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Upgrading Hardware and Software for Tax Season

It's an annual ritual for tax and accounting firms after the end of one tax season and before training begins for the next: replacing obsolete hardware and software, investing in new technologies, and preparing additional workstations if plans call for a staff expansion in the year ahead. 

But the process isn't as easy as it used to be.  Legions of local computer shops run by knowledgeable entrepreneurs have largely disappeared from the marketplace, leaving tax professionals with a choice of ordering computers, peripheral devices, and software from online sites or a handful of high-volume retail stores. 

How, then, does a tax practice achieve the best return on investment for the dollars spent on computer software and hardware? Let’s consider first the ten basic rules for purchasing technology, followed by recommended places from which to purchase. 

  • Assess what you have and what you need. Remember to check the licenses for software you already own. In many cases, you may use the same software on multiple machines (one desktop, plus one laptop, plus one mobile phone, etc.) under the license agreement for what you already have – thus saving the cost of new software. An assessment will also consider whether an upgrade of RAM, a larger hard drive, or faster processor would mitigate the cost of a new computer.
  • Renew your professional software early. If you know you will continue next year with the same vendor, early renewal may provide you with “early bird” discounts; an opportunity to give more input to the developers as they prepare tweaks and fixes in the software; and better software (because the developers will have a better sense of the resources they will have to put toward product development).
  • Don’t buy tech products on Black Friday or Cyber Monday. These two shopping days, on the Friday and Monday after Thanksgiving, were once prime shopping venues to kick off the holiday sales season.  They are today an opportunity for manufacturers to dump inventory –particularly unreliable or poorly designed products they can move at bargain-basement rates.
  • Invest in new technologies. Each year, a new piece of hardware or software is available to boost the productivity of the practice.  From digital signature pads to workflow and document management software, investing in these technologies now will provide plenty of time to learn how to use them to their best advantage before preparations begin for next tax season.
  • Be careful about returns and warranties. Hardware made overseas may offer better prices up front, but where do you return hardware if it starts to fail in the middle of tax season.  Sending the hardware back to the manufacturer and waiting weeks for a repair is not an acceptable turn-around time in the middle of tax season.  Your best bet is returning the item to the place it was purchased for a no-questions-asked, immediate replacement.
  • Separate work needs from home needs. For firms with a relatively small permanent staff, it is tempting to assess hardware and software from a comfort zone based on personal experience.  This can be dangerous, because a computer or device that needs to last through three or more tax seasons – with reliable performance – demands a more powerful processor and RAM than a machine intended for home or family use.
  • Pay attention to the specifications. A favorite retail trick is to under-specify a device in order to sell it at an attractively low price.  They will sell a machine with a hard drive of one GB or less, bundle it with a low-end monitor, and toss in a basic mouse.  Most of the sub-$300 machines fall into this category.  Also, note how much RAM comes installed, and how much can be added.  A basic home computer can sneak by with only 2 GB of RAM, but most business machines will require 8 GB or more. And if the computer cannot be upgraded, you will be stuck with a slow machine that can only be remedied by throwing it away and buying a better one.
  • Consider software toolkits versus suites. Buying a suite of accounting and tax tools from a single developer offers some attractive benefits – lower overall cost and higher integration being two.  But if your client base is small and need only a basic set of services, the suite approach can cause you to purchase and maintain software you don’t need.  Consider buying the best-in-class, stand-alone versions of what you really use.
  • Don’t allow personal software on office machines. Employees often have favorite software that is familiar and may enable them to be more productive.  By allowing this personal software in the door, however, the firm risks using software it cannot properly support, integration problems with other software – and a very high risk of viruses and other malware that can bring your network it its knees.
  • Pay no attention to “user ratings.” Many software and hardware vendors encourage users to post ratings of their products.  While these ratings may once have been valuable, they are today largely phony.  Writers are paid to wander the Internet posting positive reviews about the product they have been hired to pitch – and bad reviews of competitive products.  

Armed with this basic set of rules, it is time to consider where to buy from.  Obviously a local vendor will make returns and service calls, but not all communities have a large vendor pool from which to choose.  Conversely, most communities nationwide now have a Walmart, BestBuy, or similar outlet within easy driving distance. 

“Deal of the Day” Sites.  These generally offer decent prices for technology selected by knowledgeable professionals.  The top three of these are: 

  • CNet’s “The Cheapskate,” operated by Rick Broida. He also Tweets most of his deals on Twitter.
  • Daily Deals from NewEgg. NewEgg is an online site recommended for computer and technology purchases, which also offers daily deals.
  • Amazon Local is a daily deals site operated by Amazon.Com. It requires free registration.

Online Retailers.  These sites generally offer a wide range of technology products and reasonable prices. Three worth noting are: 

  • Amazon is one of the largest online retailers in the world, with a substantial inventory and very good prices. Be wary, however – many of these products are from overseas and will not fit or not work. In recent years the company has shipped refurbished products listed as “new, and sometimes orders arrive missing parts.
  • NewEgg is an online retailer of computers and software, headquartered in California. It is generally recommended for quality products at low prices.
  • Tiger Direct is an online technology retailer. Many of their products appear to be one year off their release or otherwise not the latest generation.  However, the products are still in use, are proven in value, and are offered at excellent prices. 

Storefronts.  Stores that sell computing hardware and software can be counted in the thousands, but shopping can be fraught with risk.  Some stores have gained a reputation for simply taping up returned items and putting them back on the shelf with no effort to correct problems.  Others sell refurbished items as new.  But there are others – Staples comes to mind – that offer a decent selection at good prices.  Here are the top two: 

  • Microcenter. Twenty-five stores in 18 states and a strong online presence make this computer superstore a strong choice if there is one in your vicinity. And it's worth a little travel if there isn't. 
  • Best Buy. A familiar consumer retail brand with more than 1,000 stores in the US.  The caveat here is that the sales reps (associates) are paid to move selected merchandise – which may or may not be the best for your needs. 

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The Taxing Subjects staff is proud to cover the latest in tax-industry-related news, from tax law and IRS updates to technology and business strategies. If you have questions about an article or just want to reach out to the Taxing Subjects staff, email comments@taxingsubjects.com.

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