5 Best Small Business Tax Software 2020

Costs & Features to Consider

In addition to federal returns, most individuals and businesses must file state returns. When comparing the cost of small business tax software, be sure to include the cost for all your required returns.

Most small business tax software now have the option to consult with a live tax professional. In my 24 years as a CPA, I have corrected many returns that were self-prepared by business owners. Software can only produce accurate returns when you enter accurate information. Answering a question incorrectly can have a dramatic effect on a tax return. The more complicated your return, the more important it is the software provides a tax professional to consult with during the preparation.

The key features you should look for in small business tax software are:

• Cost: Owners of corporations and partnerships generally require at least four returns, and sole proprietors require at least two returns.
• Support for tax forms: The tax software can prepare business entity returns for S-corps (Form 1120S), C-corps (Form 1120), partnerships (Form 1065), sole proprietors (Form 1040, Schedule C), and rental property (Form 1040, Schedule E).
• Data import: The tax software can import data from bookkeeping software and financial institutions.
• Deduction finder: The tax software helps business owners find deductions for their industry and pick the best way to deduct depreciation and car expenses.
• Error checking: The tax software must have diagnostics to check for mistakes and potentially missing data.
• Live tax professionals: Consultation and perhaps even a review by a tax professional is critical for complicated returns; simply clearing all the issues from the error check does not guarantee the return is correct.
• Ease of use: The tax software must be relatively easy to learn and navigate.
• Customer support and help resources: The tax software must provide an online knowledge base and customer support by phone or email.

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H&R Block Price & Filings by Edition

H&R Block Features

Both H&R Block programs allow you to import a prior year tax return from any tax provider, including TurboTax. This reduces the time it takes to switch tax software providers and reduces the potential for mistakes. Both programs also include a deduction finder, error check, and the ability to import financial information from your bank.

H&R Block Premium

H&R Block Premium is very similar to TurboTax Self-Employed, and allows the preparation of an individual return including self-employed income on Schedule C. The Premium edition does not prepare payroll tax returns. If you are a sole proprietor with employees, you might want to consider the Premium and Business edition in order to prepare and file payroll tax returns.

H&R Block Premium & Business

H&R Block’s Premium and Business edition adds the ability to prepare business returns (Forms 1120, 1120S, and 1065) for only an additional $15. TurboTax requires the purchase of a separate program to prepare business returns. Premium and business also adds the ability to prepare payroll tax returns (Forms 941 and 940) as well as Form 1099-MISC and employee wage statements (Form W-2).

H&R Block Ease of Use

While H&R Block tax software is relatively easy, you need to complete all required information before moving on to the next screen. Similar to TurboTax, the software guides you through a series of questions and answers, like an interview. Alternatively, you can quickly navigate to specific data areas of the program. The language used in H&R Block is a bit more complicated than TurboTax.

The H&R Block software reviewed here is not an online platform. You must download the software and install it on your computer. You’ll also need to install new updates as they are released by H&R Block. You must pay for the software before downloading it, whereas many online programs defer payment until you are ready to file the return.

H&R Block Customer Support

H&R Block and TurboTax both include a knowledge database and live customer support. Users have unlimited access to live, personal tax advice from H&R Block’s tax professionals for a fee. Unlike TurboTax, H&R Block also provides audit support at no additional charge.

What H&R Block Is Missing

H&R Block Premium & Business does not automatically transfer income and loss numbers from bookkeeping software. However, in my experience as a CPA, once the books are complete, it doesn’t take much effort to transfer the numbers into a tax return. H&R Block does not address the credentials of tax professionals available for live help. In contrast, TurboTax requires all tax professionals to be either lawyers, enrolled agents (EAs), or certified public accountant (CPAs).

H&R Block Customer Reviews

Customers have voiced mixed reviews of H&R Block tax software. Some customers are pleased with the simplicity of the software and note that tech support has been exceptionally helpful. One customer said explanations are fairly poor in the state section. Several customers mentioned the Business version isn’t as user-friendly as the Premium version.

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TurboTax Price & Filings by Edition

TurboTax Features

Both TurboTax editions reviewed here come with a deduction finder and automatic error checking to help produce an accurate tax return. Both editions also come with customer support that includes an online knowledge database and telephone customer support for product issues. Only TurboTax Online Self-Employed comes with access (for a $30 fee) to live tax professionals like lawyers, enrolled agents, and certified public accountants. TurboTax tax professionals will not provide tax advice for business returns (Form 1120, 1120S, or 1065).

TurboTax Online Self-Employed

TurboTax Self-Employed Edition can prepare personal Form 1040 and state tax returns, including Schedule C (for self-employment income) and Schedule E (for income from a rental property or flow-through income from a business entity). TurboTax Self-Employed comes with a subscription to QuickBooks Self-Employed for the following year at no additional cost. Sole proprietors can prepare Form 1099-MISC for their independent contractors using TurboTax Self-Employed.

