Nobody starts a small business because they want to make filing their taxes more complicated. But with help from some of the best tax software options on the market today, you can get everything filed on time without pulling your hair out or skipping High Point Market to pore over receipts or stress out over your Schedule C.
With federal returns due in under two months (and partnership/S corporation tax returns due even sooner), it’s time to get down to business and figure out which online (or offline) tax service works best for your design practice’s needs. That’s why AD PRO is here to cover everything you wanted to know about today’s top tax filing software.
So what is tax software?
In the simplest terms, these are programs that help you file your and/or your business’ annual federal and state tax return. Tax software facilitates that by ingesting all of your relevant information (marital status, dependents, income, stimulus checks, expenses, etc.) and checks them against tax code. In the process, these programs don’t just ensure you file your 1040, 1065, or 1120 forms properly—they find the most relevant deductions possible to maximize your refund.
For consumer-facing tax software, there are two main methods for entering this information. There’s straightforward “form-based” software, which essentially replicates the paperwork of your tax return in a digital environment. Certain leading software follows an “interview-based” approach, where you’re asked to upload various documents (like a W-2 or 1099, for example) and answer a series of questions that pertain to your tax return. This can take the guesswork out of the process by freeing you from needing to know where to input certain information or worrying about following these occasionally maze-like tax forms.
If you’re already well-versed in filing your taxes as an individual and your design business isn’t a partnership or some form of corporation, you may find that more straightforward form-based software is your most cost-effective option–there might even be a free tax program available to you. If you’re filing your small business’ taxes as a partnership or some form of corporation for the first time, or if you just want to take the guesswork out of where everything goes and why, an interview-based approach may be best for you.
Should I hire a CPA or file with tax software?
Whether or not to enlist the help of a Certified Public Accountant (CPA) depends on your business’ situation, classification, and budget. If you’re a self-employed sole proprietor, you can feel confident that software will cover your needs—and many offer live assistance to address anything that pops up along the way.
On the other hand, if your small business owns its own real estate, pays a roster of employees, and/or does business in multiple states (or countries), you could probably benefit from professional help. It’s pricier than going the DIY route with low-cost or free tax software, but outsourcing your filing to a CPA gives you more time to focus on running your business—not to mention the greater peace of mind that comes from maximizing your refund while minimizing your chance of an audit.
While opting for software is great during tax season, keeping in touch with a CPA has its year-round advantages, as well. Accountants can help guide you through the tax implications of various business decisions, including whether or not it makes sense to consider changing your company structure before next tax season, so you aren’t caught completely off-guard when it comes time to file.
As such, a CPA can be advantageous if your small business involves a greater number of moving parts, especially since not every online tax filing solution is designed with partnerships, LLCs, or corporations in mind. But for sole proprietors who are essentially just individual filers reporting self-employment income on a schedule C, almost every type of tax software makes it easy to file your state and federal returns, and many offer the chance to get help from a pro who can walk you through any issues.
How soon can I pay my taxes?
If you’re eager to just get tax season over with ASAP, the good news is you can go ahead and file right now. In 2022, individuals (and sole proprietors) became eligible to file their returns with the Internal Revenue Service (IRS) on January 24. Procrastinators are in luck this year, too: because Washington D.C. is observing Emancipation Day (traditionally April 16) on Friday, April 15, this year’s deadline is actually Monday, April 18.
That deadline applies to individuals, C corporations (unless your fiscal year differs from the calendar year), and LLC’s—but S corporations and partnerships have less time to file than you might think. Taxes associated with those types of businesses are actually due on March 15, so don’t delay too much longer.
What should I have prepared before using tax software?
For an in-depth look at everything you’ll want to know before filing (like the difference between a 1040 and an 1120, for example), our comprehensive guide to small business taxes covers company structures, the paperwork you’ll want to have on hand, and a lot more.
In short, getting your small business’ return filed quickly and accurately is all about preparation and organization. Before you sit down and boot up your program of choice, make sure you have a record of your business’ transactions on hand. If you’ve done a good job of keeping records about your sales and expenses over the course of the last year, you’re in good shape. But be aware that any online tax software (or human assistant) is only as useful as the information available to work with.
How do I know which tax software is best for me?
The three things you’ll want to think about are cost, assistance, and timesaving features. Are you operating on a shoestring budget, or are you willing to pay a bit more to completely outsource the process?
The level of help varies from program to program, and within the pricing tiers of a given company’s software. Have you mastered your taxes and just want a faster way to e-file? There are options designed with you in mind. On the other hand, do you want to pay a bit more to get live, human support that’s closer to what you might get from a CPA? Whether you’re ready to go it alone or you want to make sure you don’t hit any roadblocks, options abound.
Finally, some tax software features handy integrations that can take the work off of your plate. For example, TurboTax gives anyone using QuickBooks to track payroll, invoices, and expenses a significant head start by making it easy to import that information without having to worry about any info getting lost in the shuffle. They’re also one of the brands that make it possible to fill out forms by snapping a photo of a W-2 or 1099, which can save you from one of tax season’s more tedious tasks.
