There are a ton of perks to owning a business. You’re in charge. You might be able to work from home.
You might travel the world or meet all kinds of people. But, no matter what type of business you own, you’re building something great from the ground up.
Yup, taxes can be an obstacle for small business owners. Unless you’re a CPA or have a nerdy affection for numbers, tax season can be a real drag. I’m in the creative industry, so number crunching is especially painful for me.
Let’s start with the bookkeeping involved. You have to keep track of every single expense throughout the year…don’t lose a receipt! Organization is key; you need to estimate your profit at least a quarter ahead of time. Each spring, you “decode” and fill out a pile of paperwork. And, don’t forget you pay 15% (or more) in self-employment taxes to Uncle Sam.
But, paying taxes is also a business owner’s rite of passage. It’s an exercise in organization, discipline, and financial planning. And, it’s an important part of owning a business in America—one we can’t get around. At least not legally.
The good news is there are a ton of software solutions out there to help. If you’re just starting your business or on a tight budget, save money with a “do-it-yourself” approach with the right tax software. Keep in mind, if you’re a larger business, growing quickly, getting audited, or if you’re merging, acquiring, selling, or closing your business, you’ll want to call a CPA for guidance.
But, in many cases, the right tax software can make filing much easier. Here are a few that have been reviewed and approved by small business owners.
Best Tax Software for Small Businesses: TurboTax Business
TurboTax is a big name in the tax software business. And it’s no wonder why. Their small business solution, TurboTax Business, is one of the easiest-to-use and most cost-effective solutions out there. It’s designed for:
- Corporations (S Corp, C Corp)
- Multi-member LLCs
- Trusts and estates
In 2019, PCMag editors gave TurboTax Business 4.5 out of 5 stars for best overall tax software. Meanwhile, NerdWallet gave it 5 out of 5 stars, and Mashable rated Intuit’s solution the best available on the market.
For just $169.99, business owners can download TurboTax’s software or buy a CD. Compare that to the cost of hiring an accountant.
- Easy import of last year’s return. Once you start with TurboTax, you’ll want to keep using it, year after year. The software pulls information from your last return, so it’s quicker and faster each time.
- Simple integration with QuickBooks. If you use QuickBooks for bookkeeping, then adding TurboTax is a no-brainer. TurboTax connects to QuickBooks and automatically imports your income and expenses—plus, it classifies them for you.
- Free phone support. Business customers can talk to a customer service agent free of charge. And, TurboTax checks your tax return for errors before you officially file.
- Help getting industry-specific deductions. One of the benefits of working with a CPA is guidance on tax deductions. TurboTax Business offers this too, so you can feel confident you’re writing off as much as you can.
- Support for new businesses. Just starting out? Believe it or not, TurboTax can walk you through startup tax deductions too. No need to hire an accountant right away.
Best Tax Software for Freelancers: TurboTax Self-Employed
Self-employed and working solo? In my opinion, TurboTax is still the way to go.
Freelancers and sole proprietors can buy the software for just $119.99. For $199.99, you can get the software plus a final review from a real CPA or EA. That extra $80 might give you the peace of mind you need.
Trust me, getting audited is a stressful experience. I’ll never forget the day I received an intimidating letter from the IRS. My heart jumped through my throat, and in two minutes, I was on the phone with a CPA. Fortunately, it was a minor mistake on their end (not a full audit), but the experience did cost me some cash.
It pays to stay on top of your taxes and get a review from a professional. The price you pay now is much less than the cost of handling an audit. One article from Forbes says audits can cost businesses at least $10K. Usually more.
In addition to all of the regular TurboTax features (e-file, search for tax deductions and credits, support with investments), TurboTax Self-Employed has specialized features geared toward sole proprietors.
- Over 450 self-employed tax deductions. The software has already searched hundreds of tax deductions commonly used by self-employed workers, so you can maximize what you write off (travel, entertainment, supplies, etc.).
- Find industry-specific deductions. TurboTax software will offer up deductions targeted to your line of work.
- Easy tracking of expenses. You work on your own, so you don’t have a lot of time for bookkeeping. To help, TurboTax integrates with QuickBooks Self-Employed. Take a photo of your receipt on the spot, then upload it to track expenses.
- One-on-one support. TurboTax pairs you with a specialist to help with questions and even guide you by drawing on your screen.
- Double-checking your work. The TurboTax team checks your tax return before it’s filed to ensure accuracy and help prevent an audit.
Best Tax Software for Support: H&R Block Premium and Business
Want a lower-cost solution for tax prep, but still want hands-on support? Try H&R Block. They offer a hybrid of online and in-person support.
For a reasonable cost ($74.95), H&R Block offers Premium Tax Software, a product best suited for freelancers. For small business owners with 10 or more itemized expenses, H&R Block offers Premium & Business software for $89.95. If you visit one of H&R Block’s brick-and-mortar stores, you’ll pay an additional fee (starting at $59).
Their Premium Tax Software offers all of the basics with a focus on organizing self-employment income and expenses. Their Premium & Business software is geared toward C-corps, S-corps, partnerships, and LLCs. It also walks business owners through payroll and employer forms.
Best for Peace of Mind: Hire a CPA
The right tax software can make doing your return quick and painless. But, no amount of software can give you the same peace of mind as a certified public accountant (CPA). In fact, I still rely on a CPA to do my business’s taxes.
Professional accountants are especially helpful if you’re just starting your business and you want advice on the best way to structure it (i.e. LLC or corporation). Ideally, a good CPA will stay alongside you as your business grows and when tax laws change. If an issue arises, like an audit, your CPA is available to help you navigate IRS requirements and questions. Finally, CPAs are crucial if you’re acquiring another company, merging companies, or if you decide to sell or close your business.
It varies, based on your needs. A simple tax return might be just a few hundred dollars, while in-depth consulting is much more. CPA costs also vary based on your business’s location.
In short? Do what’s right for you and your business. But don’t tackle it alone. Either get the right tax software or visit a top-rated CPA for advice. Taxes are too time-consuming and important to not get the help you need.
Get Insured in Under 10 Minutes
Get an affordable & customized policy in just minutes. So you can get back to what matters: Your business.
People like you also read
Getting Clients to Pay Overdue Invoices
I remember the first time one of my customers refused to pay for a project I had completed for him.
Best Social Channels for Small Business
Even if you’ve been a business owner for years, the internet has changed drastically in the way social media is used to boost a brand’s presence.
Best Small Business Credit Card
Access to capital is often one of the biggest financial concerns for any small business, and small business credit cards are a popular financing option because they offer fast and easy access to credit.