If you own a small business, tax season can get hectic.
Hiring an accountant to prepare and file your business taxes can save you time, but it's usually much cheaper to do it yourself online.
To find the best online tax software for small business owners, we compared three of the leading online tax preparers - TurboTax, TaxAct, and eFile.com - on price, accessibility, and ease of use.
TaxAct: Best tax software for small business owners overall
Who can use it: General partners, S-Corp owners, C-Corp owners, and LLC members.
Cost:
- TaxAct Business online: $109.95 for federal return; $49.95 per state return.
- TaxAct Business desktop (Windows operating systems only): $109.95 for federal return; $49.95 per state return.
Why it stands out: If you've filed business taxes before and feel confident navigating tax jargon, TaxAct is a good cost-effective and straightforward option. Unlike industry heavyweights TurboTax and H&R Block, you can file your business tax return online with TaxAct. And there's no upcharge if you prefer the downloadable desktop version (though it's only available to Windows users).
What to look out for: S-Corp owner and Business Insider contributor Eric Rosenberg reported running into an issue with his California tax ID number on TaxAct, which resulted in him having to print out and mail his state return rather than filing online.
TurboTax: Best tax software for filers who use QuickBooks
Who can use it: General partners, S-Corp owners, C-Corp owners, and LLC members with a Windows operating system.
Cost:
- TurboTax Business desktop version: $159.99 for federal return; additional $49.99 per state return.
Why it stands out: One of the big draws of TurboTax is QuickBooks integration. If you track income and expenses in QuickBooks, you can automatically import all that information onto your return. In general, TurboTax stands out among online tax services for its excellent user experience and reliable customer service.
What to look out for: You can't file business taxes online with TurboTax and the desktop software is limited to Windows users only.
H&R Block's Premium and Small Business software has the same restrictions but at a significantly cheaper cost - $89.95 for federal and state filing combined. If you're already using H&R Block for personal taxes then you'd be fine sticking with it for business, unless you want to be able to use QuickBooks integration with TurboTax.
eFile.com: Best tax software to save money on preparation and filing
Who can use it: General partners, S-Corp owners, and LLC members.
Cost:
- Premium: $34.95 for federal return; additional $28.95 for unlimited state returns.
Why it stands out: If you're looking to save money on business tax filing, eFile.com is the best option. Not only will you be charged a single, flat rate for unlimited state returns, the federal return rate is over $100 cheaper than TurboTax. eFile.com is simple and gets the job done.
What to look out for: Expect that a lower price means less hand-holding. eFile.com Premium is best for small business owners who generally know how business income tax filing works and don't need explanations for everything.
How do you file taxes for a small business?
Partnerships, multi-member LLCs, and S-Corporations must file a tax return every year to report income, deductions, profits, and losses for the business.
Because these organizations are flow-through entities, the owners, partners, and shareholders pay taxes on the income. If you're a general partner, Form 1065 needs to be filed for your business. If you're an S-Corp, Form 1120S must be filed. LLCs are unique in that they choose how they want to be taxed, whether as a sole proprietorship, partnership, S-Corp, or C-Corp.
Sole proprietorships report income as a self-employed individual, so business tax forms aren't required annually, and C-Corporations are taxed as separate entities and file Form 1120.
Once the business forms are filed for a partnership, LLC, or an S-Corp, each owner or partner receives Schedule K-1, which details their share of income to report on their personal tax return. Independent contractors and employees of the business itself will also receive the forms needed to fill out their personal tax returns.
Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.
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