Top Accounting Software for Small Business Tax Preparation

Top Accounting Software for Small Business Tax Preparation
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The Key to Tax Preparation Software

The key elements common to the most popular versions of income tax preparation software are the same for self preparers and professionals. We are all looking for a program with accurate calculations and user friendliness. Programs should have a logical progression from screen to screen and, just like writers, take their audience into consideration.

Price is another important factor. The old adage “you get what you pay for” is true, even in tax preparation software. However, that does not mean that the most expensive software is always the best choice. Usually, more expensive software includes more bells and whistles, added benefits for those who are not necessarily adept at tax law or understanding tax forms.

Beyond the basics of audience and price is where tax software begins to differ between self preparers and professionals. We’ll explore both audiences so that, no matter which group you fall into, you’ll be well on your way to purchasing the accounting software for small business tax preparation that best fits your needs.

Tax Preparation Software for Small Business Self Preparers

Perhaps the most popular tax preparation software available to self preparers with small businesses is Turbo Tax. Program pricing is reasonable and is usually between $60 and a $100 depending on the version. Not every individual that owns a small business needs the Turbo Tax Home and Business Edition. If you’re just starting out you can pretty much get away with using Deluxe or Premier. Both of these editions contain everything you need to fill out a Schedule C (that is the schedule that is used to report sole proprietorships).

The Home and Business edition is better suited to individuals who have assets to depreciate, claim the home office deduction and are running a business beyond the start-up phase. This is because businesses that are just beginning will most likely not use all of the features available in the Home and Business edition and you may feel that you have spent too much money on the program by the time you’re through.

The point is, if you self-prepare your taxes, you should be looking for a program that walks you through the process step by step. The program should offer a guarantee on its calculations and offer technical support if you need it. Look for programs that pose questions in a clear and concise manner. And, of course, it never hurts to try the free edition of several different programs to see which one works best for you. Other tax programs include FreeTaxUSA, H&R Block and Tax Act. 

Tax Preparation Software for Small Business Professional Preparers

As professional tax preparers, we are also searching for quality software that provides accurate calculations, user-friendly screens and decent pricing. Of course, we understand that most of the time our software package will cost upwards of $1,000. This really depends on the type of package you decide to go with, such as pay per return or unlimited efile.

Several companies offer accounting software for small business tax preparation including ATX, Drake and Inuit. ATX is perhaps one of the cheapest tax preparation software packages available for professionals. Preparers enter their data on screens that mimic the official forms. In other words, if you are preparing a 1040 your data entry screen looks just like the 1040 form. This type of user entry does not work for everyone. If you go with a program like ATX you should be comfortable working directly with forms and have a clear and comprehensive understanding of tax law.

Drake is the next least expensive software for tax professionals and is gaining in popularity. The screens are more question based and do not necessarily mimic the official forms. However, my two favorite tax preparation programs are Proseries and Lacert, both developed by Intuit. While these programs tend to be more on the expensive side, I find them worth it.

Proseries is better suited to small business tax preparers. The cost of the program is worth the added value in help screens and support material available to the professional. And believe me, even the most seasoned professionals still rely on reference material to answer an off-the-wall tax question or to research situations further.

Lacert, on the other hand, is geared more toward larger tax practices. The pricing is much more expensive and the program itself has less bells and whistles in the user-entry screens, yet it facilitates speedy entry for seasoned preparers with large volume.

Call it a Wrap on Tax Preparation Software for Small Business

Tax preparation is complicated and comprehensive. Almost all businesses are unique in some sense, especially when you take into consideration sole proprietorships, corporations, LLCs and partnerships. Those are the different types of business entities, and choosing an entity type is one of the first decisions you make before starting a business or even preparing taxes. However, this decision does not always happen when it should. Many of us, in our excitement to work for ourselves, rush into forming a business without considering the tax consequences.

So, for those of you need who need a little extra help understanding the formation process of a business you may find W.A. Swan’s article 7 Factors to Consider when Starting a Business helpful.


Image Credit (Free Digital Photos/Arvind Balaraman)