Accounting and Financial
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Formations takes the fear out of tax season : Tech Review Update

The web-based oversight solution has added an AI tool to asisst users in making more informed tax decisions
More money for you, not taxes

A software review of Formations, which helps real estate agents smartly manage their annual tax commitments and monitor long-term financial performance. It now has an AI tax-adviser on board, named MAX.

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This article was last updated on April 25, 2024.

Formations is tax and financial management software for the self-employed.

Platforms: Browser
Ideal for: All agents
Initial review: April 2023
Update: April 2024

Top selling points:

  • “MAX” AI tax advisor
  • Clear, elegant user experience
  • Simple S-Corp creation engine
  • Two-way bank integrations
  • Annual tax preparation and filing
  • Proactive, financial oversights

Top concern:

Merely your tolerance for firing your accountant. However, the app is best leveraged when users become an S-corp, so be comfortable with that when deciding to move forward.

What you should know

Formations is not accounting software. It’s a revenue tracking and tax management application that helps agents create an S-Corp and direct themselves as a business. It facilitates self-payroll, manages all tax withholding, gauges tax-to-revenue metrics, tracks expenses and handles aspects of simple bookkeeping.

Formations can file tax returns, offer liability predictions and help agents control profit and loss. This is a very well-designed software, able to offer long-sought relief to any independent contractor who suffers from anxiety or stresses over the numeric nuance of business self-governance. This is what TurboTax wants to be.

Formations, like countless other business services solutions, is finding its own way to integrate the efficiencies of generative AI. As a buyer may do these days when beginning a home search, MAX will respond to a number of basic and increasingly complex tax-related inquiries a user needs answered.

Naturally, when combined with the individual’s actual business account, it gets even more granular. The intent is to reduce the amount of time a person needs to spend in the software. After all, the best software requires the least amount of interaction.

Obviously some tax scenarios will demand an expert’s input, as rules change often and individual scenarios can’t be taught to MAX until the first person asks about it. Nevertheless, the company’s use of it makes good sense, as its entire approach rests on minimizing the challenges of being self-employed, of which tax management, expense decisions and so forth top the list.

I think the conversation UI/UX needs a bit of work. Once a discussion begins, the user prompt still says “Ask me anything …” in the footer, confusing the user as to where to enter the follow-up to MAX’s response during an active conversation. I thought using that input would start a separate topic, but that shouldn’t take engineering long to update.

The first year I was working for myself as a copywriter and freelance journalist, I called a CPA friend at 5 a.m. a few weeks before April 15, pleading for help. I was stressed to the point of stillness. My filing was not the slightest bit complex, but my numberphobia and new freelancer-angst had coalesced into a palpable gripe around my psyche. What are estimated quarterlies? I hadn’t paid them. I’m a 1099? Wait, that can be deducted?


I panic at the sight of printed data-entry boxes resting on clinical fine print. Medical forms. Tax forms. It doesn’t matter — the physical constraints they demand trigger my crippling claustrophobia and remind me of why I will only write on a screen that is blank from edge to edge. No menus. No font choice. Nothing. (I use Calmly Writer, btw.)

In short, I’d rather find a spider in my ear than face the forms and the processes involved with doing taxes. I paid a CPA $500 this year.

If you can relate to any part of my confession, then pay for this software.

Formations is for any sort of independent contractor and ideal for real estate agents who want to control how they grow. The new agent will find its welcoming, spartan interface a visual relief and the growing, entrepreneurial agent will recognize it as a technological ally.

Formations tracks income and reactively adjusts what you’ll owe the government for every dollar earned, doing so in a tightly designed, hyper-transparent user interface. It offers graphical views into profit and loss, offers payroll summaries, tax payment status and ongoing to-do lists relative to outstanding tax returns. There’s also a mileage tracker and like the app’s other features, it’s designed to remind you to use it.

Bank integrations pull in your spending data for easy categorization within your business. While not every cost is business-related, more of them than you realize are, and that is why Formations can be so valuable.

Setting up the S Corp is handled by Formations, and officially transitions the user from contractor to formal business entity. It offers you more protection, and of course, better tax breaks. It also alleviates the painful self-employment tax.

The overall user experience within Formations never wavers from initial account setup. It’s fast, dynamic and ever-lucid, knowing exactly what you need to see each time you log in. It offers consistent recommendations for expenses and ways to save. In fact, customers of Formations save an average of $11,280 in taxes, according to the company.

I was told by its leadership that the app wants to “democratize the loopholes” used by much larger corporate entities. And I believe them. They call it predictive tax management with good reason and plenty of technological sophistication to prove it.

Formations borders on being classified as fintech, too, the blending of consumer financial services with software advancements that add security and simplicity to traditionally cumbersome financial operations. This category is moving its way steadily into real estate business lines, and there are instances of it in apartment property management, rent payment solutions and post-transaction payment processing.

I’m curious if Formations is looking at introducing features specifically for real estate investors or landlords who often have multiple LLCs or S Corps overseeing their portfolios. It’s just an idea, but there’s overlap with companies like Baselane and Poplar Homes.

All said, this is the type of tool you could go without, but only until you use it. It’s like having heated seats in your car. The company has a case study from a real estate agent on its website.

For any agent looking to better formalize themselves as a business, a characteristic any top producer will attest to being the difference maker, Formations is a smart, simple and highly valuable way to change how you manage your finances.

Have a technology product you would like to discuss? Email Craig Rowe

Craig C. Rowe started in commercial real estate at the dawn of the dot-com boom, helping an array of commercial real estate companies fortify their online presence and analyze internal software decisions. He now helps agents with technology decisions and marketing through reviewing software and tech for Inman.

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