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.
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:
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.
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.
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.
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.
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I earned a B.A. in Journalism from the University of Wisconsin at Madison (go Bucky). After realizing my first job might involve carrying a police scanner at 2 am in pursuit of “newsworthy” crimes, I decided I was better suited for freelance blogging and marketing writing. Since 2010, I’ve owned my freelance writing business, EST Creative. When I’m not penning, doodling ideas, or chatting with clients, you’ll find me hiking with my husband, baby boy, and 2 mischievous mutts.
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