And if you start using certain tax software and get the feeling it just isn’t for you, not to worry. In most cases (with potential live assistance tiers excepted), you’ll only pay once you file, so you’re not locked into something that doesn’t fit your needs.
Your top options for tax software that can simplify your tax season
All tax software has the same goal: To make it as easy as possible for you to file accurately while maximizing your refund. However, it can differ in terms of price point, suitability to your particular business structure, and level of customer support.
One important caveat for designers is that all of the software below at least covers personal income taxes (i.e. a 1040 return with a schedule C attachment) for sole proprietors and small business owners. However, there are a few options that are specifically designed to generate the 1065 or 1120/1120S forms that businesses need to file which will be mentioned below.
With that in mind, here’s a closer look at some of the top options for tax preparation software that designers and small business owners might want to know about.
What is the most popular tax software?
Most Well-Rounded Option: TurboTax
If you’re familiar with any of the options here, it’s probably TurboTax. Their software uses a Q&A format to simplify the process of getting ready to file. And rather than a one-size-fits-all solution for any tax situation, Intuit offers different editions of its flagship tax software that covers both personal income tax and the 1065 or 1120/S you might need to file as well.
As the name suggests, TurboTax Self-Employed is the go-to option for anyone operating as a freelancer or sole proprietor. That starts with the ability to take a photo of any 1099-NECs (the form covering non-employee compensation for any work you do as an individual or independent contractor) and have all of the relevant information automatically imported into the appropriate spaces. TurboTax Self-Employed also gets to know who you are and what you do in order to maximize your refund, searching through 500 tax deductions and credits with an eye towards industry-specific deductions that can maximize your refund.
Another thing that sets TurboTax Self-Employed apart is in the levels of guidance and live tax support it has to offer. Beyond advice and info at every step of the Q&A process, Turbotax Live Self-Employed offers access to a dedicated tax expert or CPA who can offer on-demand assistance and walk you through any Schedule C snags you might encounter along the way. Once you upload your tax documents via photo, they’ll match you with a tax professional with expertise tailored to your needs, so there’s no need to break down the basics of what you do for a living.
TurboTax Live Full Service Self-Employed offers yet another layer of help. Not only will your expert review those industry-specific deductions and conduct a personalized audit assessment, they’ll actually do your taxes for you. And it’s not some unseen process, either. You’re kept updated as they work on your return, and you’ll have the chance to walk through the whole thing together before you file. If you’re willing to pay more to just not have to worry about filing at all, this level of support is your best bet.
If you need software that helps with your partnership, LLC, or an S or C corporation, then TurboTax Business can fit the bill. Where it really proves its worth is through its integration of information from QuickBooks and Quicken. If you’re already using Intuit’s accounting software to keep track of things like employee payroll, expenses, and revenue, importing the information into TurboTax is a snap.
But no matter how you happen to track your income or expenses, TurboTax offers help to make sure your information is incorporated accurately. Speaking of employees, you also get the ability to generate unlimited W-2’s and 1099’s, so everyone who works with you can have an easier time filing their taxes, too.
And because filing as a partnership, LLC, or corporation for the first time can be a daunting prospect, TurboTax Business comes with extra support for businesses that might be filing for the first time, helping to identify specific start-up tax deductions that can make your small businesses’ first refund a bit bigger. And if you opt for TurboTax this year for your business, you’ll already have a head start on next year thanks to the ability to import the previous year’s completed returns.
There is one drawback for TurboTax Business, however: because it functions as a downloadable desktop application rather than an online platform, it lacks the level of live expert help as you’d find in the self-employed edition. Though the software comes with built-in error checks to review everything before you file, there may be other options worth exploring if you’re worried about having access to real-time tax advice.
TurboTax pricing and filing options
TurboTax Self-Employed: $69 federal return, $38 per state filing.
TurboTax Live Self-Employed: $179 federal return, $49 per state filing.
TurboTax Live Full Service Self-Employed: $369 federal return, $49 per state filing.
TurboTax Business: $160 for CD/download file with free federal filing included. File state returns with TurboTax Business State for $50 per state filing.
Which software is best for the self-employed?
Best option for taking things offline: H&R Block Self-Employed
Don’t let the name fool you: H&R Block’s Self-Employed Online edition isn’t just for independent contractors. Combining a straightforward process and an intuitive interface with access to assistance at every step of the way (not to mention the option to take the process offline) makes it one of the top choices for small business owners and sole proprietors alike.
Part of the appeal of H&R Block’s tax software is that it makes it easy for small businesses to report on their profits and losses, while helping them to accurately track business expenses, calculate asset depreciation, and more. On top of all that, H&R Block notes that you can also use their software to handle your payroll as well.
While the software behind H&R Block Self-Employed is savvy enough to hunt for deductions and handle a variety of tax code situations that small business owners might encounter, where it really shines is in the ability to tap into the well-known tax preparer’s wealth of institutional knowledge and human expertise in whatever format makes the most sense for you. From on-demand chat and video sessions across any device, the ability to screen-share to walk through the process together, or the option to even meet in-person with a tax expert, opting for Self-Employed Online Assist allows you to access a wide breadth of support services.
