4 FAQs--Small Business Tax Software

Small business tax software can save you the expense of filing your returns through an accountant. This option is best for small businesses with relatively simple taxes in a given year. This means expenses due to cost of goods and capital expenses will be simple to manage. If you think you need assistance in filing expenses into these categories, then you may need to consider an accountant instead. If you already know the deductions and capital expenses you will need to file, then software can be a great solution.

How Easy is the Process?

The process of filing returns through tax is automated and is designed for a lay person with no knowledge of accounting. You will have to move through the many screens of information to enter your responses and the software will do the rest. Software is easier to get through, when compared to paper tax forms. However, if you have a very complicated business model and will have questions regarding which expenses should be entered in which category, then the software will become much harder to use. You may have to spend extra time considering which option will best suit your needs.

Can I File Online?

Most software comes with an electronic filing option, sending your complete forms in without ever requiring a postage stamp. You will sign the forms electronically. In addition to making the process easier, filing online makes the process faster. You will know if your taxes have been submitted, reviewed or approved and will be able to check the status of your refund or payment. If your software does not offer online filing, consider making a switch to another product.

Are There Risks?

There are definite risks to filing with software instead of an accountant. The biggest risk is you will misfile, which can leave you exposed to audits or outstanding tax obligations. With an accountant, there is still a possibility you will misfile. The difference, however, is the accountant will be partially responsible and will help you handle the correction. When you file through a software, the software company does not continue to offer you support in an audit. If you are not comfortable accepting the ultimate responsibility for any mistakes in filing your taxes, this is not a good option for you.

Which Software is Best?

There are a number of tax payment software programs to help you, some are better than others. Products offered by accounting firms, such as H&R Block's software, tend to be very easy to use and even come with the firm's backing. TurboTax is perhaps the most popular option. Users generally express success with TurboTax. Be sure to research reports from other consumers to estimate how easy the program will be to use. Consider asking other business owners which programs they like. It is important to look for a few features: easy online filing, preparation of tax forms for next year, the ability to file state and local taxes and a guarantee from the company.

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