Best Small Business Tax Software of 2021

Tax season is one of the most stressful times in a small business owners’ lives. The IRS has gotten tougher on taxpayers, and technology to automate tax returns has become more common. This article will explore some of the best small business tax software for 2021 that are available now or coming soon into the market.

The “best tax software for tax preparers 2021” is a software that is designed to help small business owners with their taxes. The software can be used by individuals who are self-employed, freelancers, and consultants.

For a fraction of the expense of hiring a tax expert, small company owners may complete their own tax returns. Starting a company is difficult, and most CPAs charge at least $500 for a business return, so the cost savings may be significant. Based on pricing, functionality, and convenience of use, we’ve identified the finest small company tax software. The majority of company owners need a package of returns, so keep in mind the entire cost of completing all of your required returns. If you’re not sure what returns your company needs to submit, check out the section at the conclusion of this article for further information.

Top 5 Small Business Tax Software Options

• TaxAct is the best tax software for small businesses in general.
• H&R Block is the best low-cost tax software for corporations and partnerships.
• TurboTax is the best tax software for freelancers and self-employed people.
• TaxSlayer: The Best Low-Cost Tax Software for Freelancers with Tax Pro Advice
• FreeTaxUSA is the best free tax software for small businesses and freelancers.

TaxAct is the best overall tax software for small businesses.

Because you can complete both your individual and company returns in its online application, TaxAct is our best overall tax software for small business owners. TaxAct is the only program evaluated that allows you to prepare both individual (Form 1040) and company (Form 1040) forms online (Forms 1120, 1120S, and 1065). The most significant disadvantage of the online application is that it only allows for one return, while desktop versions allow for several returns. The average company owner will pay $285 on both personal and corporate taxes.

TaxAct

What We Enjoy

• Forms 1040, 1120, 1120S, and 1065 may all be completed online.
• Import income and spending accounts as a comma-separated values (CSV) file from any program.
• Import stock transactions to save time.

What Isn’t There

• Because the price only covers one return, it becomes prohibitively costly if you have many firms.
• There are no live tax specialists available to consult.
• There isn’t any unique cryptocurrency support.

Pricing

• TaxAct Online is a service provided by the IRS.
  • Individual Federal Form 1040 returns are $74.95 each.
  • Individual returns are $49.95 per state.
  • Federal Forms 1120, 1120S, and 1065 business returns are $109.95 each.
  • The cost of a state company return is $49.95.

Expert Recommendation

TaxAct provides a dashboard that displays all of your current and prior-year TaxAct Online returns. With a single click, you may initiate a new return of any kind and begin the TaxAct interview process. You may start as many returns as you like and pay just when you’re ready to file. Other handy features on the dashboard include a fast tax calculator and a tax planner.

A CSV file may be used to import income and expenditures from almost any accounting program. From the interview, TaxAct gives a link to the help section, which explains how to prepare your CSV file or spreadsheet for import. In its Answer Center, you can find answers to your tax issues, but you won’t be able to speak with a tax specialist directly.

H&R Block: The Most Affordable Tax Software for Corporations and Partnerships

For a nominal charge, you may create the whole bundle of needed returns for company owners using H&R Block desktop software. H&R Block Premium and Company prepares and e-files both your personal federal and state taxes (Form 1040) as well as your federal and state business returns (Form 1040) for only $119.85. (Forms 1120, 1120S, and 1065). In certain states, e-filing of state business returns is not possible.

H&R Block

What We Enjoy

• Included are up to five government e-files.
• You may use any tax program to import your previous year’s return.
• Audit assistance is provided free of charge in person.

What Isn’t There

• Downloading and installing desktop software is required.
• With the desktop software, there are no live tax professionals.
• Return is not available via a mobile app.

Pricing

• Self-employed Tax Software at its Finest
  • Up to five federal individual returns, including Schedule C, may be e-filed for $84.90.
  • One state individual return is included in the e-filing.
• C companies (C-corps), S corporations (S-corps), and partnerships should use premium and business tax software.
  • All needed returns are e-filed for $119.85:
    • One federal return and one state return
    • Return for a federal C-corporation, S-corporation, or partnership
    • Return on investment for the state

For each individual and company state return, a $19.95 e-filing charge is included in the aforementioned pricing.

Expert Recommendation

Small company owners may file online or with downloaded desktop software via H&R Block. The desktop software comes highly recommended. Not only is the desktop software less costly, but the internet application does not include company returns (Forms 1120, 1120S, and 1065). The disadvantage of the desktop software is that it does not feature live tax expert support, which is provided via the online program.

