Best Tax Software for Small Businesses in 2023

If you’re a proprietor of a small enterprise, you’re likely aware of the intricate nature of tax filing.

Tax preparation software is an affordable alternative to hiring an expert such as CPAs or EAs to prepare taxes. Nonetheless, small business owners need to understand that only accurate filing can maximize their income tax refunds.

Given the plethora of online tax software solutions available for businesses, your ideal choice should prioritize user-friendliness, affordability, and exceptional customer support.

Buy a product that can efficiently assist you in identifying and claiming all the deductions rightfully yours.

What Is Tax Software For Small Businesses?

Online tax software simplifies the process of completing your small business tax return entirely on the online.

It takes the numbers you’ve entered and calculates your total income, subtracts eligible deductions, and determines the amount of tax you owe or the refund you’re entitled to.

This is is done automatically, meaning that there will be no need for manual calculations, which will reduce the risk of mathematical errors.

6. Best Tax Software for Small Businesses

Here are six best tax software for small businesses that you may want to consider:

1. TurboTax

TurboTax, designed for professionals and business owners, serves a wide range of online tax filing needs, including compatibility with cryptocurrency—an attractive feature for startups.

With Intuit tax preparation software, you can generate as many W-2, 1099-MISC, 1099-INT, and 1099-DIV forms as you need. It also reviews your tax return against a database of over 350 deductions and credits to maximize your savings.

Plus, you have the option to receive your tax refund directly in your bank account, skipping the wait for a paper check in the mail. TurboTax offers a guarantee to cover any IRS or state penalties that may arise due to inaccuracies in their online filings.

Pros of using TurboTax

• User-Friendly Interface
• Accuracy Assurance
• E-filing and Quick Refunds
• Variety of Versions
• Access to Experts
• Import Financial Data

Cons of using TurboTax

• It is expensive
• Additional Fees for Certain Features
• Limited Suitability for Complex Tax Situations

2. TaxSlayer

TaxSlayer is a top-notch tax preparation software designed for filing your taxes. Its pricing options are adaptable, offering four different packages to match your business requirements. 

TaxSlayer ensures that all taxes, fees, and shipping expenses are accurately allocated within your accounting system. This service is purpose-built to identify any unexpected discrepancies, and the best part is, it’s a breeze to set up with just a few clicks!

As you focus on growing your business and boosting revenue, data synchronization operates automatically in the background.

Pros of using TaxSlayer

• Affordable Pricing
• User-Friendly Interface
• Variety of Versions
• E-filing and Direct Deposit
• Customer Support Options

Cons of using TaxSlayer

• May Not Be Suitable for Complex Tax Situations
• Additional Fees for Certain Features
• Mobile App Experience may be Limited
• Data Security and Privacy Concerns

3. FreeTaxUSA

FreeTaxUSA is a cost-effective yet reliable tax preparation software ideal for small businesses seeking affordable online tax filing services. The opportunity to file taxes for free through an IRS-approved provider certainly sounds like an enticing offer, doesn’t it?

FreeTaxUSA can handle all state and federal tax filing forms, including popular tax credits. It also covers all the essential aspects for filing 1099 forms. Federal tax preparation is always free, and there are no fees for tax extensions. This is why it’s widely regarded as one of the top choices for free tax software.

Pros of using FreeTaxUSA

• Free Federal Tax Filing
• User-Friendly Interface
• Data Import from Other Tax Software
• E-filing (Electronic Filing)
• Direct Deposit Option
• Email Customer Support

Cons of using FreeTaxUSA

• State Filing Fee (if applicable)
• Limited Import Options
• Fewer Advanced Features
• Mobile App May Have Limited Functionality

4. H&R Block

H&R Block’s tax preparation software is compatible with various forms and is tailored to assist small business owners.

This tax preparation software will lead you through the tax filing process using clear and simple instructions. It will alert you to any errors when you enter information incorrectly or place it in the wrong spot.

If the tax software finds any errors, it highlights them for you to correct. Furthermore, for an additional fee, a professional can handle your tax preparation in addition to H&R Block’s standard tax services.

Pros of using H&R Block

• Professional Expertise
• Variety of Software Versions
• User-Friendly Interface
• Accuracy Guarantee
• Mobile App Availability
• IRS Audit Support

Cons of using H&R Block

• Cost may be relatively higher
• Additional Fees for Some Features
• May not be ideal for extremely complex returns
• Privacy Concerns

5. eFile

eFile is tax filing software program that helps you with your taxes, especially if your taxes are not very complicated. It’s easier and faster than doing your taxes with pen and paper. But if you want, you can still print your tax forms and send them through the mail instead of doing it all online.

This tax software provides live chat support, even when it’s really busy. When you file your taxes online, you can have your tax refund sent directly to your bank account. You also have the option to cover the eFile fees from your tax refund instead of using a credit card to pay.

Pros of using eFile

• Affordability
• User-Friendly Interface
• Accuracy Assurance
• E-filing (Electronic Filing)
• Direct Deposit Option
• Mobile Accessibility
• Some Customer Support Options

Cons of using eFile

• Limited Import Options
• State Filing Fees (if applicable)
• Fewer Advanced Features
• Privacy Concerns

6. TaxAct

TaxAct is a top tax software that places a strong emphasis on accuracy and the quality of assistance it provides. It offers a library of essential IRS forms accessible on their website. Furthermore, it includes helpful calculators for calculating depreciation expenses.

