Software for Tax Preparers
Moving tax preparers from the desktop era to AI. Some of the more interesting AI vendors serving up some holiday cheer before tax season.
I’m publishing this on Day 2 of the Digital CPA event hosted by CPA.com. While I had another travel commitment and couldn’t attend in person, I’ll share brief thoughts on software for CPA and accounting firms instead.
Today I’ll focus on tax. Over the last 9 years as an accounting and CFO tech investor, I found tax software investment opportunities less compelling. There were some venture-scale opportunities in indirect/sales tax (see Avalara, Vertex, et al). But not as much in direct/income tax. Post-ChatGPT and LLMs, that has changed.
Some tax software still operates on desktop rather than the cloud 🤯. While tax advice is highly valuable, the work required to intake, prepare, and file taxes is time-consuming and tedious. A perfect application for AI.
If you’re a tax firm professional, tax season is approaching fast. ‘Tis the season to be festive, so treat yourself to some stocking stuffers below. Here are some AI vendors that might make your life easier in Q1.
Intake:
Soraban is “building the system that does the work before the work. From collecting client docs to organizing usable workpapers, Soraban automates the intake process so tax teams can start clean, stay organized, and focus on what really matters.”
The CEO has a background in engineering with various startups prior to founding Soraban in 2021. From 2019 to 2021, he started a tech-enabled accounting firm focused on self-employed individuals (S-Corps) and small businesses.
Stanford Tax is building an “AI-powered binder that’s prep-ready”. Streamline intake and prep in three steps: (1) Generate organizers and binders from your tax software, (2) Watch client docs feed into the binder (or upload the docs yourself), and (3) do the prep right from the binder, with all the workpaper and annotation tools you need.
The CEO has a background as an engineer at places like Wix and as a founder at places like CardSnacks. He started Stanford Tax in 2023.
Preparation
Magnetic1 focusing on 1040s, Magnetic scans client documents - from handwritten charity notes to excel spreadsheet Schedule Cs to multi-state K-1s - and enters them into tax software automatically, saving hours of tedious data entry.
Magnetic has developed a proprietary vision model that beats incumbent scanning technology by almost 2x on accuracy - jumping from 50% field-level accuracy to 89%, approaching the quality of their expensive human-verified service at 92%. Because accuracy is table-stakes, every return is reviewed for accuracy and coverage by its US-based tax professionals.
The CEO has a background in product, most recently Head of Product at Keeper Tax, where he designed tax engine automation and OCR tax doc scanning systems for the world’s first consumer AI tax filing product in the U.S. He also previously led product teams at Niantic and Zynga.
The company has shared with me that they are also hiring for a Tax Expert (Learn more here).
Filed helps tax firms automate the tedious parts of preparation by extracting data, organizing documents, and preparing review-ready returns directly inside your existing tax software. It too is also focused on 1040s.
The CEO Leroy Kerry has a background in startups, having previously been a co-founder at Magic (Stockholm; Software for e-commerce) and a founding team member at Juni (Netherlands; European fintech)
Payment
Remitian: is the world’s first AI-powered Tax Payment Platform that unifies tax payments in one secure portal. Traditional tax payments are confusing, scattered, and easy to get wrong. Remitian gives taxpayers a clear and simple way to review, authorize, and track every payment in one secure place.
The CEO was formerly the founder of Mindbridge, a PE-backed accounting audit automation startup.
As a Canadian paying taxes in the U.S., I am shocked how antiquated and arcane the US state tax portals are. It makes the Canada Revenue Agency look like Linear. For my sanity and for others, I’d encourage all tax accounting firms to utilize Remitian!
Which tax vendors are you curious about? Who have I missed? Let me know.
Disclosure: portfolio company of my VC firm, Seguin Ventures.