TurboTax Online Self-Employed provides the extremely complicated accounting for cryptocurrency transactions. A capital gain or loss is generated every time cryptocurrency is used to pay expenses or buy assets. This can easily result in hundreds or thousands of gain or loss transactions per year. This feature alone makes TurboTax Online worth the extra price.

TurboTax Business

TurboTax Business Edition is best for owners of an S-corp, C-corp, multimember LLC, or partnership. The Business edition is desktop software for preparing business tax returns (Forms 1120, 1120S, and 1065). A major benefit of TurboTax Business is the ability to transfer financial information from QuickBooks Desktop. You can also prepare Form 1099-MISC for contractors and W-2s for employees.

TurboTax Ease of Use

Similar to H&R Block, TurboTax is relatively easy to use. Users can navigate the software in multiple ways, such as using interview-style questions and answers to move through major sections of the software. Alternatively, users can navigate directly to data input screens. Users can import business income and expenses from QuickBooks Desktop or QuickBooks Self-Employed. Investment data can also be imported from financial institutions.

TurboTax Customer Support

Similar to H&R Block, TurboTax provides helpful in-app guidance, an online knowledge base, and free telephone support from customer service. For an additional fee, users can have a lawyer, certified public accountant, or enrolled agent review their personal tax return before filing through the TurboTax Live feature.

What TurboTax Is Missing

One of the downsides of TurboTax is if you are a corporation or partnership, you must purchase two tax software programs: TurboTax Business to complete your business tax return and another software, such as TurboTax Self-Employed, to complete your personal tax return. Instead, you could go with H&R Block Home and Business, which allows you to complete both your business and personal tax returns for one price.

Unlike H&R Block Home and Business, TurboTax Business does not prepare payroll tax returns (Forms 940 and 941). However, this is not a problem for QuickBooks users as the QuickBooks program prepares these forms.

TurboTax Customer Reviews

Customers have left mixed reviews of TurboTax tax software. Several users complain that the Business version cannot successfully import data from QuickBooks Online, and the Business version doesn’t work on a Mac. Unfortunately, users are correct about both these limitations. On the plus side, several users say TurboTax is easy to use, and provides a checklist for preparing business returns.

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TaxAct Price & Filings by Edition

TaxAct Features

TaxAct Self-Employed and the TaxAct Business editions priced above are online software, but are also available as desktop downloads. The TaxAct Bundle includes both TaxAct Self-Employed and one TaxAct Business edition, but is only available in the desktop versions of each program.

All versions of TaxAct include a deduction finder, error checking, and free customer support. For new users of TaxAct, PDF documents of prior-year returns can be imported to ease the transition from any other tax preparation software.

The TaxAct Business edition comes in five editions: S Corporation, C Corporation, Partnership, Estates and Trust, and Tax-Exempt Organizations. Each of these business tax software editions is available as online software or as downloadable desktop software. TaxAct personal tax software for business owners comes in two varieties: Self Employed+ (online software) and Self-Employed (desktop software).

TaxAct Self-Employed+

TaxAct Self-Employed+ offers similar features to H&R Block and TurboTax. It prepares both Schedule C for self-employed business income and Schedule E for income from rental properties and flow-through entities (such as S corporations and partnerships). TaxAct also provides audit alerts to notify you of errors or omissions that might make an IRS audit more likely.

TaxAct Business Editions

TaxAct Business comes in five editions: S Corporation, C Corporation, Partnership, Estates and Trust, and Tax-Exempt Organizations. Each of these business tax software editions is available as online software or as downloadable desktop software. Because each edition only covers one type of organization, be sure to select the correct edition for your business.

TaxAct Business can import business income from virtually any bookkeeping software. However, it will require some technical and accounting expertise from the user. You must first export your trial balance as a CSV file from the bookkeeping software. The CSV file can then be imported into TaxAct Business. This is more complicated than an automatic import (such as QuickBooks Desktop to TurboTax). If you aren’t familiar with trial balances or CSV files, you shouldn’t try this import.

TaxAct Business can prepare amortization schedules that separate loan payments into amounts paid for principal versus interest. This is very useful to determine your portion of loan payments that are deductible as interest expense.

TaxAct Bundle

The TaxAct Bundle includes TaxAct Self-Employed (desktop version) and your choice of one of the TaxAct Business editions (desktop version). The bundle is not available for TaxAct’s online programs.

TaxAct Ease of Use

Similar to TurboTax and H&R Block, TaxAct has an interview mode that will allow you to respond to questions. In addition, you can also switch to forms mode and go directly to the section you would like to complete. The user interface is not as polished as TurboTax, and, unfortunately, there is no easy way to skip questions that don’t apply to you.

