I'm using TaxAct for my small business this year because it provides a service I can't get from TurboTax or H&R Block
- Many small business owners hire a professional accountant for their taxes, but I do my S-Corp taxes online myself.
- TaxAct is the biggest major tax-prep software company to offer a completely online option to complete my business form 1120S.
- The biggest competitors, like TurboTax and H&R Block, only offer the ability to complete an 1120S if you have a Windows computer, leaving Mac users like me out of luck.
- Using TaxAct on Tax Day 2020 could be a smart move if you're a small business owner »
If you make money through a side hustle or run your own full-time business in the US, you have to report and file taxes for your business.
When I moved to California in 2016 and took my online business full-time, I created an S-Corporation, a business entity that gives me some big legal protections and tax benefits over running as a sole proprietor or a standard LLC.
But having an S-Corp also means some additional challenges, including filing a separate tax return for my business every year.
Taxes are a part of making money and running a business, but it's a good idea to find the most efficient and cost-effective way to file. For my business, that has been TaxAct for the last two years, and I plan to use it again this time around. Here are some reasons why.
You don't need an accountant to do your taxes
I hired an accountant to do my business taxes for 2016, but after finding some errors in the return he prepared, I decided to do them myself going forward. I had the exact same problem when I used to hire someone to do my personal taxes.
In most cases, you will know your money better than anyone else. While some people feel more comfortable handing over the reins to someone else to do their taxes, I have found that they are more accurate when I handle things. And because doing them myself is cheaper, I've switched to doing my own taxes online for all parts of my financial life: business and personal.
Picking tax preparation software
There are a handful of companies offering tax preparation apps for mobile devices, desktop and laptop computers, and the web. Picking a web-based app means you can work on your taxes with any device, at any time. That's definitely my first choice for how to handle things.
That said, I was disappointed to find that the program I use for my personal taxes, TurboTax, doesn't have an online option to do taxes for an S-Corp. It only lets you do it using a desktop program for Windows. As a household with two Mac laptops and no modern Windows PCs, TurboTax Business isn't an option. H&R Block Premium & Business also requires Windows.
Apparently, these companies don't want my money, so I was left finding some other way to do my taxes. I could have downloaded a program to run Windows programs on my Mac, but I'm not doing that just for my taxes. I kept on hunting until I found TaxAct, which has a fully online version I can use for my 1120S taxes. I was quickly sold.
TaxAct makes doing business taxes fairly simple and straightforward
Before going full-time with my own online business, I spent about a decade in corporate finance and accounting roles. This leads me to keep my accounting records updated at least monthly. When tax time rolls around, I just need to hit print to get copies of my profit and loss (P&L) statement for the year and my year-end balance sheet.
Using that information, I can complete just about everything in TaxAct. I had to do a little extra online searching to make sure I answered every question correctly, particularly for my state tax return. But overall, I don't have many complaints.
The worst issue I ran into, for both of the last two years, is a nuance with how TaxAct handles California tax ID numbers. The app wouldn't let me change the format from one type of business to another, so I was stuck printing and snail mailing my state return instead of filing it online. That should be fixed for this year, however, after a chat with customer support last year.
My projected cost for TaxAct this year is $109.95 for federal taxes and another $49.95 for my state. About $160 for my business taxes feels like a pretty good deal. The IRS shared that the typical cost for this form is $761. That's well over four times what I'm planning to pay.
Finding the right tax-prep method for your business
If you are not confident about your business finances, there is no shame in hiring a professional to help you out. But if you take care of your own bookkeeping and know your way around a P&L, you should be able to easily do your business taxes on your own.
The three big leaders in business tax preparation are TurboTax, H&R Block, and TaxAct. Any of them would likely do a great job meeting the needs of most small businesses. That is, unless you use a Mac. Then your only choice among the three is TaxAct.
What isn't a choice is doing your taxes, and April is just around the corner. Getting an early start takes away the last-minute stress and anxiety of filing your taxes. I've already taken the basic steps to get started for my 2019 taxes. April 17 is just three months away!
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