576 The Tech Modern Accounting Firms Are Buying In 2026

Accounting firm technology. In some ways it's changing fast. In other ways, it just isn't. And in a few specific spots, AI has completely turned it on its head. So today let's revisit the 12 biggest changes that have happened in the last couple of years to make sure your accounting firm didn't miss the boat. And in the process, look at what's most likely to change over the next 18 months. Because it impacts your tech buying decisions today. It really does. I used to run a 40 person accounting firm and once chose the wrong practice management platform at the wrong time. Cost us about two years of work and a lot of money. I don't want you to do the same thing. Kay. Mind if I save you two years of wasted time and effort? Nope. Stop it. No. You need to watch this. Okay, let's get right into it. Number one, practice management systems reign supreme. Your pm. It is the home to as much about your firm as possible. The projects, time and billing, oftentimes a client portal, your invoicing. This is the operating system of an accounting firm these days, your practice management system. Now back in ye olde days, the original practice management system, it was like your lead sheet, basically a digital lead sheet and time and billing. These days practice management systems do way more than that. It is the biggest change in how you run an accounting firm from the last decade is these systems have now gotten super popular. Now for big firms, mid market firms, the tech there, it's largely the same. Still got a lot of firms running stuff like xcm, Access practice, good old Thompson, Reuters practice cs. Boo. And part of the trouble here is the best solutions today they top out around 100 employees. They're not great for huge firms, yet similarly itty bitty tiny firms. A single person firm, a 1, 2, 3 person firm. Sometimes you don't need to start with a practice management system. There's actually a better tool to start with instead which we're gonna talk about. But your pm, it is truly these days the most important app you will choose in your accounting firm. Frankly, the biggest thing blocking the category as a whole is firms thinking they need to use a PM from their tax software provider. Thomson Reuters is the big culprit here. Cch to a lesser extent. The rationale being you can only use a system that integrates with your tax software. Right? Right. Bring it in. No amount of integrations makes a platform that is just a hot hot pile of dawn. Good integrations don't make up for bad software. And these days there's way better solutions in Fact, there's like something like 45 practice management systems for accounting firms just in the US now five of them sit atop my recommendations which you can grab totally free. It is all based on crowdsourced information from over 5,000 accounting firms. Not from your sales rep, who as it turns out is not a great source of independent information. Well, you can tell somebody really hurt this guy, okay? Second big change in just the last few years is big breakthroughs on bookkeeping technology. And it's not from the accounting ledgers doing anything different. It is from a new like kind of entirely new category of software, month end close automation software that sits atop your ledger. So the job of this tool is to help you do a hundred month end closes. How do I manage all those? Not just a single close on every ledger, but how do I get a whole bunch of them done? And the advent of this type of software, which is was tools like Flo Cast and it was more for mid market like bigger companies, a single place to organize the whole month end close and track people down for all the information you need and all that. But that was for like bigger ERPs, not for QuickBooks, not for Xero, the company that arguably changed. This company called Double, used to be called Keeper. What they did differently is they actually integrate into the ledger, pull all of the transactions into the system and then you manage the entire month end close of all of your clients from inside of one app rather than hopping around between a bunch of different ledgers. And it, I mean in my opinion was the biggest change to bookkeeping tech in over a decade. In fact last year I pulled my online community. I've got a private community of 700 accounting firms, very progressive people. I pulled the bookkeeping only firms to see how many of them were using this new category of tech. 80% of them reported they're now using month end close automation platforms. So today if you're just using the accounting ledger, know that you're missing an opportunity. Cause there's a level of tech that now sits above that. In fact it's a whole category in my app recommendations now. So you can see my favorite tools there. But interestingly, practice management systems are now beginning to incorporate some of the features from these month end close automation platforms. So Carbon actually acquired a company called ADIR that does month end close automation Client Hub, another practice management system. They now sync all of the transactions from your client ledgers into the platform so that the doing and finalizing of that month end close are all like tasks inside the pm. Financial Sense recently announced Something very similar. You do kind of all of your quality assurance and all that work inside of financial sense because it rolls up all the transactions from your client's accounting ledgers. The firms that are churning out a high volume of