Best Tax Software for Small Businesses in 2021

The right small-business tax software can simplify your end-of-year tax filing, which means less hassle and stress. Business.org reviews the year’s best tax software, from TurboTax to eFile.com, so you can find the right tax software for your business’s needs and budget.
Best overall
Turbo Tax
TurboTax
  • Icon Pros  Dark
    Most reliable guarantees
  • Icon Pros  Dark
    Most perks and features
Best for complex businesses
H&R Block
H&R Block
  • Icon Pros  Dark
    Free audit representation
  • Icon Pros  Dark
    Integration with Xero accounting software
Best for beginners
Liberty Tax
Liberty Tax
  • Icon Pros  Dark
    Tax education courses
  • Icon Pros  Dark
    Both online and on-site filing
Best for small business
Efile
eFile.com
  • Icon Pros  Dark
    Approachable, personable website
  • Icon Pros  Dark
    Inexpensive, up-front pricing
Best budget option
Free Tax USA
FreeTaxUSA
  • Icon Pros  Dark
    Free federal filing
  • Icon Pros  Dark
    State filing only $14.99 per state

Worried about filing your small-business taxes correctly? Small-business tax software can minimize tax season stress while maximizing your tax return. Check out Business.org’s picks for the year’s best tax software options below.

The best tax software for small business

Compare the best small-business tax software

Brand name
Federal filing starting cost
State filing starting cost
File Now

TurboTax

$90.00*

$50.00

H&R Block

$84.99

$36.99

Liberty Tax

$44.95

$34.95

eFile.com

$34.49

$28.95

FreeTaxUSA

Free

$14.99

TaxAct$64.95$44.95

Data effective 1/12/20. At publishing time, pricing and features are current but are subject to change. Offers may not be available in all areas.
*For Self-Employed online service. TurboTax Business downloadable product starting at $160.00.

Best overall business tax software: TurboTax

Turbo Tax

TurboTax, Intuit’s tax software program, is a popular, accessible small-business tax filing option. The software explains and simplifies each part of the tax-filing process. Even better, TurboTax’s guarantees help ensure your refund is as high as possible.

TurboTax is one of the most popular tax software options for a reason (well, several). For starters, the software walks you through every step of the tax-filing process, asking clear questions and pointing you toward often overlooked tax deductions. The clean interface speeds up tax filing, and TurboTax’s maximum refund guarantee gives you some extra peace of mind.

That said, the features and reliability definitely come with a cost—especially if you wait until April to file, when TurboTax’s prices tend to jump. Currently, TurboTax Self Employed starts at $90 for federal taxes and $50 per state, or you can pay $180 to get live help from a CPA to ensure you’re filing taxes correctly. If you have more than one or two employees, you’ll want TurboTax Business, which starts at $160 for federal plus $50 for state filing.

If you already know which tax deductions to claim, you can save a little money by choosing a cheaper service that doesn’t hold your hand from start to finish. Otherwise, TurboTax can point you toward crucial tax write-offs that could save you some hard-earned cash.

Best for complex businesses: H&R Block

H&R Block

Want to file taxes on your own with optional support from a live professional? If you run into trouble while filing with H&R Block, you can access live support from an H&R Block accountant (at an additional cost).

H&R Block is a popular company with plenty of experience—it’s been around for over 60 years. And while it doesn’t offer the cheapest software, it’s a tad cheaper than TurboTax with all the same guarantees. H&R Block also has hundreds of locations all over the country. If you decide halfway through filing taxes that they’re too complicated to tackle on your own, you can always call your local branch and decide on next steps with a certified accountant.

H&R Block’s additional features include the following:

  • Quick, easy integration of past tax return info (even if it’s from a competitor’s software)
  • Free in-person audit representation if needed
  • Live chat help with a tax professional (available at an additional cost)

H&R Block starts out a little cheaper than TurboTax: its software for self-employed business owners costs $79.95 for federal filing and $19.95 per state filing. Additional resources like Tax Pro Review cost extra.

As with TurboTax, if you know which deductions you can claim, there are cheaper filing options than H&R Block. But if you want help itemizing your deductions and the extra assurance of knowing you’ve got live support when you need it, H&R Block’s tax software is a safe bet.

Best for beginners: Liberty Tax

Liberty Tax

Liberty Tax’s mix of affordable on-site and online tax preparation options make it a good fit for business owners who haven’t filed before and want some extra help.

Have you seen anyone twirling a sign while dressed as Lady Liberty on a sidewalk? That’s Liberty Tax. Like H&R Block, Liberty Tax combines brick-and-mortar storefronts with online offerings—a great perk for new business owners who might want face-to-face help untangling tricky tax situations. Plus, Liberty Tax’s Tax Education School offers online and classroom tax courses. If you’re a brand-new business owner, these courses can help you gain tax know-how to save time and money the next time tax season rolls around.

If you’re self-employed, you’ll need at least the Deluxe edition, which usually costs $64.95—but thanks to Liberty Tax’s ongoing sale, all of its online tax filing products cost just $44.95. That includes the typically pricier Premium edition, which is perfect for S corporations.

Don't sweat tax season

Get your maximum refund for your small business with TurboTax.

