10 Best Tax Software for Small Businesses in 2024

10 Best Tax Software for Small Businesses
10 Best Tax Software for Small Businesses
It's common for a small business to struggle to find the best tax software that fits its specific needs.

Usually, tax software is either designed for users with simple personal income or geared towards larger businesses, which can be expensive and too advanced for a small business with straightforward tax needs.

With the internet becoming a big thing, some software has moved online. That means it doesn't matter what kind of computer you have—it'll work just fine. And that's been a huge help for small businesses because now the software is easy to access.

Nowadays, there are so many options for tax software, both online and downloadable. They all claim to be the best at saving you money compared to the rest.

This guide looks at different tax software brands to help micro-businesses pick the best one for their needs.

Features to Consider When Buying the Best Tax Software for Small Businesses

Here are the top features to determine the brand of tax preparation software to buy for your small business:

1. Cost of the tax software

Cost is a crucial factor for any business expense. With such a big difference in features among business tax software, some products can still be more expensive than others.

Fortunately, many providers offer free trial periods, which can range from a few weeks to three months. Make sure to take advantage of these trials to see how much time and money it costs to prepare your return with each product. Then, compare that against the value each one offers.

2. Customer service support

Since most small business owners handle their tax returns themselves, having good support in tax software is key. Look for applications that offer online support like tips, articles, or tax-related resources to help you out.

Does the software provide free telephone or email support from a qualified tax professional, or does it contract out the service to a third-party company? Having support from a tax professional can really boost the value of doing your tax returns in-house.

3. Speed and accuracy

The best tax preparation software for small businesses should be able to generate returns quickly and help steer clear of audits. Think about the speed at which the software can handle complex tax situations.

Best Tax Software for Small Businesses

While the main focus of the comparison is on software for preparing a Schedule C, it's worth noting that many of these products also offer versions for other business entities like S-Corporations or LLCs.

Here are the 10 top tax software options for small businesses in the United States:
  • TurboTax
  • H&R Block
  • TaxAct
  • TaxSlayer
  • FreeTaxUSA
  • TaxWise
  • Drake Tax Software
  • QuickBooks online
  • Xero
  • FreshBooks

1. TurboTax

TurboTax is a well-known personal income tax software offering various options like Basic, Deluxe, Premier, and Home & Business. Compatible with both Windows and Mac, it can be installed on your computer or used online.

TurboTax stands out as the top tax software in the market. It can directly import data from W-2s, 1099s, and 1098s if they're from TurboTax partners. The software is available at different prices, and they offer discounts during tax season.

2. H&R Block

H&R Block, established in 1946, boasts a long history of quality tax software development. Their free edition suits simple tax returns and includes one session with a staff tax professional, though expertise is often higher in paid versions.

However, the software isn't compatible with Macs and may lack support for certain credits and deductions. Additionally, filing multiple state returns can become costly as state return costs aren't included in the package.

3. TaxAct

TaxAct is super reliable and safe. They make sure to patch and update the app every year, so you hardly ever run into any glitches or crashes. Although filling out forms may take time with occasional server delays, users rarely experience data loss or incomplete filings due to server errors.

Affordable and widely used, TaxAct stands out with its competitive pricing and comprehensive features, despite its interface needing improvement.

The free version is popular, but other versions are slightly cheaper than TurboTax or H&R Block. However, users preferring an interview-style format should avoid the free version, which only supports Forms mode.

4. TaxSlayer

TaxSlayer offers three tax preparation options: TaxSlayer, TaxSlayer Classic, and TaxSlayer Premium, each with straightforward pricing. All versions include federal e-filing and offer unlimited phone and email customer support, except for Simply Free. 

Accessing the free version requires starting the return from the TaxSlayer website and accessing the account through a special link emailed to you, which is inconvenient. 

Despite lacking the brand recognition of TurboTax or H&R Block, TaxSlayer is a reliable tax prep solution with affordable pricing, an intuitive interface, and a top-tier mobile app, making it ideal for self-filers.

In 2020, TaxSlayer increased its maximum refund guarantee to $2,500 and introduced the option to pay for the software out of your federal refund for a $45 charge, providing a cheaper alternative to paying out of pocket.

5. FreeTaxUSA

FreeTaxUSA's tax software, despite its visual shortcomings, offers high usability for various tax situations at competitive prices. Notably, it provides a specific package for state tax filing at $9.95, accommodating state-specific forms.

Additionally, it offers free amendment services if the IRS requires further information post-filing. With its capability to handle both state and federal taxes and features like deduction assistance and tax import, FreeTaxUSA is a well-regarded option for tax preparation.

6. TaxWise

TaxWise, designed for professional tax preparers, offers comprehensive software found in IRS-authorized locations. While not recommended for individual filers, it enables professionals to swiftly create accurate returns.

Secure and user-friendly, TaxWise includes diagnostic reports covering various tax topics.

All returns are filed electronically, with the option for direct deposit of refunds. However, due to its complexity, it comes at a higher price, varying based on the license and volume of returns filed.

Individuals using TaxWise through a professional preparer should expect higher costs compared to other filing methods.

