers you give them, and your projections will be wrong, just like if you use projection software.

Tax Projections From a Monthly Accountant

A monthly accountant like the ones at CSI Accounting & Payroll can overcome a lot of those challenges with tax projections. 

We work with you year-round, providing dedicated time to a complete tax strategy consisting of tax planning, projections, preparation, and filing. 

One of our main objectives is to advise on minimizing your tax liability. We also work with a lower volume of clients than annual tax accountants do. We’ve got the time, and we don’t charge extra for questions! When you work with a monthly accountant, your bookkeeping, taxes, and more are covered with your set monthly fee. 

A commitment to a monthly service could be a downside for people who are not committed to a long-term solution, but accurate tax projections are a complimentary portion of the service – and they’re part of the key to a great tax season.

We guarantee audit protection for the books that we do for you. This means they’re accurate, and they can be used to make accurate tax projections.

To do a tax projection the right way, we compare this year's first quarter to last year's first quarter to see your percentage increase. Then, we ask why the numbers changed and if you expect it to continue for the rest of the year. This process is much more accurate than the ones that come from annual tax accountants.

Get Tax Projections Done the Right Way!

Don’t worry about your taxes – get a tax projection to see into your future. 

Now that you know about the benefits of tax projections, the pros and cons of projection software, and the pros and cons of working with an accountant on tax projections, are you ready to check out monthly accounting services?

If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:

Not ready to talk? That’s okay! First, learn more about what you need to know about taxes by clicking the image below:

Bryan Cremeen

Bryan joined CSI Accounting in 2019. He joined the team after CSI purchased his accounting firm, AccountSource LLC, which he had owned since 2005. He graduated from St. Cloud State in 2001 with a Bachelor's Degree in Accounting and has been an Enrolled Agent since 2010. Before owning his own accounting practice, Bryan had worked at the State of MN handling financial reporting and had been in private industry as a Controller. His primary responsibilities include overseeing the accounting department and making sure clients are receiving quality service. Fun Fact: Bryan has played soccer since the age of 4. He still plays soccer year round through various adult leagues and is an avid supporter of the Minnesota United MLS soccer team. COYL!!! (Come on, you Loons!!!)