H&R block offers support for those filing as a partnership, an S corporation, or a C corporation as well, offering live help to handle 1120 or 1065 and hunt for every deduction, backed by a 100 percent accuracy guarantee and year-round support. If you’re considering the CPA route but don’t know where to start, enlisting the help of H&R Block’s Tax Pro could be a good option for more complex fiscal matters.
H&R Block pricing and filing options
Self-Employed Online: $67.99 (plus $36.99 per state filed).
Self-Employed Online Assist: $144.99 and up (plus $36.99 per state filed).
Self employed with Tax Pro support: $180 and up.
S Corporation/C Corporation/Partnership with Tax Pro support: $260 and up.
Best online option for filing as a partnership or corporation: TaxAct Business
While it quite often makes sense for a partnership, C corporation, or S corporation to turn to a CPA for help, TaxAct Business is the go-to choice if your design practice fits into those categories and you simply must file online. Each of these types of small businesses can follow a simple Q&A format that gets all of the vital information loaded in, with extra help from the ability to quickly enter M-3’s, 4562, K-1 and Schedule L data as needed. On top of that, the business income, deductions, and credits in your Schedule K-1 automatically go right where they’re needed, and you can transfer relevant data directly into your personal 1040 filing. TaxAct Alerts can automatically spot errors, omissions, and missed refund-maximizing opportunities, with the software’s TaxTutor Guidance offering helpful tips along the way.
One thing to watch out for with TaxAct is that it doesn’t have quite the level of live support that the highest-end TurboTax and H&R Block options offer. With that said, their Xpert Assist feature can connect you to CPAs and tax experts for in-the-moment advice, plus there’s an Answer Center (an archive that provides speedy access to tax queries), as well as account and technical support.
So if your design firm is on the bigger end of the small business spectrum and you (or someone on your team) is confident in their ability to handle your company’s taxes online, TaxAct presents a straightforward and comparatively cost-effective option. Their 100% Accuracy Guarantee doesn’t hurt, either.
TaxAct pricing and filing options
TaxAct Self Employed: $64.95 federal return, $44.95 per state filed.
TaxAct Business for Partnerships, C Corporations, and S corporations: $109.95 federal return, $44.95 per state filed.
Best mix of cost-effectiveness and support for sole proprietors: TaxSlayer Self-Employed
Another option to help small business owners and the self-employed file their personal income taxes, TaxSlayer Self-Employed can help individuals in the small business space handle all of their 1099 and Schedule C needs. This particular tax software charges less than some competitors to file federal and state returns, but doesn’t skimp on the support you’ll receive.
In addition to offering personalized tax tips that you can access throughout the year, their Ask a Tax Pro feature connects you to experts who are ready and willing to take a deep dive into your unique filing situation to find the answers you need.
Beyond affordability and assistance, TaxSlayer’s Self-Employed edition offers peace of mind. Filing with them connects you to three years of defense and legal representation from one of their tax pros in the (hopefully unlikely) event that you’re audited. And if there are any errors in your return, TaxSlayers’s accuracy guarantee means they’ll handle any subsequent IRS penalties or fees (though you’re on the hook if you entered your information wrong).
If you’re unsure about paying TurboTax prices but want a bit more expert assistance than you might get from TaxAct, then opting for Taxslayer self-employed is probably right in your sweet spot.
TaxSlayer Self-Employed pricing and filing options
Federal return: $47.95.
State return: $36.95 per state.
What’s the best free tax software?
Best option for penny-pinching freelancers: FreeTaxUSA
If saving money in the filing process is your number-one priority, then FreeTaxUSA is worth a look. As the name suggests, it’s just about the most affordable option on the market—in fact, it’ll cost you exactly $0.00 to file your federal tax return with the IRS. This free version makes it ideal for budget-conscious sole proprietors or small business owners who want to knock out their personal income taxes as cheaply as possible.
Of course, that kind of a deal comes with inherent tradeoffs. You’ll have to do a bit more manual data entry than you would with TurboTax, for example. Filing federally may be free, but some of the support features you’d find in other tax software aren’t. To access priority support with live support, you’ll have to pay $6.99 for the Deluxe edition of the software, but that’s still a fair amount lower than what you’d pay for similar functionality anywhere else. Deluxe also comes with Audit Assist to help you deal with any post-filing issues, and offers unlimited amended returns at no extra cost.
FreeTaxUSA Pricing and filing options
Federal return: $0.
State return: $14.99 per state.
Deluxe Edition (access to priority audit support): $6.99.
So which software is best for small business taxes?
There’s no one-size-fits-all solution, as evidenced by the fact that so many tax software programs offer multiple tiers of service. But with that said, TurboTax might offer the best balance of price and support for self-employed sole proprietors who aren’t scared off by the cost. For actual business filings, H&R Block’s potential mix of on- and offline touch-points represents a good way to see what a CPA has to offer without committing to an accountant for the long haul just yet.
So there you have it: way more than you ever thought you’d know about the world of tax prep and software providers. Sure, it’s less fun to sort through than planning for your next design project, but getting audited is definitely not on-trend this tax season.