7. Drake Tax Software

Drake Tax Software is praised for its speed, high-quality printouts, good customer support, and affordability, as per user ratings. It offers updates and repair tools on its website, though installation can be complex and system requirements are high.

The software boasts numerous features like quick data entry, form navigation, a built-in calculator, error diagnostics, and user-definable fields.

Available in different versions for various tax needs, Drake Tax Software is flexible, easy to install, and customizable, catering to both beginner and experienced tax preparers.

8. QuickBooks online

QuickBooks Online, tailored for small businesses, requires no software installation and ensures data security with automatic storage in three locations.

Designed for non-accountants, its user-friendly interface and automated features minimize effort. While it lacks some features of other QuickBooks versions, new additions are frequent.

It's ideal for US self-employed and small businesses, with data easily sorted into tax categories and exportable to Excel for VAT reports. The bank import feature simplifies expense assignment.

However, it may not suit larger companies that need detailed financial accounts. Some users find it overly simplistic.

9. Xero

Xero software caters to small to midsized businesses with over 200 integrated features, including invoicing, bank reconciliation, expense claims, reporting, and contacts, complemented by 24/7 customer support.

It integrates with platforms like PayPal and Google Apps, making it a strong competitor.

While initially attractive, Xero's pricing based on features may not be affordable for small businesses. Starter and standard packages are reasonably priced, but larger businesses may find premium packages costly, reaching up to $1200 annually.

Additionally, its heavy reliance on internet integration may limit some users. Despite this, Xero has lots of tools that business owners would like, and it's well-suited for medium-sized businesses handling complex financial data.

10. FreshBooks

FreshBooks simplifies accounting tasks, reducing procrastination commonly seen in self-managed accounting. Its invoicing feature allows for quick creation by importing client details, with online payment options through PayPal, speeding up payment processes by 2-3 weeks.

The timesheet function helps billable employees track and invoice their worked hours. Additionally, the expense organization feature streamlines expense tracking and reporting. 

FreshBooks is made for small businesses and freelancers. It has a really easy-to-use interface that makes accounting simple, even if you're not an accounting professional.

Its tagline, "Small Business Accounting Software That Makes Billing Painless," rings true as it streamlines the accounting process. Its user-friendly design and 'who owes you' feature streamline navigation and enable quick identification of past due amounts.

10 Best Tax Software for Small Businesses
Best Tax Software for Small Businesses

Best Tax Software: Comparison of Pricing and Plans

TurboTax offers two business products: TurboTax Business and TurboTax Home & Business. TurboTax Business, priced at $130, is ideal for QuickBooks users, importing financial data for easier tax filing.

TurboTax Home & Business, priced at $100, suits sole proprietors, enabling Schedule C filing, essential for business taxes.

TaxAct costs about $35 for federal filings and $15 for state filings. It is one of the most affordable tax filing software for small business owners in the U.S.

Consider H&R Block for your corporation, partnership, or LLC. They offer specialized tax software tailored for these entities and self-employed business owners, each priced at around $50 for federal filings.

QuickBooks Online offers four pricing plans: Simple Start, Essentials, Plus, and Pro. Simple Start, priced at $12.95 per month, caters to sole proprietors, while Pro, at $31.96 per month, sits at the higher end. However, the differences between Pro and Plus are not clearly outlined.

FreshBooks offers three packages: Lite, Plus, and Premium, priced at $19.95, $29.95, and $39.95 monthly. While each varies in features, the Lite package stands out for its 60% discount for the initial six months. Free trials are also offered.

TaxSlayer has two products: Classic and Premium. Classic is $17 for federal and $29 for state returns, while Premium, with extra features, is $37 for federal and $47 for state returns. For multiple state returns, the multi-state package costs $57 for five additional state returns.

FreeTaxUSA lives up to its name by offering free federal returns with guaranteed IRS acceptance, regardless of income. While a nominal fee is charged per state return, users can file state returns an additional five times for free.

TaxWise pricing depends on the tax practitioner, ranging from $124 for single licenses to $650 for network/pay-per-return options. However, detailed pricing and plans are not publicly disclosed.

Drake Tax Software offers a base package with unlimited e-filing and 15 return preparation. Prices vary based on purchase date, increasing by $100 after November 15th and another $100 after January 15th. Entry-level costs start at $330, with optional state packages available for an extra fee.

Xero's pricing details are not readily accessible to the public. This cloud-based accounting software offers a free trial and operates on a subscription basis. However, specific pricing and plans must be obtained through discussions with the best tax preparation services.

Conclusion: Best Tax Software for Small Businesses

The number of businesses adopting tax software keeps increasing every year. Nowadays, many companies rely on tax software to handle various taxation issues from start to finish.

Instead of hiring a tax professional or doing your taxes manually, you can use tax software as an alternative. Even tax professionals can benefit from using tax software to file for their clients at a lower cost compared to manual preparation of tax forms.

Tax software for small businesses is ideal for those starting out, running home-based businesses, or working online. With the rise of affiliate marketing and improper tax filing by individuals earning income online, tax software provides a reliable way to ensure you file your taxes accurately on your own.
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