Many small-business owners recoil at the horror of doing taxes. Trying to get your head around all the deductions and forms, and even the idea of setting aside income to pay quarterly taxes can seem overwhelming. Tax software can help. Using a package such as TurboTax Business or TaxAct can help you take control of your business tax payments. Here are some guidelines to make sure you pick the best tax software for your business needs and keep as much of your income as possible.
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Evaluate your needs
Do you collect sales tax at the register? Consider using software such as Avalara, which supports e-filing for sales and use tax (certain states require it). Do you buy a lot of equipment that you can deduct? Make sure it has business-friendly features, such as a comprehensive Schedule C section for managing deductions. This feature is available in the premium Turbo Tax version for business, but not on the cheaper versions. Do you have a sole proprietorship and work at home? If so, you’ll need help in navigating tricky subjects such as the home-office deduction, which TaxCut Premium and TurboTax Premier support. Do you have employees or run a corporation? In this case, consider taking a look at higher-end products, such as TurboTax for Business. There are even numerous packages geared specifically for accountants, such as Intuit’s ProSeries, though you generally don’t need this kind of firepower on your own. Take stock of your business issues now to ensure you’ll make the right decisions when buying tax software.
Go with higher-powered software if necessary
Consumer tax software is fine if you’re a sole proprietor, but what if you have a partnership or an S corporation? Jim Baker owns JB Consulting, a California-based, two-person consulting firm. He uses TurboTax Business since he has a partnership, which requires Form 1065 (something that the regular TurboTax software doesn’t support). He also uses TurboTax Premier for his home taxes. “I start with the business, do all of the business income, outgo, and depreciations, and then fill out Form 1065,” said Baker. Once he finishes with his business taxes, he switches over to TurboTax Premier for his home and uses a regular 1040. “I actually send the government money through the 1040 form,” Baker added
Do everything in one shot by e-filing
One of the best things about using tax software is that you can also e-file. This means that instead of printing out the forms manually and mailing them along with your payments, you can use the tax software, do your returns, and send payment to the IRS all from your computer. It doesn’t matter if you use a Mac or a PC, either. Companies such as Intuit are now offering fully online solutions, such as TurboTax Online, so you don’t even have to install anything on your PC.