If you run a company, you need to know the best tax software for small businesses. Because doing it the “old way” can be costing you a lot of time, money, and energy. A whole lot.
1 in 3 businesses spends 40+ hours a year doing taxes as per a 2018 NSBA Tax Survey.
But it gets worse.
Because according to information published by Gusto, “fifteen percent of those businesses spend more than $10,000 a year to complete their taxes. For comparison, 41 percent of small businesses spend less than $10,000 on marketing annually.”
That’s more time trying to be compliant than actually growing the business.
So it should come as no surprise that 67% of small business owners say tax paperwork is their biggest tax concern.
But if you want to sidestep these headaches, this is where the best tax software for small businesses comes in.
Best Tax Software for Small Businesses
We know taxes are a challenge. We also know it’s easy for us as small business owners to make mistakes. And tax mistakes can have costly consequences. But there’s good news.
Taxes are easier. Not because of the laws, but because the software has gotten better.
It’s a lot less expensive than in recent years due to the rise of small business tax software. So, instead of having to pay an accountant or bookkeeper, you can use this software. This software helps manage your tax liabilities in real-time and, often, with greater accuracy.
Very complex tax matters still require the advice of a tax professional. But the reality is that most small business tax matters can be managed in-house. But only if you have the best tax software.
To give you a clearer picture of how this software can help, we’ve reviewed the top 4 best tax software for small businesses below.
TurboTax has long dominated the small business tax preparation industry. Because it was one of the first to market, it’s always been a top pick.
In the early days, you would have to visit a store to buy a physical copy of TurboTax. That software would then have to be installed on your computer. With CDs being ancient relics now, TurboTax has updated its offerings, so you can work across multiple devices disc-free.
Best TurboTax Features
TurboTax is packed with features, as you would probably expect. Our favorite though?
One of the best TurboTax features is the ability to easily find deductions.
This includes ones you may have missed. You can use to software to make sure that you have claimed all of your depreciation allowances, as an example. Or, to take advantage of opportunities to depreciate property at an accelerated rate.
The software also comes with a feature to check for errors. It does this using more than 1,000 diagnostics tools. Again, very useful. This alone makes it worthy of inclusion in our list of the best tax software for small businesses.
Should I Use TurboTax?
If your business already uses QuickBooks, TurboTax is a good option. Because Intuit allows you to import QuickBooks data directly. You can use TurboTax Business to manage taxes for estates, partnerships, LLCs, C-corporations, and S-corporations. Some self-employed folks use the Business edition of TurboTax. But there’s also a specialized TurboTax Self-Employed you should consider if you have simple needs.
With the Business Edition, you can prepare and file all tax returns necessary to remain in compliance throughout the year. The software, therefore, does far more than the ordinary version of TurboTax that mostly focuses on April 15th. You can file quarterly returns, pay estimated taxes, and even submit returns to each individual state where you owe taxes.
TurboTax is a great software package to start with. Especially if you’re new to managing taxes for your business on your own. But it can add up price-wise. TurboTax Business costs $169.99 and you have to pay an extra $24.99 for each state tax return. Also, if you need additional tax help, TurboTax has a premium feature. You can hire one of their tax professionals to manually review specific issues. But again, that’s going to cost you too.
Related: TurboTax Self-Employed Review
If you’re self-employed, TaxSlayer is a great tool. It can be counted among the best tax software for small businesses 100%. But TaxSlayer can only be used to submit returns for people who file Schedule C forms or 1040. Not a bad thing, but just know you can’t use TaxSlayer for corporations or partnerships. But, since most small business owners are considered sole proprietors for tax purposes, that’s what makes TaxSlayer a good option.
Best TaxSlayer Features
TaxSlayer really shines in the tax education department. Their knowledge base is vast. But best of all?
With TaxSlayer, you can easily reach knowledgeable representatives.
You can pick your preference to, whether by phone, email, or online chat. It’s great!
TaxSlayer comes with useful tools to help you streamline the completion of your tax return. The data import feature is one, and it can fill in most of your information automatically by scanning your old tax return. There’s even an audit assistance tool that can guide you through the process of getting through an IRS audit. I really like TaxSlayer personally.
Should I Use TaxSlayer?
One of the main advantages of TaxSlayer is its inexpensive price. You may not need to pay $200 to complete all of your filings with TurboTax. Instead you can enjoy similar functionality for just $47 with TaxSlayer. But you do have to pay an extra $29 for state tax filings, but there’s no limit to the number of federal returns you can file electronically.
Another reason TaxSlayer ranks among the best tax software for small businesses? Because they have a strong reputation for good customer service. With some of the other players in the tax industry, getting a representative on the phone can be challenging. Many competing providers attempt to sell customers additional services when they call in to ask a simple question.
Not TaxSlayer. Tax expertise is just a click or chat button away, and I love them for that. Again, one the best tax software for small businesses for sure.
File a Schedule C or 1040? TaxSlayer is the best tax software for small businesses in that bracket.
