Business and personal taxes
Aside from the fact that tax programs are one of the cheapest ways of preparing tax returns, they are convenient as well since they handle personal and business taxes either separately or together. In fact, in order to be able to file a return that reports both personal and business income all you have to do is opt for the top-tier product of the chosen tax company. Additionally, there is always the option to start the tax prep process with the most basic tax software and the moment it detects the fact that a Schedule C is needed to report business profit and loss, the program will automatically prompt users to upgrade to the most suitable product to handle the specific tax situation.
Although the various tax topics can be very different from one another, tax prep solutions are smart enough to transfer over relevant data into new forms the moment they are started but will also automatically skip topics that are not necessary. Also, since tax software always asks thorough questions – which are based on the most up-to-date tax laws – you can be sure that all income, deductible expenses, and qualified credits are covered by the tax return and entered into the right place.
What to look for in tax prep software
Granted, it would be logical to just pick the most suitable online product and simply file the business tax return, but things aren’t as black and white as they seem. As such, the most crucial aspect to consider when choosing the right software is how you run your business. No matter how convenient and advanced they might be, top-tier online tax prep solutions should only be purchased by one-man businesses. This means that to cover the tax situations of every other type of business – like partnerships, S corps, C corps, LLCs etc. – a special tax program like TurboTax Business or H&R Block Premium & Business will be required.
If your business is a sole proprietorship that is only run by you, then there are only a few things to pay attention to. The most important aspect is that the chosen software should be able to handle Schedule Cs to properly report profit and loss. In addition to that, the program must also be able to itemize deductions to ensure a reduction in the amount of taxes to be paid in the end. And last but not least, it’s a good idea to check the price of the software and whether any additional fees must be paid after filing, whether by credit/debit card or via refund deduction.
However, if the business is a separate legal entity, then the main focus should be on whether or not the program can handle forms specific to your business. Thankfully, not only are all business tax prep solutions purposefully designed to manage the taxes of any kind of business, but some are also capable of putting together W-2s and 1099s with which the company’s employees and contractors can be taken care of as well.
Importing accounting data for tax filing
Having cloud-based solutions is a huge asset for an SMB as they are reliable and inexpensive, but as online accounting programs have already proven they can also cooperate with tax programs flawlessly, too, streamlining business and finance management even further. As such, it would be logical to just require a single click to transfer all business information from the accounting software automatically into the relevant forms within the tax software. Sadly, the situation is a bit more complicated than that.
In most cases the only way to fill the tax return out with business-related information is by having the relevant business reports prepared by the accounting software and then typing all the data in manually. However, that doesn’t mean that data entry cannot be reduced to the absolute minimum. For instance, tax programs can copy information from the previous year’s return into the current one, which then only needs to be checked for any mistakes and changes. H&R Block goes one step further as it also allows users to upload certain documents onto the company’s online database for the software to then use that document to fill out the necessary sections in the tax return.
And then there is Intuit’s solution, with which QuickBooks Self-Employed users can export relevant tax information into TurboTax Self-Employed with a single click, provided that they have opted for the QuickBooks Self-Employed Tax Bundle. A simplified data import option is available for standard TurboTax Self-Employed users too, although in this case they’re limited to importing business expenses and mileages.
Zoltán G.
Adam B.
