Tax administration is complex, time-consuming, and expensive for many small businesses, diverting resources that could be directed towards improving operations and generating growth. Statistics show that one in three small businesses spend more than 40 hours each year on federal taxes, and 63% spend more than $1,000 each year on the administration of federal taxes alone.
The National Small Business Association’s (NSBA) 2018 Small Business Taxation Survey looked at how the Tax Cuts and Jobs Act, passed at the end of 2017, was impacting small business owners. Just 45% of those surveyed believe they will see a benefit as a result of tax reform, and among those, only seven percent said they expect the process of filing taxes to be easier.
Taxes are confusing enough without the added pressure of deciding on a tax software program that will help simplify this aspect of running your business. Whether you are outsourcing this critical function or handling your business taxes yourself, it is essential that you invest in a program that will meet your particular needs and avoid the expense of purchasing services you can’t use. No matter what your situation, we believe these top-rated tax software tools may have what it takes to help you take control of the tax management, preparation, and filing process.
Small businesses that file their own taxes online need a program that makes the process as painless as possible. Based on expert reviews and feedback from business owners, Intuit’s TurboTax has earned its reputation as the top overall do-it-yourself tax program by being comprehensive and user-friendly, with intuitive tools that help you navigate the complexities of the tax filing process.
Although it is slightly more expensive than comparable software, TurboTax offers the most features for the price. The software runs a double accuracy check through your forms and identifies hundreds of deductions and credits for which you might qualify. The software is available for download or online use, and the TurboTax Live support package offers a one-on-one review with a CPA or Enrolled Agent (EA) before you file, as well as unlimited live tax advice year-round.
TurboTax offers several options based on your business type. For example, the TurboTax Self-Employed Edition offers suggestions on deductions generally taken by self-employed individuals, such as the home office and vehicle tax deduction. You can enter multiple sources of income, including 1099-MISC and sales from goods and services. Corporations, S corporations, and partnerships, including multiple-member LLCs, will need the TurboTax Business Edition. The program offers suggestions for deductions based on your business entity and checks to see if there are any special deductions based on your industry type.
If you are new to managing your business taxes or have a complex tax situation that requires robust support, H&R Block may be your best option. Ranked the best alternative to TurboTax, H&R Block provides simple, effective tax software that accurately corrects human errors and automates the most complicated parts of the tax-filing process. The interface is straightforward and easy to use, and the free version of the software is one of the best on the market.
H&R Block excels when it comes to providing support, both online and offline. The new “Ask a Tax Pro” service offers unlimited, on-demand chat sessions with a tax expert you can share your screen with to discuss specific questions. It works on mobile devices or you can talk over the phone. H&R Block’s Tax Pro Review provides a one-on-one review of your return with a tax pro who will check for accuracy and possible missed deductions as well as sign and e-file your return for you. Both services are available for an additional fee. If you need more help, H&R Block supports its online tax packages with live tax professionals at over 12,000 brick-and-mortar offices around the world. The company also offers audit assistance and representation before the IRS if necessary.
TaxAct holds its own against leading competitors at a more affordable price. The free edition offers a product that is professional and comprehensive, although the software’s interface is less user friendly than that of some of the paid software products. Access to more complex forms is limited, but TaxAct has all the basics, including importing last year’s returns and a W-2 import, as well as planning tools and calculators.
The free version provides exceptional service for filers with simple federal and state returns. Those with more complex tax needs will need to consider upgrading, an option that is still relatively inexpensive compared to other leading software solutions on the market.
Similar to TurboTax and H&R Block, TaxAct offers a Freelancer edition suited to solopreneurs and self-employed individuals and a Business edition for S Corps, C Corps, and multi-member LLCs. Unlike TurboTax and H&R Block, TaxAct only allows you to file one federal tax return; if you need to file a state tax return, it will cost you extra.
While the right software program simplifies the process of managing your small business taxes, you may encounter specific challenges that require advanced expertise. If you are faced with preparing a more involved business tax return for a partnership, multiple member LLC, or corporation, it’s wise to seek the help of a tax professional who is familiar with the complexities of the current regulations.
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