Tax season is creeping up. Which means you really, truly, actually do have to start getting your business taxes together. And if you’re an entrepreneur doing tax prep yourself, you should make certain that you’re using the best tax preparation software for small business that’s available to make the process as painless as possible.
Then which, exactly, to use? There’s no one answer—just like there’s no one small business. The best tax preparation software for your business, in particular, depends on several factors, including how in the weeds your needs are and just how dirty you’re willing to get with the filing, plus the actual forms you need to file.
Let’s start with the essential questions to ask yourself when choosing the best tax prep software for your small business:
Different software programs provide varying levels of support, including, in some cases, in-person consultation via phone or videoconferencing.
If you have no employees and your business entity isn’t registered as a corporation, LLC, or LLP, your tax preparation needs are less complex.
If you have employees or you’re not a sole proprietor, your business structure is the primary factor in your choice of tax preparation software.
You want to make sure the software you choose supports your required tax forms, such as a Schedule C, Schedule 1040A, or 1099 forms. Plus, if you have employees or hire independent contractors, being able to upload their W-2 forms or 1099 forms directly into the tax preparation app is helpful.
Most tax preparation software companies offer both online, cloud-based versions and downloadable version of their software. Online tax prep software has some big advantages—it’s easier to share your data with others, you know the software is always up-to-date, and it’s generally easier to get started with than software you have to download or install. In addition, you can usually buy a more basic version of online software and easily upgrade if needed. Obviously, with something on your local drive, this isn’t as simple.
Now that you’ve thought about your needs, see how these tax preparation software providers—known as the “big three”—could work for your small business come Tax Day.
TaxAct’s goal is to create an easy way for both businesses and individuals to file their own taxes online. The company promises that if your tax return isn’t accurate, they’ll refund the cost of the software, pay any difference in your lower refund or higher tax liability, and cover related legal or audit costs up to $100,000.
Small business owners, including self-employed, freelancers. and independent contractors, can use TaxAct Freelancer ($44.95, state filing additional). If you need to file specialized tax forms, such as for a C Corporation or LLC, TaxAct walks you through choosing the correct product to get the software and forms you need.
There’s also TaxAct Premium ($59.95, state filing additional), which includes Audit Defense—comprehensive response and resolution strategies, including assistance with tax debt relief, denied credits, fraud, and correspondence with the IRS and state on your behalf.
You can get help online from the Answer Center or contact TaxAct for free support if needed. Another nice feature here is that once you’ve used TaxAct to file your taxes, you have unlimited access to your previous year’s tax return for seven years after the filing deadline.
TurboTax Self-Employed ($119.99, state filing additional) is designed to help self-employed individuals, freelancers, and independent contractors maximize their tax credits and deductions. Whether you’re a real estate agent, craftsperson, consultant, or digital designer, the software helps you find tax credits and deductions specific to your industry.
You can get on-screen guidance and answers to your questions. This is a cloud-based product that you can start using for free; pay only when you actually file your taxes. (The downloadable equivalent product is TurboTax Home and Business. It costs $119.99, but you’ll have to pay for that upfront.)
TurboTax runs error checks on your tax returns as you complete them, and double checks your return before it’s filed. If TurboTax miscalculates and you have to pay a penalty, they will repay the penalty plus interest.
If you own a partnership, C corporation, S corporation, or LLC with more than one member, you’ll want to step up to TurboTax Business ($169.99, state filing additional). This downloadable tax preparation software for small business automatically imports your QuickBooks income and expenses into your tax returns and classifies them. It can also automatically import last year’s tax return (provided you used TurboTax to create it). You can also create unlimited W-2 and 1099-MISC forms, among others, which is useful if you have employees or use independent contractors.
Is your business tax situation unusual or complex? For a few dollars more, TurboTax Live ($179.99, state filing additional) gives you access to a one-on-one review by a CPA or Enrolled Agent (EA) before you file your taxes. You answer questions and then prepare your taxes with real-time help from experts on-screen. Ask them any questions you want. You can feel confident the CPAs and EAs are up on the latest tax law changes. They can search more than 450 tax deductions and tax credits to find the ones you’re entitled to.
H&R Block lets you choose how you want to handle your tax filing—do-it-yourself or totally hands-off.
If you want to do it yourself, use the Self-Employed software ($74.99, state filing additional) to file your taxes online. H&R Block helps you find industry-specific deductions and tax credits, as well as those related to startups. The product includes the Stride app, which automatically tracks your mileage, receipts, and business expenses. It supports schedule 1040, Schedule 1040A, Schedule 1040 EZ, W-2s, 1099s and schedule Cs, among many others.
If you want to let the pros handle your tax filing, H&R Block Tax Pro Go ($59.99, state filing additional) is for you. Just upload your tax documents, and H&R Block matches you with a tax pro who has the right expertise for your business. Your returns are prepared virtually within five days—you can message your tax pro at any time, too.
Whichever product you choose, you can add Tax Pro Review for an additional fee. A tax professional reviews your return to make sure it’s accurate and that you received all the deductions and credits you are entitled to. They can also file any tax form you need, even if it’s not included in the tax preparation software you purchased. Finally, their “Peace of Mind” tax notice services are available at an additional cost.
If you get notified of an audit, an H&R Block Enrolled Agent will accompany or represent you. H&R Block also reimburses up to $6,000 toward any taxes you owe due to errors on their part.
Five more questions for you to ask once you’ve considered the options! When you assess your top contender for tax prep software, find out:
Although prices among tax preparation software packages do vary, this isn’t really the time to dither over saving $50. Instead, focus on finding the tax prep software package for your small business that has the features, support, and security you need to make tax preparation as easy as it can be.