Best Tax Software for Small Business

Every small business owner would agree that the tax season is not the most popular time of the year.

BY: AUSTIN ANDRUKAITIS ON TUESDAY, DECEMBER 03, 2019
Best Tax Software for Small Business

Every small business owner would agree that the tax season is not the most popular time of the year. But it is one of the most important ones.

If you are not using the best business checking account and tax software, then you are missing out. You are most likely not maximizing tax credits or deductions.

You are also leaving a significant amount of room for costly errors to occur.

You do not want to be among the ones audited by the IRS with faults in their taxes.

But the filing process is not simple. There are several problems owners face when the tax season rolls around.

The paperwork for filing taxes is daunting. So are the complexity of tax compliance and the frequency of changes in tax laws. You do not have time for all that extra work; you have enough on your plate already.

Enter: Small business tax software. A computer program that simplifies preparing your annual return.

With this software, owners can prepare their own tax returns. You can do it for a fraction of the cost of tax professionals, too. Not to mention, it also makes filing taxes a less painful process.

When using the best bank to track your money, the more accurate your tax information will be. All there is to do is to enter it into your tax software.

In no time flat, you can enhance your ability to tackle the process of small business tax returns.

How We Evaluated the Best Tax Software For Small Businesses

To find the best tax preparation software, there are several features to look for. This includes things like error scanning and customer support.

Keep in mind that small business owners have specific tax requirements.

We created a shortlist of the best tax software for small businesses. Those who made the final cut met all our requirements.

6 Key Features Of Tax Software

Each has the six key features we expect from a tax software provider.

1. Support for Small Business Tax Forms - Prepares for business entity returns like S-corps and LLCs

2. Data Import - Imports data from accounting software like Quicken and QuickBooks.

3. Deduction Finder - Finds deductions for the business industry. It chooses the best method to deduct depreciation and car expenses.

4. Error Check and Audit Assistance - Diagnostics, checks for errors, and possible missing data.

5. Ease of Use - Easy to learn and navigate.

6. Customer Support and Help Resources - Provides an online knowledge base and customer support

Along with using tax software, we highly recommend you choose the right bank and bank account. You must have a separate business checking account for tax purposes.

Why You Need A Business Checking Account For Tax Purposes

When filing taxes, it requires your business to include the correct banking information. If you mix your personal money with business funds, this quickly becomes messy.

With a separate bank account, it will save you time and create a favorable tax return experience.

More importantly, you can keep better track of your business finances.

How well your money is traced depends on the type of bank and banking accounts you use for your small business.

What Small Business Owners Must Look For In A Business Checking Account

To find a bank that best suits your business banking needs, there are seven things to look for:

  1. A relatively close location.
  2. Mobile App.
  3. Minimum balance.
  4. Low fees.
  5. Online banking services.
  6. Cash deposit limits.
  7. Customer service.

Businesses need a bank that is convenient, practical, and close to their location. Otherwise, banking becomes an issue that instantly creates a tax issue.

Before selecting tax software, the next step is to choose the best type of bank account(s) for your business. Again, the way you do your banking impacts your tax return.

12 Different Types Of Business Bank Accounts

Small businesses may choose to have more than one bank account, each with a different purpose. Owners want a savings account, a business checking account, or another type of account.

The more accounts you have for your business, the more organized your company’s money will be. Opening a business bank account can be done at the bank or online. Choose whichever way is easiest for you.

Consider how multiple business bank accounts are best for analysis and in seeing how well your business is doing. They make for a perfect system of information gathering.

From all your business accounts, you can quickly get what you need to fill out financial forms for tax purposes.

Business Checking Accounts For Small Business

Cash Accounts

A cash account records payments, deposits, and withdrawals in real liquid currency. This will show that you were paid in cash or that you paid for something in cash.

Credit Cards

This account tracks all the credit cards associated with your business. Using a credit card for all your expenses makes keeping track of your payments easy.

UnDeposited Funds

Before there were mobile banking apps, businesses collected funds to deposit as one lump sum. It will then appear in the bank statement as one transaction.

This allows the money to move through the accounting system accurately. The deposits will match what you have in the accounting software.

This account is excellent for those business owners who prefer not to use a banking app.

Income Accounts

Income accounts track the source of revenue. Depending on the operation of your business, create two income accounts or more.

At a glance, you will see the income your business is collecting in the different parts of your company.

Expense Accounts

An expense account tracks money spent on any product or service that does not have a resale value. Note: If you are paying for an item that can be resold, it needs to be listed as an asset.

Different countries have different rules for accounting expenses. Before setting up an expense account, consult your accountant.

Assets

The asset account details the value of the assets owned by the business. Assets are items that have a resale value and depreciate

Depreciation is part of your tax return.

Your accountant will enter adjustments for the depreciation of your assets. He or she will base it on rules set out by your local tax code.

Liabilities

A liability account depicts a debt or future cost for the business. You can have both short-term and long-term debt.

Lines of credit, loans, and pre-payments from customers for work not yet done are all a liability.

Equity

An equity account outlines the value invested or created in the company. Built-up equity can include investment from owners or contributed capital.

Accounts Payable

Accounts payable are all the bills you need to pay. Enter statements into the software with the correct due date as soon as you receive them. It will allow you to see how much money you need going forward.