Freelancers and independent contractors can benefit greatly TaxSlayer.
But the reality is that most business owners can make use of the software as well.
Consider using TaxSlayer over competing offerings if you are looking to save money and your tax return is not extremely complex.
Related: Should you DIY or hire a pro for filing your taxes?
3. H&R Block
H&R Block is one of the leading U.S. accounting firms, and it has branched into the tax software industry in recent years. The provider offers three different product lines for business owners:
- Self-Employed edition,
- Premium edition, and
- Business edition.
The Self-Employed edition is designed to make it as easy as possible to file straightforward returns while the Premium and Business editions are designed for LLCs, S-corporations, C-corporations, and nonprofits. You can get the Business edition for $89.95, but you have to pay an extra $15 for the Self-Employed version. H&R Block makes it easy to upgrade to the Self-Employed edition if you start with the Business edition before deciding that you need additional features.
But cost aside, H&R Block could still be considered one of the best tax software for small businesses
Best H&R Block Features
The tax software itself is relatively easy to use. Another cool perk?
H&R Block provides a a free in-person tax return audit to make sure you did everything correctly.
As with TurboTax, H&R Block relies on an extensive list of questions to generate your tax return. Most questions can be answered in a matter of seconds, but other questions require you to input extensive spreadsheets or other complex information.
The biggest problem with H&R Block’s software, however, is that it requires you to input all information immediately before moving on to the next screen. If you cannot provide answers to questions that H&R Block asks, you will have to pause your work to get the answer before continuing forward.
But, unlike TaxSlayer, H&R Block offers limited customer support. You have to rely on a knowledge database and live chat to get answers to your questions. H&R Block can provide personalized advice, but you have to pay additional money to get real answers from licensed accountants while you work on completing your return.
Should I Use H&R Block?
Many business owners have grown accustomed to using TurboTax, so H&R Block includes a feature that lets you get started by directly importing your data from TurboTax. You can also import data from Quicken, spreadsheets, and a broad range of other data sources. The ability to input data saves a tremendous amount of time and allows you to leverage the electronic data that businesses are increasingly utilizing.
H&R Block Summary
If you are a business owner who plans on using tax software to simply get all of your information together before sending it over to your accountant, H&R Block is probably the best provider for you. A “Tax Pro Review” feature is built into H&R Block’s online tools to make it easy to send your work over to your accountant once you are done.
H&R Block does, of course, charge additional fees to actively work one-on-one with an accountant on your return, but doing so is often the best option when you have a complex business. The bottom line, therefore, is that H&R Block is ideal for larger businesses that need to file extensive returns, but freelancers might be better served by using a less expensive alternative.
Related: H&R Block Tax Pro Go Review
TaxAct is another growing provider that is focused on streamlining the tax filing process at an affordable price. As with TaxSlayer, the main advantage of TaxAct over competing solutions is its cheap price point. If you are an independent contractor, one payment of $49.95 is all you have to pay to use the Self-Employed version of TaxAct for life.
Most providers make you pay every year to use their software, but TaxAct is significantly less expensive since its software can be used for many years.
Should I Use TaxAct?
There are, of course, some sacrifices that you have to make in exchange for TaxAct’s cheaper price. If you file quarterly tax returns, TaxAct can be more expensive because it only lets you file one federal tax return for free. With TurboTax and H&R Block, on the other hand, you can submit up to five federal returns at no cost. The other major downside is that TaxAct’s user interface is less sophisticated than with the more expensive products offered by H&R Block and TurboTax.
Best TaxAct Features
Customer service is a major strength of TaxAct because it comes with unlimited phone and email support.
TaxAct offers 24-hour phone support throughout tax season.
And its support team can be reached during ordinary business hours throughout other times of the year. As with most of its competitors, TaxAct also offers an online knowledge base that can help you to answer some of the most common questions.
Another major benefit of TaxAct is its ability to walk you through relatively complex tax matters. This, coupled with their great customer service, make them a welcome addition to our list of the best tax software for small businesses.
For instance, it can provide you with a list of everything that you will need to file to keep your C-corporation in compliance.
With some software tools, it is easy to forget key filings that go beyond your income tax return, but TaxAct goes the extra mile to help you remain in compliance with perpetually changing regulations. Similar functionality is available for LLCs, S-corporations, and even sole proprietorships.
Although TaxAct has a few downsides, the software is basic enough not to be overwhelming. It is also enough to meet the needs of most small business owners. TaxAct is among the best tax software for small businesses because it is very inexpensive, but it also provides all of the functionality that you need to complete a straightforward tax return on your own.
That’s why it’s one of the best tax software for small businesses.
The software package is simple to use, and there is a feature to skip ahead to key parts of your tax return. However, you are still limited in your ability to skip ahead since you can only jump forward to specific sections that TaxAct defines. Once you have started a section, you have to answer each question in the sequence before moving on. Unfortunately, the lack of functionality to skip specific questions often becomes problematic when you are required to answer a question that does not apply to you.