Best Small Business Tax Software for Business Owners
Preparing your taxes doesn’t have to be painful if you choose small business tax software that fits your needs. Online tax software can streamline the process and reduce time spent completing and filing forms. Here are our picks for the best business tax preparation software.
- Best small business tax software
- Tips for choosing business tax preparation software
- FAQ: Business tax preparation
Best small business tax software
|H&R Block Premium and Business||
|TaxAct Business Sole Proprietor Edition||
- Best for: Partnerships, S corporations, C corporations and multi-member LLCs
- Pricing: $169.99 for federal; additional $54.99 per state
- Best feature: Prepares tax returns for multiple businesses, including different types of entities
Intuit’s TurboTax Business tax preparation software is designed to guide partnerships, S-corps and C-corps, and multi-member LLCs through the federal and state tax filing process. Trusts and estates can use the software as well. TurboTax helps you enter business income and expenses into tax forms, allowing QuickBooks Desktop users to import existing data. TurboTax also offers assistance calculating and reporting asset depreciation.
The software can prepare tax returns for multiple businesses. It creates unlimited forms for employees, contractors, shareholders and partners, including W-2 and 1099-MISC, 1099-INT or 1099-DIV forms. You can also create and distribute K-1 forms electronically. TurboTax guarantees accurate calculations and would reimburse you for any IRS penalties that result from errors.
H&R Block Premium and Business
- Best for: Nonprofits, S-corps, C-corps, partnerships and LLCs
- Pricing: $89.95 for federal and state (first personal state program included; each additional state is $39.95)
- Best feature: Generates payroll and employer forms, such as W-2 and 1099 forms
H&R Block’s Premium and Business tax preparation software offers step-by-step guidance for corporate tax classifications, including nonprofits, S-corps and C-corps. The software also handles tax prep for partnerships, LLCs, estates and trusts. H&R Block creates payroll and employer forms, including 940, 941, W-2 and 1099 forms. The software also helps business owners maximize deductions, including those related to self-employment, rental properties, vehicles, asset depreciation and business expenses.
You can import your personal return from last year, even if you used another software such as TurboTax or Quicken. H&R Block offers five free personal federal e-file tax returns and charges a $19.95 fee for additional personal state e-file returns (New York state returns aren’t subject to the e-file fee). H&R Block’s Premium and Business software also allows you to file unlimited business returns. H&R Block provides an accuracy guarantee similar to TurboTax, promising to cover any IRS penalties resulting from calculation errors.
TaxAct Business Sole Proprietor Edition
- Best for: Sole proprietors, single-member LLCs and self-employed business owners
- Pricing: $109.95 for federal; additional $49.95 per state
- Best feature: Tax glossary available as resource while preparing returns
Business owners who operate on their own can use TaxAct’s online tax software for sole proprietors. Single-member LLCs, or disregarded entities, can also use the software, as the IRS taxes single-member LLCs like sole proprietors. TaxAct helps sole proprietors identify and maximize available deductions. You can import personal data such as charitable donations, stocks and W-2s, as well as 1040 forms generated through another platform.
TaxAct offers free IRS e-file for sole proprietors. The software includes tools such as a complete tax glossary and an answer center to provide assistance if you have questions. Like the previously-discussed programs, TaxAct provides an accuracy guarantee and would compensate you for any penalties or interest you incur because of a calculation error. However, there would be limitations on the reimbursement.
Tips for choosing business tax preparation software
The complexity of your business and your tax filing would determine whether you need a simple or advanced tax preparation software. Here are some features to consider when choosing small business tax software.
Tip #1 Cost
Many tax programs offer free e-file to complete federal taxes online, but many business owners need additional features that only a higher-tier package would include. When comparing costs, remember that most software providers charge an additional fee to file state taxes.
Tip #2 Forms
The IRS expects different business entities to file specific forms. For example, partnerships, S-corps, estates and trusts must file a Schedule K-1 to report income tax. Meanwhile, sole proprietors and single-member LLCs must file a Schedule C to report income. Make sure your tax software supplies the forms that your business requires.
Tip #3 Accuracy guarantee
When you’re paying a software provider to file your taxes, you want to make sure it’s done correctly. Look for tax software that comes with an accuracy guarantee that would cover any IRS penalties from calculation errors. Be sure to read the fine print to understand what the company would cover in the event of an error. TaxAct, for instance, would cover liabilities up to $100,000 that pertain to software errors, not errors that a customer makes.
FAQ: Business tax preparation
Can I file business taxes online?
Yes, business and self-employed taxpayers can file federal taxes online. The IRS offers electronic filing options for common business forms such as Forms 1120 and 1041. The IRS also provides a list of approved e-file business providers for individual tax forms.
What are small business tax preparation fees?
When using an online software, you would typically pay a fee to download the program. The fee would cover the cost of filing your federal business tax return, including all necessary forms. You would typically need to pay an additional fee to file any state returns.
Can I file small business taxes with personal taxes?
The IRS mandates that businesses formed as corporations must file personal and business taxes separately. LLCs can also be taxed as corporations and must follow the same rule. Any pass-through businesses, such as sole proprietorships, partnerships and single-member LLCs, must report business income or losses on the owners’ personal tax returns.
The small business tax software providers on our list were chosen based on the following criteria:
- Federal and state filing capabilities
- Affordable cost below $200 for federal filing and $100 for state filing
- Accuracy guarantee and penalty protection provided
Pricing as of March 3, 2020