TurboTax is the best small business tax software for freelancers and self-employed individuals.

Because of the opportunity to interact with a tax specialist, we recommend TurboTax Live for self-employed and freelancers. A line-by-line evaluation of your return by a tax specialist is also included in the fee. Unfortunately, companies and partnerships will have to buy the TurboTax Home & Business desktop program separately, which does not offer tax advice. TurboTax Live Self-Employed costs $200 plus an additional $55 for each state.

TurboTax

What We Enjoy

• Tax professionals are available all year.
• All tax professionals are either enrolled agents (EAs), certified public accountants (CPAs), or attorneys.
• Transactions in cryptocurrency should be imported.

What Isn’t There

• C-corporations, S-corporations, and partnerships must buy two programs.
• Each additional state return costs $55.
• When compared to programs that do not provide access to tax professionals, this program is more expensive.

Pricing

• TurboTax Live Self-Employed is ideal for freelancers and self-employed people.
  • Individual tax return (Form 1040): $200
  • Individual returns in the state of $55
  • A total of $255 was spent.
• TurboTax Business (desktop): Recommended for C-corporations, S-corporations, and partnerships.
  • Five federal business returns are included in the $170 fee.
  • $55 for each state’s business tax return

C-corporations, S-corporations, and partnerships must buy both programs for a total of $480.

Expert Recommendation

For self-employed taxpayers who are uncertain about their abilities to file their own taxes, TurboTax Live Self Employed is a viable solution. You’ll have year-round access to a tax pro, not just when you’re submitting a return. Many capabilities you wouldn’t anticipate from tax preparation software, such as creating W-2s and 1099s for your workers and a year-round tax estimator for midyear tax planning, are included in TurboTax Live Self Employed.

To prepare your company return, you’ll also need to buy and download TurboTax Home and Business if you own a C-corp, S-corp, or partnership. You may import your income and spending from QuickBooks Desktop and follow the on-screen instructions to optimize your tax deductions. While you won’t be able to contact a tax professional for your company returns, you may call customer service.

TaxSlayer: The Best Inexpensive Tax Software for Freelancers With Tax Expert Advice

TaxSlayer is suitable for self-employed people who desire a low-cost tool to file Schedule C while still having access to a tax specialist. You cannot use TaxSlayer to submit your company tax return if you own a corporation or partnership. Priority customer service, a clear interface, deduction advice, and audit help are all included with TaxSlayer Self-Employed. The majority of self-employed or freelancers will spend $88 to file both federal and state taxes.

TaxSlayer

What We Enjoy

• A tax specialist is here to help you right now.
• Inexpensive
• A smartphone app may be used to access the cloud-based application.

What Isn’t There

• Returns for C-corporations, S-corporations, and partnerships are not allowed to be filed.
• Importing Schedule C income and expenditures is not possible.
• Importing capital gain transactions is not possible.

Pricing

• Self-Employed TaxSlayer:
  • $47 for each government employee Individual tax return (Form 1040) includes Schedule C
  • Individual returns are $39 per state.

Expert Recommendation

Self-employed or freelancers will benefit from TaxSlayer, a cloud-based tax preparation program. It connects you with real tax specialists that specialize in self-employed taxation. Many of the tools you’d anticipate, such as a deduction finder and tax advice, are included. Its assistance area, which may be accessed by tax subject or tax form, gives expert solutions to frequent tax issues.

The most significant disadvantage of TaxSlayer is that it does not allow you to submit corporate or partnership taxes. Importing your Schedule C company revenue and expenditures, as well as your capital gain and loss transactions, are also lacking elements. If you purchase and sell stocks regularly, manually entering all of your transactions might take a long time.

The Best Free Small Business Tax Software for Freelancers is FreeTaxUSA.

Self-employed folks seeking for free tax software to prepare their individual federal tax returns, including Schedule C, would love FreeTaxUSA. FreeTaxUSA isn’t a lite version of a paying membership. This is a full-featured tax software package that covers all of the forms that the majority of self-employed taxpayers will need. FreeTaxUSA, on the other hand, does not prepare C-corporations, S-corporations, or partnerships.

FreeTaxUSA

What We Enjoy

• Import your previous TurboTax, H&R Block, or TaxAct return.
• Free federal tax returns and low-cost state tax returns
• Data is collected using an interview procedure, similar to that used in paid programs.

What Isn’t There

• CPAs and EAs are not available for consultation.
• Importing income and costs, as well as stock transactions, is not possible.
• There are extremely few choices for customer assistance.

