If you are self-employed, tax software can be a savior when it comes to tracking and filing your year-end return. Which program you purchase does not matter as long as it offers the following solutions to your business.
#1 Use Spreadsheets for Tracking
The best tax software will have help for year-round accounting instead of just tax filing. Look for a program that has spreadsheet templates to help you track your expenses. For example, the program should have a mileage log for your vehicle. You can use the log throughout the year, and then it will automatically be compiled for your tax return. In the best case scenario, it will link directly to the return, and you will not even have to copy the information.
#2 Consider Bank-Supplied Assistance
Some software links to your bank accounts. In this case, you can set up business-only accounts and then link them to the tax accounting service. Any expense you purchase will automatically be recorded with the software. You can go through on a weekly or monthly basis to categorize these expenses and validate them against your receipts. Like the other spreadsheets provided through the software, these expense reports can be automatically joined to your tax return.
#3 Sync your Smart Phone
Today, many small business owners use a smart phone to track any number of business appointments. Why not use the phone to track expenses? Consider a tax software program that has an application for your Blackberry, iPhone or other smart phone. For example, with a business expense application, you can note directly into your phone the conversation you just had over your business dinner. This will be saved to your files when you sync with your computer, recording the expense and purpose automatically.
#4 Back Up Online
Online back-up is a critical feature of any tax software system. It is crippling to do all this work for your taxes only to find the files wiped out by a virus or stolen by an identity theft. Purchase the protection when you have the opportunity. Sync your files online and use the security-enabled features to block out unwanted visitors to your account. An additional bonus to online back-up instead of an external hard drive is the fact that the files are off-site. You will not lose the files in a flood, fire or home burglary.
#5 Use a Software Program to File
At the end of the year, you will want to use the same program you used to track your expenses to file your tax return. Find a software program that has a guaranty on the return. This guaranty does not protect you from an audit or promise your return will go smoothly. The guaranty should, however, provide you with low-cost or free assistance in the case of an error with your tax return. The best software is backed up by an accounting firm that can double check your files if you have questions. Consider what would happen if your return is rejected to select the optimal package.