bookkeeping work efficiently. They absolutely swear by these tools. That's number two. Number three on the tax side, tax workflow tech has gotten a big upgrade. And this is because there's been a bunch of investment, as in like VC dollars going into software companies doing new things around tax workflows for accounting firms. Arguably what kicked this off was Thomson Reuters, $500 million cash acquisition of SurePrep. People saw that and they're like, okay, this could be a space where there's some opportunity. And there is. But right now, most of the innovation is just happening around individual tax 1040 work, not around business tax. If it isn't obvious yet, I'm talking about the US market here. And they're going after four different parts of the 1040 prep process. Intake, which is how you gather information from all of your clients work paper preparation, which is how you organize all that information once you got it input, which is how you get all the data into your tax software. And then delivery, which is where you go from a completed return in your tax software to getting that into the hands of your client. Signed 8879, they're making payments, all that stuff. So four parts of the process there. The greatest time savings opportunity today is in intake. We have tools that are very, very good at automating your 1040 intake. And this. I mean, in my firm, we did 1800, 1040s a year. And upwards of a third of my professional staff's time during tax season was actually spent on figuring out what we even need to request, figuring out what we have, figuring out who we need to follow up with, figuring out what bits they've gotten us and what bits they haven't yet. That is all now entirely automatable via software. If you don't yet have a 1040 intake automation solution, this is the biggest time savings opportunity in a 1040 practice. Right now you've got some platforms like SafeSend that are focused on automated delivery, other platforms like filed that do a bit of the intake, but are really working on automated input into the tax software. Having talked with hundreds of firms using these tools, I'm still a believer that the biggest time savings opportunity today is an intake. Now, that may change next year. Some of this stuff may get better. But right now, if you're gonna go out and buy Something buy a solution that will automate your 1040 intake. That is change number three. Number four is how all those workflow tools we just talked about, month end close automation, tax workflow automation, those tools are exploding, are seeing so much growth. In fact, you get a lot of people in small firms now who will buy these workflow tools and they'll be like, do I even need a practice management system? Cause I'm kind of in love with this one tool. Be it double for automating month end closes or something like Sorben or Stanford Tax or Tress on the workflow, the tax workflow automation side, the strength of these tools is kind of challenging. The position of the practice management system, which historically didn't really get into workflow, just kind of oversaw the work. The PM is like a 10,000 foot view of everything that's happening. But your workflow tools, they're actually doing the work. They're getting work out the door faster for you. And this is 100% putting pressure on PMs to start shipping workflow features. Because there could be a day where your favorite workflow app starts looking a little bit like a practice management system. And if it already does the workflow, well then great, I don't need a PM anymore. We've seen a lot of movement here. In fact, the Carbon acquisition of ADIR I would say is a response to this. ADIR is a month end close automation platform. Carbon is a practice management system. Taxdome just shipped, kind of a version of automated tax intake. Canopy's done the same financial sense went down the month end close automation path. And so you've got sort of this workflow layer and then you've got the practice management layer. And right now accountants are in love with these workflow tools. But they're kind of like ah, this practice management layer, I still need it, but I wish it did workflow. And all the practice management systems are saying, oh yeah, we'll have that, we're gonna ship that in Q2. We're almost there. They've been saying it for years though. So today and like we'll see where this develops over time. Things to look out for. Don't expect what your practice management system ships to be as good as a point solution that just does month end close automation or 1040 intake automation, something like that. Historically, like they will promise a lot, but when they actually ship it, it's kind of half baked. This has been the case for the last three years. So recognize the version of workflow from your practice management system. It is going to be limited. But also recognize the workflow players, they're doing some really cool new stuff. Like they're at the bleeding edge defining like what next? Like can my workflow tool automate both my intake and my delivery? Got some tools like starting to get into like AI review and it's all happening at the workflow layer, not at the practice management layer. So right now for most people they're buying both of those layers. And I know this comes at a time when we're spending more money on software than we ever have before, but at the end of the day, if it is getting more work out the door faster, that's an opportunity. Now quick word for like very traditional firms who are still using old tech