Pricing

• Individual federal Form 1040 returns with Schedule C are free to file.
• Each state costs $14.99 to file.
• Priority help with live chat, unlimited amended returns, and audit assistance are all available for $6.99.

Expert Recommendation

For taxpayers who are confident in their abilities to submit their own tax returns, FreeTaxUSA is an excellent alternative. Almost every self-employed company arrangement, as well as other popular tax issues like itemized deductions and rental properties, are supported by the program. There are extremely few, if any, taxpayers who are unable to submit their taxes with FreeTaxUSA.

The most significant disadvantage of FreeTaxUSA is its lack of customer service. There is no way to contact a tax expert. It also lacks a self-help database to refer to. Sending a message and waiting for a response is your sole option for customer service. You may live chat with customer care for $6,99 if you upgrade.

How to Pick the Best Tax Software for Your Small Business

When choosing tax software for your small company, keep in mind the other business tools you’ll need and attempt to choose a mix of software that best meets your requirements. You must first determine which returns you must submit in order to choose the finest small company tax software. The needed returns to submit are determined by how your firm is formed for tax purposes.

Self-employed, Sole Proprietorships, and Freelancers: Filing Requirements

For tax reasons, self-employed taxpayers, sole proprietorships, and freelancers are all considered the same. These firms must declare their earnings on Schedule C of Form 1040, Individual Income Tax Return. There is no separate tax return for businesses.

C Corporation Filing Requirements

C companies must file Form 1120, a company tax return, to detail their business revenue and tax liabilities. Unless the company distributes dividends to the owners, all business revenue is taxed on the corporate return and has no impact on the individual tax return.

S Corporation and Partnership Filing Requirements

S companies and partnerships must record their company revenue on a separate federal tax return from the owner’s return. Partnerships must submit a Form 1065, whereas S companies must file a Form 1120S. Schedule K-1, which indicates each owner’s portion of the company profits, is included on both Form 1120S and Form 1065. Schedule K-1 revenue is known as flow-through income and is reported on the owner’s individual tax return, Form 1040, Schedule E.

Limited Liability Company (LLC) Filing Requirements (LLC)

A limited liability company (LLC) may be structured as a single proprietorship, C-corp, S-corp, or partnership. To find out how your LLC is taxed and which tax returns to submit, see our article on small company LLC taxes and tax returns.

Consider the following costs and features:

Most people and corporations must also submit state filings in addition to federal taxes. When evaluating the costs of small company tax software, be sure to include in the cost of all the returns you’ll need to file.

Most small company tax software now includes the ability to speak with a live tax advisor. In my 25 years as a CPA, I’ve corrected a lot of returns that company owners prepared themselves. When you submit correct data into the program, it can only generate accurate results. An erroneous answer to a question might have a significant impact on a tax return. The more intricate your return is, the more crucial it is to have access to a tax specialist throughout the preparation process.

The following are the essential elements to look for in small company tax software:

• Cost: Corporations and partnerships are required to file at least four returns, whereas single proprietors are required to file at least two.
• Support for tax forms: The tax software can produce returns for S-corporations (Form 1120S), C-corporations (Form 1120), partnerships (Form 1065), sole proprietors (Form 1040, Schedule C), and rental properties (Form 1040, Schedule C) (Form 1040, Schedule E).
• Data import: Data from accounting software and financial institutions may be imported into tax software.
• Deduction finder: The tax software assists company owners in locating deductions specific to their sector as well as determining the optimum method for deducting depreciation and vehicle expenditures.
• Error checking: Diagnostics must be included in the tax software to check for errors and possibly missing data.
• Live tax professionals: For difficult returns, consulting and maybe even a review by a tax expert is essential. Clearing all of the errors from the error check does not ensure that the result is accurate. Instead of being taught by the software supplier, tax experts should preferably be CPAs, EAs, or attorneys.
• Ease of use: The tax software should be simple to use and navigate.
• Customer support and assistance resources: The tax software should have an online knowledge base as well as phone or email customer service.

Conclusion

When it comes to picking tax software to prepare their company and personal tax returns, small business owners should think about their demands carefully. You’ll need software that can produce Forms 1120, 1120S, or 1065 in addition to your personal Form 1040 if your company is a corporation or partnership. You need software that makes it simple to transmit accounting data, optimize tax deductions, check for mistakes, provide limitless customer service, and consult with a tax specialist when necessary.

The “tax preparation software for small business” is a software that allows users to prepare their taxes with ease. The best part about this software, is the price. It’s very affordable and it has a lot of features that make it worth the money.

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