Importing financial information into TaxAct Business is somewhat complicated since it requires the use of CSV files. However, the CSV import function allows importing from any bookkeeping software that will export the trial balance as a CSV.

TaxAct Customer Support

Similar to its competitors, TaxAct provides free, unlimited telephone and email support. Support is available seven days a week during tax season, and during regular business hours in the off-season. TaxAct also has a searchable online knowledge base.

What TaxAct Is Missing

TaxAct Business does not prepare information returns such as Form 1099-MISC for contractors or Form W-2 for employees. TaxAct also doesn’t prepare payroll tax returns, Form 941 and Form 940. Like TurboTax, help from live tax professionals applies only to individual returns, not partnership and corporate returns.

TaxAct Customer Reviews

Customers have left mixed reviews of TaxAct’s tax software. Several customers complain that customer support is hard to reach by telephone. Another customer said the IRS never got a copy of her extension, even though TaxAct provided her with confirmation. Customers like the fact that TaxAct is affordable and easy to use.

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TaxSlayer Price & Filings by Edition

TaxSlayer Features

TaxSlayer Self-Employed is online tax software for preparing personal tax returns (Form 1040), including Schedule C for self-employed business and Schedule E for rentals. While TaxSlayer cannot prepare S corporation and partnership returns, taxpayers can report their flow-through income from these entities using the self-employed edition.

Like many of the other programs, TaxSlayer can import the prior-year return from a PDF file.

TaxSlayer also offers a deduction finder, error checking, and unlimited customer support. Through the Ask a Tax Pro feature, users can talk to a tax professional with self-employed expertise.

TaxSlayer Ease of Use

TaxSlayer’s online tax software is easy enough to use. Like H&R Block and other competitors, each major section of the software has a menu where users can drill down to specific data input areas. Users can also jump to a specific data entry section by entering a form number in the search box, or clicking a section name from the navigation panel.

TaxSlayer Customer Support

Similar to its competitors, TaxSlayer customers get access to seasoned tax professionals who answer questions via chat, telephone, or email. TaxSlayer also has an online knowledge base you can search for help.

What TaxSlayer Is Missing

TaxSlayer cannot be used to file business returns for C corporations, S corporations, or partnerships. TaxSlayer does not integrate with accounting software like TurboTax does. Finally, TaxSlayer’s audit assistance does not apply to Schedule C filers and business owners with pass-through income reported.

TaxSlayer Customer Reviews

Customers have left positive reviews of TaxSlayer’s tax software. Customers say TaxSlayer is ideal for beginners, as the user interface is well-organized and it takes less time to find where to enter expenses. Some customers experienced problems in which TaxSlayer did not transfer all federal data into a state return, resulting in an incomplete state return.

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FreeTaxUSA Price & Filings by Edition

FreeTaxUSA Features

FreeTaxUSA provides the same features, such as finding tax deductions and checking for errors, that paid software provides. FreeTaxUSA allows importing prior returns from TurboTax, TaxAct, and H&R Block. Similar to paid software, it walks the user through an interview process to collect all the necessary information. The free edition includes both Schedule C for self-employed income and Schedule E for rental and flow-through income from S corporations and partnerships.

FreeTaxUSA Ease of Use

Whether FreeTaxUSA is easy to use will depend upon your level of experience. Similar to paid programs, FreeTaxUSA walks you through an interview process to collect the necessary information. The interview process seems to be not as detailed as some of its competitors.

While the interview may not be as detailed, all the necessary information is still there—it just might require clicking some additional information links. I actually like this since I’m an experienced tax preparer and I can move quicker. However, if you are nervous about preparing your own return, you might want to go with a paid program to walk you through the process a little slower.

FreeTaxUSA Customer Support

You can send a message to customer support and they will respond within 24 hours. They also have a large database of frequently asked questions (FAQs). If you upgrade for $6.99, you can live chat with customer support. Customer support by telephone or video is not available.

What FreeTaxUSA Is Missing

FreeTaxUSA is missing some of the features of paid software. Perhaps the most important for people unsure about their tax knowledge is the lack of tax professionals to consult. Also, customer service is not available by telephone. FreeTaxUSA is for strictly individual returns (including self-employment income) and doesn’t prepare business returns such as Forms 1120, 1120S, and 1065.

FreeTaxUSA Customer Reviews

Most customers have good reviews of FreeTaxUSA software. Customers say that it is intuitive, easy to use, delivers as promised, and has a reasonable price. However, other customers report that the program can sometimes be glitchy when entering data. Be sure to carefully review the information you’ve entered before submitting your return.

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