or who are using no tech. Cause there's a lot of people that will see this and it'll just be like whoosh. They're like buddy, we're still banging rocks together. We're still using paper files or practice CS or something like that. If you're looking for a place to start here, like what is my entry point? It's true that the practice management system is the most important platform in your entire firm, but it's also the biggest and the hardest thing to change. So if you got an office full of people, accountants who are not excited about a bunch of change, that's a hard place to start. Cause it's literally the biggest system in the firm. So I'd actually push you to start instead with the workflow layer. If you're a bookkeeper, start with a month end close automation solution that can be rolled out one client at a time. If you're doing tax work, start at tax workflow. These tools are quick to bolt on and give you like an immediate easy win. Similarly, you don't have to roll it out across every single client. You can start small and go from there. As someone who has been in that firm, that is a very old school firm and it feels frustrating that you just can't get things where you want it to go. What you gotta focus on is the next step. And so for you you're really looking for a quick win change. Number five is portals have really become standard. That is some sort of login for your client. So to self service, unlike pay your invoice or grab a copy of a tax return or month end close or something like that. Feels like for a long time people accountants really didn't want to lean into the portal because everyone said my clients hate this. And a big reason why is the early portals and still, the portals from, say, your tax software vendors, they were awful, they sucked. But the tools that we have to put in front of our clients now, they're much, much better. And the single biggest thing that portals unlock is a more efficient way to exchange information or with our clients. Most portals now they have a way for you to request things from your client. And it is a vastly more efficient way to request something than sending an email with a list of 12 things. We all know what that looks like. You send that off, maybe you hear back from the client, maybe they send you back 3, 7, 8 and 12. And then three weeks go by and you're like, did they ever send me the other stuff? And you gotta go back and do this archaeology project to see what you have and what you don't have. Requests inside your client portal. Solve for this. Anytime you need something, you load in a request of what you need, it automatically follows up with the client until they provide that info. And you're not having to go back and do that archeology project or follow up yourself. Now, the change getting clients to pay attention to those notifications, it's work. A lot of people go into that. Assuming that clients are going to pay attention to those notifications, I'll just tell you right now, they won't plan on them ignoring those notifications until you educate them and you keep reminding them. You say, hey, haven't heard back from me on this. Look out for these notifications from whatever your software platform is, because once you get there, it's an unbelievable time savings to be able to load requests into software so you can do the other stuff. Let's let the machines do the requesting so the humans can do the important stuff. Because if every email your client gets from you is a to do list, go get me these hundred documents. How are they gonna feel every time they get an email from you? They're gonna see that email come in from me. They'll be like, ugh, here we go again. And the perception of us becomes that we do something administrative which devalues the work that we do. You don't wanna get sucked into that. Have you noticed what we haven't talked about yet? Get to the AI stuff. Okay, the two areas where AI has turned accounting tech on its head. First is number six, accounts payable on AI. And the reason is actually because AI vision models can pull information off of documents better than OCR technology ever could. You know the OCR tech where like for the last decade they've been like, finally, no more manual entry. But you're like, okay, but I'm an accounts payable clerk and if you read 100,000 instead of 10,000, I'm gonna lose my job. AI has been able to take automated extraction way further. Even working on like handwritten text and so pulling all the very detailed, very nuanced stuff off of a bill. It's possible now in a way that it wasn't before. And when you add in a little bit of like LLM logic, like a little bit of reasoning where it can also sort of read between the lines and these sort of gray areas, it totally changes how you would build an accounts payable department right now. In fact, I had clients where we sort of managed their whole AP. Some of these new AI accounts payable platforms, truly with automated, not an exaggeration, 80% of the stuff that we were doing. The best versions of this that I've seen in the wild right now, they are maker's hub and they are ramps bill pay, which is actually totally free. I'd start with ramp for the simple applications, makers hub for the really hairy sort of ugly stuff. Okay, Second place, we're seeing a lot of AI is number seven here. Tax research. And historically, I honestly haven't really recommended tax research platforms. I've just told people, stick with ChatGPT cause it's doing it better than anybody else. Which is to say kinda okay, but not