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How to Find the Most Effective Small Business Tax Software
December 04, 2019
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How to Find the Most Effective Small Business Tax Software

Owning a small business means wearing many hats. Managing employees, forming partnerships, and paying invoices are just some of the many tasks you’ll need to do.

Of chief importance is the need to complete taxes correctly. This can be one of the most challenging feats for small business owners. In fact, a recent survey from the National Federation of Independent Business found that over 50 percent of the “most severe” issues that business owners face were tax related.

While some small business owners opt to hire a virtual bookkeeper, others use a tax software to help with business taxes. Looking to find software to help your small business during tax season? There are many changing business trends expected in 2020, but one thing will definitely remain the same: you’ll always have to pay your taxes.

So, to get started, compare tax software options early. Consider how the right technology could be positive for your business and well worth the upfront cost. 

Why Tax Software Matters For Your Small Business

Small business owners have a wide range of taxes to be aware of. Between individual and corporate income taxes, Medicare employment, social security and unemployment compensation taxes, there are many tax legalities to be mindful of. 

While it’s admirable to try and run your business independently, you don’t have to. Sometimes being a successful entrepreneur means delegating tasks. With tax prep checklists, price comparison, special offers, refund status and more, tax software offers the expertise of a consultation with an accountant from the comfort of your own office.

Tax software enables you to continue managing your company, and catch a break when it comes time to pay taxes. When you can make one facet of your job easier, you’re allowing time to tackle something else. 

Open up your schedule and invest in your small business by looking into software options for the next tax season.

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The Best Small Business Tax Software Options in 2020

When you’re deciding on a tax software for small business ventures, it helps to compare costs and benefits between numerous software options. By doing this, you’ll learn more about what your company needs.

Are you looking for a simple platform that can help you file your taxes online? Is prompt customer service paramount for you? Could additional tax information make you choose one piece of software over another? With so many tax software options, the details matter. Let’s dive in.

Intuit TurboTax: 

Geared toward individuals and small business owners, Intuit TurboTax offers personalized care, tax prep and small business accounting. Most of all, Intuit TurboTax stresses trustworthiness as one of their pillars for success. 

Pros:

  • Intuit features helpful products that go beyond taxation. The service gives users the ability to improve their personal budget skills in addition to tax help with integrated products like Mint and Quickbooks. 
  • Intuit TurboTax offers a 30-day free trial.
  • You can input all of your financials directly from QuickBooks, so if you use QuickBooks as your accounting software this is a convenient tax solution.
  • TurboTax guarantees 100% accurate calculations, with a promise to pay any IRS fees that result from inaccuracies. 

Cons:

  • While Intuit TurboTax is easy to use and effective, it might not be the best option for you if your small business taxes require specialized attention. 
  • TurboTax doesn’t help you with tax planning for the upcoming year. 

H&R Block: 

H&R Block is one of the most easily recognized names in the tax software industry. Offering three different levels of assistance for business, H&R Block has impressive attention to what different kinds of small business owners could benefit from. Here are three main options for small business tax prep and financial consultations.

H&R Block Online— for self employed professionals who prefer to complete their own taxes with guidance

H&R Block Office— offers tax consultation, completion and the concentrated efforts of tax experts

BLOCK ADVISORS— the highest level of personal care attention, this option offers professional help to grow your business

Pros:

  • Since H&R Block has brick and mortar locations, you can schedule an appointment to meet with someone in person if you have any questions. 
  • Different tiers of tax prep software packages allow a flexible user experience. 
  • Free, in person audit support is included, in the unlikely event that you’re audited.

Cons

  • Many review sites claim the software’s user experience isn’t as intuitive as competitors’ options. 
  • Competitors have more robust integrations for growing your business. For example, Intuit TurboTax integrates seamlessly with Mint and QuickBooks. 

TaxAct: 

TaxAct is a leader in digital and download tax preparation that won’t break the bank. Founded in 1998, TaxAct works for individuals, business owners, and tax professionals to make tax season as smooth as possible. Their biggest product is self-titled and offers high accuracy and intricate design. Their forms are all IRS and State approved. 

Pros:

  • Their satisfaction guarantee promises the consumer 100% satisfaction, or the ability to discontinue use before payment. TaxAct also offers a maximum refund guarantee, meaning you’ll get the most out of your tax return if you use them to file. They will fully refund the cost of the software and pay you the difference between your lower tax refund. 
  • TaxAct allows you to enter accounting records from in CSV format. 
  • You can access your return through their platform for up to seven years after you file.

Cons:

  • TaxAct doesn’t offer a free trial of their business products.
  • TaxAct only allows one business to file per purchase of their software, so if you’re filing for multiple businesses you’ll have to purchase multiple copies of the software.

Drake Software: 

Drake Software aims to attract new clients by helping businesses grow financially. With just under 60,000 tax professionals nationwide using Drake, they process about 33 million federal and state accepted returns annually. Featuring tax software and tools to increase workflow, Drake Software provides the resources to help their customers understand the tax process. 

Pros:

  • Drake’s website features educational videos to help their audience understand the tax process and how to use their software. You can also attend seminars or online webinars to help you with tax preparation.
  • A partnership with Nelco makes printing properly formatted forms, business checks and envelopes very simple.
  • Drake provides taxpayer forms in Spanish. 
  • Hardware integrations allow you to digital signature pad or a 2D barcode scanner.

Cons:

  • Drake is priced on the high end of the spectrum compared to competitors. 
  • Drake caters to tax professionals and accountants, so they could be less user-friendly to a small business owner without accounting expertise.

Thomson Reuters: 

Known as “the answer company,” Thomson Reuters uses research, artificial intelligence, and data-driven analysis to deliver the most accurate result possible. Their products are developed by using insights to find solutions, and their website states that they have “the world’s leading resources in tax and accounting.” 

Pros:

  • Thomsons Reuters offers solutions for global taxes, which can be helpful if you have employees in more than one country.
  • You can use the ONESOURCE feature to help with corporate tax planning.

Cons:

  • For a small business simply wanting to do their taxes, Thomson Reuters might be more robust than necessary.
  • Thomson Reuters doesn’t list their package prices online, so you’ll need to contact a salesperson, as opposed to other competitors that allow you to buy instantly. 

Discovering The Perfect Small Business Tax Software

Now that you’ve reviewed the leading tax software options currently on the market, you probably have a better idea of what’s available for your small business. Finding the perfect small business tax software takes research and a clear understanding of what your company needs to make paying taxes a smoother process.

If you’re still unsure about what tax software to move forward with, try using a trial version of the software you want. If that’s not available, don’t be shy to ask the company to walk you through a demo of how their software works.

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Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].