Accounts Receivable

Accounts receivable are the invoices for those who owe you money. Make sure you stay on top of your accounts receivable.

Cost of Goods Sold

This account tracks the cost that goes into creating the product that the business sells. Note: This does not include the cost of shipping since it is not production

Gains or Loss on Foreign Exchange

This account tracks changes in the price of foreign currencies between the time an invoice is issued and when it is paid.

There are plenty of business banking accounts to select from, as shown in this overview. There are also many reasons you need a separate account for business banking.

One fundamental reason is that the IRS looks to see that you are an independent business. They will want to see your banking information and taxes as proof.

Once you choose the business bank account(s) most relevant to your business, find out more details.

Your next move involves making another decision related to tax preparation.

As mentioned earlier, we created a shortlist of the seven best tax software providers. Each has met our six essential feature requirements.

7 Of The Best Tax Software Providers

Not only does banking affect your taxes, but so does the tax software companies you use.

H&R Block

H&R Block offers several software options. Features like a deduction finder tool and built-in error-checking tool. It also has live customer support.

If you have employees or 1099 contractors, you can use H&R Block to file your payroll tax returns. It also processes annual forms like 1099-MISC and W-2.

The H&R Block tax software is easy to use. However, you must complete all fields of information before moving on to the next screen. It guides you through using an interview-style with a series of questions and answers.

TurboTax

TurboTax by Intuit is a desktop software for preparing small business tax returns. It provides two tax software programs.

  • TurboTax Business prepares business tax returns for entities. Examples: S corporations, C corporations, Limited Liability Companies, and partnerships.
  • TurboTax Self-Employed (online) or TurboTax Home and Business (desktop). For those listed under self-employment, like freelancers, you can prepare personal tax returns too.
  • TurboTax can import your data from QuickBooks. It has a robust error-checking tool and customer help.

TaxAct

TaxAct Business comes in five editions. All five versions are available as online software or as downloadable desktop software.

  • S Corporation
  • C Corporation
  • Partnership
  • Estates and Trust
  • Tax-Exempt Organizations.

You can file tax returns for sole proprietors, corporations, partnerships, and nonprofit organizations. Note: You cannot submit your personal tax return with the TaxAct Business edition.

TaxSlayer

TaxSlayer is an online tax software used to prepare personal tax returns. It allows Schedule C filers to complete all necessary tax forms required of a sole proprietor.

TaxSlayer’s unique feature is to prepare tax returns for previous years 2015, 2016, and 2017.

This online tax software is easy to use. The sections of the software have a menu where users can go to specific data input areas. Users can also jump to a particular data entry section by entering specific information.

Liberty Tax

Liberty Tax offers fast, easy, accurate, and secure online tax filings. It has over 3,000 offices & 12,000 tax professionals nationwide. Its customer support options are helpful.

Liberty Tax makes learning how much you may get back from the IRS a simple process.

They will calculate the costs for tax or reimbursement purposes. Liberty Tax will also estimate how much to withhold from your paycheck (tax deductions) to cover your tax liability.

Efile.com

Efile will estimate your tax refund or taxes owed with its free “Taxstimator.” If you file through them, you can learn when your Tax Refund will be in your bank.

Efile.com offers tax support that fits your needs.

If you are not sure if you should file a tax return, you can use their “Free FILEucator” tax service tool to find out. Its ease of use makes you want to use their tax tools.

You can discuss your taxes with the same “Taxpert” via their phone support, every time. With Efile, it will not rotate you among various support tax preparers.

FreeTaxUSA

FreeTaxUSA has filed over 43 million tax returns with the IRS. They work to get you the biggest tax refund the quickest way possible.

Its step-by-step guidance makes navigating the FreeTaxUSA software a breeze. You receive audit support from tax experts, and 100% accurate calculations guaranteed. FreeTaxUSA supports all common forms — federal tax and state tax forms.

It is good to know that protecting your personal information is vital to FreeTaxUSA. They keep it safe and secure. Note: If you are looking to file last year’s income tax return, you must mail them.

If your company is a separate legal entity, business funds need to be in a different bank account. Sole proprietors with a trademark must pay taxes. They will receive state returns and federal returns.

Businesses without DBAs (Doing business as) are not legally required to have a separate business bank account. However, they do still have to pay and file state taxes.

With a separate business account, your money is no longer a confusing mess.

When you choose the right bank and business checking account, all there is to do is to find the best tax software. You can choose basic software or upgrade to a deluxe one with additional fees.

Use tax software that double-checks your taxes, has an audit defense feature and enrolled agents that support you.

First, get your business checking account situation right and then choose the best tax software. Using tax software will enhance your business life during tax season.

As an owner, you want to make sure there are no slip-ups in your tax returns. You also need to ensure you are getting the most out of the taxes your business pays each year.

The best tax software equips you with all the expert tax tools you need.

About the Author

Austin Andrukaitis

Austin Andrukaitis is the CEO of ChamberofCommerce.com. He's an experienced digital marketing strategist with more than 15 years of experience in creating successful online campaigns. Austin’s approach to developing, optimizing, and delivering web based technologies has help businesses achieve higher profit, enhance productivity, and position organizations for accelerated sustained growth.

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