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Take charge of your business taxes with tax software
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What do you look for in tax software?
What do you look for in tax software?
Use tax software to take control of your business tax tracking and filing. But don't fire your accountant.
Many small-business owners recoil at the horror of doing taxes. Trying to get your head around all the deductions and forms, and even the idea of setting aside income to pay quarterly taxes can seem overwhelming.
Tax software can help. Using a package such as TurboTax, TaxCut, or TaxAct can help you take control of your business tax payments.
Here are some guidelines to make sure you keep as much of your income as possible.
1
Evaluate your needs.
Do you collect sales tax at the register? Look for software such as Trustfile that supports e-filing for sales and use tax (required in certain states). Do you buy a lot of equipment that's deductible? Look for business-friendly features, such as a comprehensive Schedule C section for managing deductions (available in TurboTax Premier, but not the less expensive versions). Do you have a sole proprietorship and work at home? If so, you'll need help in navigating tricky subjects such as the home-office deduction, which TaxCut Premium and TurboTax Premier support. Do you have employees or run a corporation? In this case, look at higher-end products, such as TurboTax Business.
There are even numerous packages geared specifically for accountants, such as Intuit's ProSeries, though you generally don't need this kind of firepower on your own. Take stock of your business issues now to ensure you'll make the right decisions when buying tax software.
Do you collect sales tax at the register? Look for software such as Trustfile that supports e-filing for sales and use tax (required in certain states). Do you buy a lot of equipment that's deductible? Look for business-friendly features, such as a comprehensive Schedule C section for managing deductions (available in TurboTax Premier, but not the less expensive versions). Do you have a sole proprietorship and work at home? If so, you'll need help in navigating tricky subjects such as the home-office deduction, which TaxCut Premium and TurboTax Premier support. Do you have employees or run a corporation? In this case, look at higher-end products, such as TurboTax Business.
There are even numerous packages geared specifically for accountants, such as Intuit's ProSeries, though you generally don't need this kind of firepower on your own. Take stock of your business issues now to ensure you'll make the right decisions when buying tax software.
2
Go with higher-powered software if necessary.
Consumer tax software is fine if you're a sole proprietor, but what if you have a partnership or an S corporation? Jim Baukus owns JB Management, a Westlake Village, California-based, two-person consulting firm in the semiconductor business. He uses TurboTax Business since he has a partnership, which requires Form 1065 (something that the regular TurboTax software doesn't support). He also uses TurboTax Premier for his home taxes.
"I start with the business, do all of the business income, outgo, and depreciations, and then fill out Form 1065," said Baukus. Once he finishes with his business taxes, he switches over to TurboTax Premier for his home and uses a regular 1040. "I actually send the government money through the 1040 form," Baukus added.
Consumer tax software is fine if you're a sole proprietor, but what if you have a partnership or an S corporation? Jim Baukus owns JB Management, a Westlake Village, California-based, two-person consulting firm in the semiconductor business. He uses TurboTax Business since he has a partnership, which requires Form 1065 (something that the regular TurboTax software doesn't support). He also uses TurboTax Premier for his home taxes.
"I start with the business, do all of the business income, outgo, and depreciations, and then fill out Form 1065," said Baukus. Once he finishes with his business taxes, he switches over to TurboTax Premier for his home and uses a regular 1040. "I actually send the government money through the 1040 form," Baukus added.
3
Do everything in one shot by e-filing.
One of the best things about using tax software is that you can also e-file. This means that instead of printing out the forms manually and mailing them along with your payments, you can use the tax software, do your returns, and send payment to the IRS all from your computer. It doesn't matter if you use a Mac or a PC, either. Companies such as Intuit are now offering fully online solutions, such as TurboTax Online, so you don't even have to install anything on your PC. For more information on e-filing, check out this link.
One of the best things about using tax software is that you can also e-file. This means that instead of printing out the forms manually and mailing them along with your payments, you can use the tax software, do your returns, and send payment to the IRS all from your computer. It doesn't matter if you use a Mac or a PC, either. Companies such as Intuit are now offering fully online solutions, such as TurboTax Online, so you don't even have to install anything on your PC. For more information on e-filing, check out this link.
4
Save money by hiring a really good accountant.
What software can't always do is help where it counts most: figuring out the ways you can minimize your tax burden.
Don't underestimate the potential tax savings an accountant can help you uncover. It's tempting to save several hundred dollars by doing the taxes yourself. However, this means you could potentially miss thousands of dollars in tax savings because you don't know the tax code well enough.
"People go to school for many years, study all kinds of material, and take tests to become certified public accountants," said Leonard Konsker, a CPA based in Hicksville, New York. "In general, software can be very helpful, but it doesn't do the return for you. You might still need the help of a tax professional, depending on how complex your return is."
What software can't always do is help where it counts most: figuring out the ways you can minimize your tax burden.
Don't underestimate the potential tax savings an accountant can help you uncover. It's tempting to save several hundred dollars by doing the taxes yourself. However, this means you could potentially miss thousands of dollars in tax savings because you don't know the tax code well enough.
"People go to school for many years, study all kinds of material, and take tests to become certified public accountants," said Leonard Konsker, a CPA based in Hicksville, New York. "In general, software can be very helpful, but it doesn't do the return for you. You might still need the help of a tax professional, depending on how complex your return is."
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