What's the Best Tax Filing Method for Small Business Owners?

You want to do your small business right, right? Of course! But when tax season rolls around, it can bring with it a whirlwind of questions about exactly what is the best way to make sure you get your business returns filed correctly.   

Should you invest in tax preparation software? Hire an accountant or CPA? How do you balance cost vs. time as a small business owner?  

Unfortunately, there are no hard-and-fast rules here. There are only different methods that will best suit different businesses. In this blog, we’ll break down your choices. We’ll reveal the best tax software of 2023…and why you still might want to go with an accountant at the end of the day.  

The Best Small Business Tax Software of 2023   

When looking for help with tax preparation, tax software tends to be the cheapest and fastest way to get assistance. Who wouldn’t love knocking out those yearly taxes from the comfort of your own home computer on your own time? When it works, it’s pretty sweet.    

So let’s take a look at our picks for the best tax software of 2023!  

TurboTax  

TurboTax is one of the most popular tax softwares out there, and its popularity is understandable. It’s an intuitive program with an easy-to-use interface, it offers a wide range of features, and it is decently priced for what it offers.   

Of course, the exact features that you will have access to depend on the package you select, and the more features you need the more that price tag shoots up. TurboTax is an excellent option for those filing simple tax returns. The free edition offers enough to file 1040EZ or 1040A tax returns fast and accurately.   

However, small business owners are likely looking for more. The Self-Employed and TurboTax Live Assisted packages are usually better fits. They cost $129 and $219 respectively.  

H&R Block 

While TurboTax edges H&R Block out in customer service and support, H&R Block includes some premium features in more affordable packages. It offers many of the same features as TurboTax (including uploading documents by photo or scan, storing information in the cloud, and being able to work between multiple devices) and the user experience is similarly intuitive to use and usually effective.   

H&R Block’s self-employed package starts at $115 for federal taxes and an additional $49 per state for state tax preparation.  

TaxAct  

If TurboTax and H&R Block feel like steep options for online tax aid, TaxAct offers software that’s a smidge easier on the ol’ wallet. You’ll sacrifice some of the intuitive design and experience of its more expensive competitors, but TaxAct is still a convenient and effective way to get those taxes filed.   

One of TaxAct’s prominent selling points is “Audit Defense” which is included in their top package. This feature is meant to help you prepare in the case of an audit.   

TaxAct’s prices are more variable and focus on choosing specific features that will best serve your business for the same base price of $124.95. They also offer a free version for simpler individual tax returns.  

TaxSlayer  

TaxSlayer is one of the more competitively priced options for small businesses, but of course, with a lower price comes a lower-end software. That said, TaxSlayer still offers premium features, a reasonable amount of customer support, and a workable user experience.   

TaxSlayer Premium and Self-Employed are two solid package options for small business owners ($54.95 and $64.95 respectively, with an additional $39.95 per state filing), but their audit assistance features aren’t included and will cost extra. You will, however, get “VIP support” and a “Personal Tax Expert” to help identify potential deductions or errors you might have missed. 

FreeTax USA  

If you’re looking for just about the cheapest tax software option you’ll find anywhere, congratulations, you just found it! However, despite the name, FreeTax USA isn’t completely free. While your federal returns won’t cost you, state returns are $14.99 each, and you won’t have access to on-demand support without paying $6.99 to upgrade to the Deluxe version. Even so, it’s about the lowest pricing out there.   

Of course, this software isn’t the fanciest or most feature-forward out there. But FreeTax USA is worth investigating if you’re looking for a simple and cost-effective option. 

When to Hire an Accountant  

Although tax preparation software has come a long way, there comes a point in every small business owner’s life where it all just feels too complicated to figure out between yourself and a computer program. That’s a big clue you might need accounting help.  

Hiring a CPA makes sense when: 

• You don’t know where to even start with taxes for your business 

• You’ve been audited or fined for getting something wrong in the past (if you’re audited again, a CPA can represent you before the IRS!) 
• You’ve made significant changes to your business structure or income streams in a given year 
• The time you would spend sorting out taxes costs more than hiring a professional 
• You want to pay the absolute minimum taxes possible (professional CPAs can often figure out deductions you’ve never heard of before!)  

Start by learning how to pick the perfect accountant.  

Accountant fees vary based on your needs and their level of expertise, but (not unexpectedly) hiring a CPA will typically cost more than simply plugging numbers into generic tax software.   

That said, professional accountants bring a great deal of value with that higher cost. For starters, accountants use tax preparation software, but not the casual kind advertised to most consumers. They use industry programs that cost $1,000-$6,000 a pop, and they’ll use those programs for your taxes. There’s some bang for your buck right there!   

You’ll also get the benefit of building a relationship with a human being who will get to know your company, your needs, and how best to assist you in estimating your small business taxes more accurately. 

Tackle Tax Season with Know Your Numbers Accounting  

Know Your Numbers Accounting offers accounting services with a focus on supporting small businesses. With quick response times and personalized guidance, you’ll be able to get the exact answers you need whether it’s on tax returns, audit assistance, or just making sure your books are in order when tax season inevitably rolls around again!  

Schedule a free consultation to chat about your business’s needs today!   

Unsure about the best way to file your taxes? Let us know your questions in the comments below!