TaxAct provides secure storage and on-demand access to your tax returns, with the capability to retrieve records from up to six years back at no extra cost. This feature becomes valuable in the event of an audit or when you wish to make revisions to your prior tax reports.

Pros of using TaxAct

• Professional Assistance Available
• Variety of Services and Plans
• User-Friendly Interface
• Accuracy Guarantee
• Mobile Accessibility (depending on the version)

Cons of using TaxAct

• Potentially Higher Cost
• Additional Fees for Certain Features
• May Not Be Ideal for Very Complex Returns
• Privacy Concerns

Tax Software vs. Tax Preparer For Small Businesses

Most online tax software providers usually include a self-employed option that allows users to file a Schedule C (“Profit or Loss From Business”). While some of these providers do offer solutions for more complex tax scenarios like partnership or corporate tax returns, you might consider engaging a certified public accountant (CPA) for such intricate tax situations.

A certified public accountant (CPA) is a licensed financial expert who helps businesses handle their money matters, like doing their taxes.

While hiring a CPA for your business taxes typically comes at a higher cost compared to using tax software, their services often extend beyond tax preparation, encompassing year-round tax planning and strategic financial guidance.

Why is it Necessary to Have a w-2 or 1099 Form When Using tax Preparation Software?

When you’re using tax preparation software, having a W-2 or 1099 form is really important. These forms contain vital info about your income, like what you earned from jobs or other sources. 

The software needs this data to figure out how much tax you owe and whether you qualify for any deductions or credits. 

Without these forms, you’d have to manually enter all your income, which is time-consuming and increases the chances of making mistakes on your tax return.

So, having your W-2 or 1099 forms ready makes the tax filing process smoother, ensuring that your taxes are done right and in line with tax regulations.

Why is it Useful to Have Your Bank Account and Routing Numbers When Using tax Preparation Software?

It’s useful to have your bank account and routing numbers when using tax preparation software because it lets you receive your tax refund via direct deposit or easily make electronic tax payments if you owe money.

This means you can skip the hassle of dealing with paper checks and get your refund faster.

The Importance Of Using Tax Software For Small Business

When choosing to handle your small business tax return on your own, it’s crucial to rely on reliable tax software. Given the constant changes in tax laws, attempting to prepare your return without it can prove challenging, if not near impossible.

An additional benefit of utilizing a tax software program is its ability to swiftly identify eligible deductions. It simplifies the process by enabling self-employed individuals to easily identify potential deductible expenses within seconds.

How To Choose the Best Tax Software For Small Businesses

When choosing the best tax software for your small business, consider the following:

• Your business needs
• Check user-friendly interface
• Verify compatibility with your devices
• Compare costs and additional fees
• Review Features: data import, error checks, form handling
• Prioritize security and data encryption
• Evaluate customer support options

Bottom Line: best software for small business taxes

While many small business owners primarily focus on establishing their business’s financial foundation, it’s equally vital to maintain smooth and efficient operations as your business experiences growth.

Taxes represent an unavoidable obligation for every business owner, but they need not overwhelm your daily business affairs. When you use the best small business accounting software for taxes, you can effectively manage your tax responsibilities, hence, potentially reducing your tax burden.

Frequently Asked Questions (FAQs) and Answers on Best Tax Software for Small Business

Here are some frequently asked questions (FAQs) about tax software for small businesses along with their answers:

1. What is tax software for small businesses?

Tax software for small businesses is a specialized software designed to help small businesses manage their taxes. It typically includes features for income and expense tracking, tax form preparation, and filing taxes accurately.

2. Why do small businesses need tax software?

Small businesses need tax software to simplify the tax preparation process, reduce the risk of errors, and ensure compliance with tax regulations. It can save time and money compared to manual tax filing.

3. What features should I look for in tax software for my small business?

Look for features such as income and expense tracking, support for multiple tax forms (e.g., 1040, 1099, W-2), integration with accounting software, e-filing options, and good customer support.

4. Is there free tax software available for small businesses?

Some tax software providers offer free versions for small businesses with basic tax needs. However, more comprehensive solutions often come with a cost.

5. How secure is my financial data when using tax software?

Reputable tax software providers implement strong security measures to protect your financial data. Make sure to choose software with encryption, secure login, and data backup features.

6. Can tax software help me find deductions and credits for my small business?

Yes, many tax software solutions have built-in features to help you identify potential deductions and tax credits that your business may qualify for, which can reduce your tax liability.

7. What is the difference between cloud-based and desktop tax software?

Cloud-based tax software is accessible from any device with an internet connection and often offers real-time collaboration features. Desktop software is installed on a single computer and may not have the same mobility.

8. How can I choose the right tax software for my small business?

Consider factors like your business size, budget, specific tax needs, user-friendliness, and customer reviews when choosing tax software. It’s also a good idea to try out demos or free trials before committing.

9. Can tax software help with state and local taxes?

Yes, many tax software options offer support for state and local taxes, including calculations and form preparation.

10. Is there a deadline for filing taxes with tax software?

Tax deadlines vary depending on your business structure and location. Make sure to check the IRS and state/local tax agency websites for the most up-to-date filing deadlines.