amazing. Right now, past 12 months, AI models have gotten way better, hallucinations have gotten way less. And while that has continued to make ChatGPT better, here's the reality of rolling out a research tool inside your accounting firm is if you're a chatgpt nerd like me, you are very confident in how to get good answers out of ChatGPT because you kind of know the ins and outs. But the reality is your team is not. You don't have an entire team of super nerds. And this is where AI tax research tools make infinitely more sense than traditional old research platforms. There's a number of players in this space right now. I would say Blue Jays, probably the leader. What you don't wanna do is buy a tax research solution from your tax software vendor, just like they do on the practice management side. They will bamboozle you by saying, well, we're the only tax research solution that integrates into your tax softw and see all the client data that's just not real yet. That's how they hook you. Like that's their competitive advantage. But that is not something that is yet live or good in the product. So if I had to send you to one place right now. It'd probably be Bluejay. And as much of an AI nerd as I am, and we do a bunch of ChatGPT content on this channel. AI fundamentally has not changed most of the technology in accounting firms. Not to say that won't change. But the only two areas where it has significantly impacted accounting firms is it's accounts payable, it's tax research. Now number eight is a whole lot of AI that we've gotten that we don't even want. And we're getting this everywhere from incumbent providers. Great example. Intuit shipped all sorts of AI stuff in QuickBooks. Now, press release after press release, all their built in agents, you ask accountants, you ask accounting firms and they're like, honestly, I could care less. I tried it once and it kind of sucked. And it doesn't change how I work. Similarly with Xero, they rolled out Jax and it was kind of a dumpster fire. And so kind of the old guard of companies, we're not really seeing anything interesting from them. The exception being when they acquire interesting products. And so a good example of this is Thomson Reuters went out and acquired a company called Materia. And Materia is now what they call co counsel their research product. And it's all right. In fact it is better than anything Thompson has shipped in maybe two decades. But it's still not as good as the leaders. And if you just think about what this looks like in practice, you got this big legacy company incapable of building cool things in house. And so they have to go out and acquire the cool stuff. They bring that company inside. All of the talented people that were in that company. How long do you think they're gonna work at Thompson? I will tell you how long exactly the number of days that their earn out is. You don't go out and like found a company and do cool stuff and then go to work at Thompson, you're like, yeah, no, this is, this is my vibe. And so we're kind of in a bummer spot, right? You got new companies building cool stuff, but then when they get acquired that, I mean that kind of ruins it, right? All this is to say don't look at the incumbents to ship the cool AI stuff. It's not gonna be Thompson, it's not gonna be cch, probably not gonna be Intuit. It's a lot of the cool upstart companies that we're talking about on this channel that you'll see in my app recommendations that are doing cool stuff. That's Ready today. That is secure that I can point to hundreds of firms who are like raving fans of that tech. It's not coming from the big companies, believe it or not. What about better tax software? Tax software, Tax software. Thank you. Let's save the Q and A to the end. By the way, Tax software, the worst software in all of accounting firm tech. Drumroll please. Still gonna suck for the foreseeable future. I wish this wasn't the case. The only real headline we've had lately on tax software is Drake launched Drake Cloud, an online version of their tax software. But it's still not as good as their desktop version. And as far as online like web based tax softwares go, it's still not as good as Intuit Pro Connect. And Intuit Pro Connect isn't as good at more technical work as some of the leading platforms like Ultra Tax, stuff like that. And if you're using Intuit ProConnect, it means you're giving Intuit money. This is a tax trick. Now there are two companies working on this new like Cloud First Tax software. They are instead and Taxa who has since been acquired by Iwin. The reality on new tax software is you're not gonna buy new tax software until it supports 50 states and everything you need and all the different tax return types. But you're also not gonna buy it until you know other people who are having good success. And because buying tax software is on like a once a year cycle, I mean the sad news here is I honestly think as much as I want people to be working on this problem, we're years from having another good solid option, unfortunately. But the news isn't so bad for bookkeepers because we're actually getting some pretty cool new AI first accounting ledgers and they may actually unseat QuickBooks. Unseat Zero. The reason I think this is if you actually look at the mid market where netsuite and Intact have been king forever, there's two AI first ledgers, Campfire and Rillet, that are making really good inroads into the mid market ledger, actually winning a bunch of market share from NetSuite and Intact. And I think we're gonna see the same at the SMB level now. Two most likely players here that I think will do this. One is Digits, the other is Kik. We've gone deeper on them in past videos about kind of new age accounting ledgers. But why this may finally happen now is that AI gives us kind of like the step improvement that was always gonna be required to overcome the ecosystem Advantage of existing ledgers that connect with hundreds of different apps. Right? Ledgers kinda haven't changed in quite a while and there's a whole ecosystem of other tech around it. And you just, you adorn your accounting ledger with all these different apps, like a pair of crocs that have got too many charms on them. And at a certain point you kinda just have to say, can somebody just build a better ledger that doesn't require all these band aids and duct tape and all that? And the answer is like, it depends. Like some businesses have very spec where you want the specialty app for that. You don't want the ledger to handle that one weird specific thing. Right? But we can also all agree that we are ready for an alternative to QuickBooks Online and Xero. Okay. Two more that may actually have the biggest impact on how you buy software. Number 11 is that accounting firms just have this growing overwhelm with the amount of tech that is being crammed down their throat and the phone calls they're getting from companies and you just don't know how to make sense of it. Right? Especially these days with landing pages from AI companies making all sorts of wild promises and you're like, I mean, that sounds cool, but I don't actually know anybody that uses it. And after a certain point we kind of start to turn our brains off. That is how a lot of people are feeling right now is they just, they don't know what to do and so they're not doing anything, which is also not the right move. Right. I've talked with so many accounting firms that are just paralyzed by this today. But the solution, in my opinion, the solution is, number 12, is that today there is now greater availability of information than there has ever been before. I just wrapped up a series of 13 in person workshops at 13 cities in the US and this was a common theme of like, I just don't know what to do. I've heard so many things. I'm on this tech and I just don't know what to do next. And as people have those conversations, you could see that, like those in person interactions, largely between accounting firm owners, they broke through this sort of paralysis that we're all suffering from a version of in a way that online stuff just does not. Like, this is great, like we're sharing information and ideas, but it can't match in person. And there's a growing number of places where you can have these conversations, like, sure, start with my app recommendations, but validate it with peers. Other people that do this stuff. We're gonna be running 20 more live events at 20 cities in the US this May and June. We got a growing number of online communities for accounting firms. I run one that has 700 accounting firm owners in it. It is a place where you can go and you can get an instant answer about any platform you can imagine. And I can tell you for me personally, this changed my life. That practice management system decision that we made, we actually spent 14 months moving to a new system. A team of 40 people like this was so much work, so much money, only to get to the end, roll it out and realize this platform sucks. We made the wrong decision after 14 months. What do you do now? Do you keep pretending it's great, be like no staff? I don't know what you're talking about. It's awesome. Do you go back to the old one after 14 months? Or do you change again when your entire team is absolutely exhausted and the last thing they want is any more tech change? That's what I was faced with. And it wasn't until a couple years later when I had some other friends for the first time that ran accounting firms and I told them this story, that almost every one of them was like, oh yeah, no, that was a stupid decision. I could have told you that was how that was gonna go. And this ought to go without saying, but the answer you need to get your accounting firm to to the next level, that answer will be found not in sales reps, not in a software company that wants you to sell advisory for the first time, but in your peers, in other people that do what you do. Kind of obvious, right, if you think about it. And the exciting thing today is our world has gotten smaller. There will literally be people that share information in the comments of this video that save you from making that 14 month disaster mistake that I made. And so whether it's just like hanging out on videos like this, turning up at events, going to your first accounting conference, joining an online community. The only solution that I have found to keep up on tech, which is so hard, cause there's just this never ending barrage of new stuff, right? The only way I've ever known to cut through the noise is to ask other people who have actually used this stuff. Because the tech I'm gonna put my accounting firm on is the tech. Where I can already point to other really smart firms who are raving fans of that tool. Anything less I'm not gonna touch. That means the next time I see this amazing landing page, I. I'm not getting sucked into that. I can be excited, but never again will I get bamboozled by a sales rep or a hyperbolic landing page that is promising the world. The only solution I found to this it's your peers.