Best for small businesses: eFile.com

Efile

Filing taxes in multiple states? eFile.com charges you just $28.95 for unlimited state tax filing, beating out TurboTax’s $50 charge per state by a mile.

If you’ve visited its site, you know eFile.com takes a, shall we say, quirky approach to taxes. If you haven’t, think confetti, hearts, and puns. (So, so many puns.) But once you get past the site’s more entertaining aspects, you’ll find a lot of standard features at a super reasonable starting price.

Most notably, eFile.com charges you one flat price for unlimited state tax filings. In contrast, big-name competitors like H&R Block and TurboTax charge you at least $40 per state. If you need to file state taxes across the nation, eFile.com is almost certainly the most affordable software option.

How affordable are we talking? Small-business owners should buy the Premium edition, which costs $34.49 for federal filings. Unlimited state returns cost $28.95. With eFile.com, you can’t file a Form 1120 for corporations from the site. If your business is registered as a C corporation, you’ll need a different tax software provider. But smaller businesses score a solid value with eFile.

Best budget option: FreeTaxUSA

Free Tax USA

If you’re okay with fewer features, FreeTaxUSA’s unbeatable cost makes it a great fit for any small businesses looking to file taxes as cheaply as they can.

FreeTaxUSA’s appeal is obvious from its name alone—federal tax filings through FreeTaxUSA are completely free. And honestly, the features you get for exactly zero dollars aren’t half bad. The software lets you integrate previous tax return information, offers email-based customer support, and accounts for over 350 credits and deductions.

Since the software is free, though, you’re looking at fewer features than you’d get with Liberty Tax or H&R Block. As a result, FreeTaxUSA works best for freelancers and sole proprietors. Plus, if you work in a state without income tax, you might be able to file absolutely free.

With FreeTaxUSA, you can file your federal taxes for free, and a state return will cost you $14.99. The Deluxe upgrade adds a few features, like amended returns and priority support, for $6.99.

Honorable mention: TaxAct

Tax Act

TaxAct offers a handful of features at a reasonable price, though it isn’t as affordable as eFile.com or as comprehensive as TurboTax and H&R Block.

TaxAct is the Toyota Corolla of tax software: affordable, straightforward, and well-rounded. You can expect all standard features—plus a few bonuses—with the TaxAct software, including the following:

  • Integration with previous tax data (including from competitors)
  • Integration with accounting software that uses CSV format
  • One-on-one help from tax and technical experts over the phone
  • Bookmarks and alerts to help you navigate your return

On the whole, TaxAct is a solid middle-of-the-road option. It gives business owners options like accountant support without overwhelming you with the bells and whistles of more comprehensive (and more expensive) software. TaxAct helps you file a single federal return for $64.95. State tax returns cost an additional $44.95. Even larger businesses, like a C corporation or S corporation, pay the same cost.

2020’s Best (and Worst) States for Small-Business Tax Deals

Thanks to the government’s recent tax-filing extension, the tax deadline isn’t quite around the corner—but it’ll still arrive sooner rather than later. Whether you have or haven’t filed yet, we hope you’re in for a substantial return. But since tax laws vary drastically from state to state, the place you choose to set up shop can influence your business’s growth, success, and sustainability.

How? Well, for starters, seven of our top states lack a state income tax, and one, Tennessee, has just a 1% rate. Some, like Washington, are famous for their startup culture and tech friendliness; it’s practically a given that their tax laws would incentivize small-business owners. Other winners, like South Dakota and Montana, are rural states where the cost of living is low—and so is the cost of starting a business, which makes the area enticing to small-business owners, individuals, and families alike.

In contrast, our lowest-ranked states have notoriously high taxes and high costs of living, especially California and New York. The lack of tax deals might make them less appealing to business owners who are trying to make money, pay their employees, send in the rent check on time, and, you know, eat the occasional meal or two.

Your taxation situation

Of course, while location is crucial to your tax prospects, it isn’t the be-all and end-all of tax deals—or of business success. State business taxes often break down by industry, so you’ll want to do more research before planning your immediate move from Minnesota to Wyoming. Still, if tax deals are important to your business, give our top picks an extra look; a good tax bargain can nudge your business in the right direction.

Top 10

Rank
State
State Individual Income Tax Rate
Combined State and Federal Corporate Tax Rate
Combined State and Local Sales Tax Rate
Median Property Tax Rate
Score

1

Wyoming

0.00%

21.00%

5.30%

0.60%

84.11

2

South Dakota

0.00%

21.00%

6.40%

1.30%

73.7

3

Washington

0.00%

21.00%

9.20%

0.90%

72.02

4

Alaska

0.00%

28.40%

1.80%

1.00%

68.84

5

Florida

0.00%

24.60%

7.10%

1.00%

67.49

6

Nevada

0.00%

25.70%

8.30%

0.80%

63.76

7

Texas

0.00%

21.00%

8.20%

1.80%

63.75

8

Delaware

6.60%

27.90%

0.00%

0.40%

60.99

9

Montana

6.90%

26.30%

0.00%

0.80%

59.18

10

Tennessee

1.00%

26.10%

9.50%

0.70%

59.14

Bottom 10

Rank
State
State Individual Income Tax Rate
Combined State and Federal Corporate Tax Rate
Combined State and Local Sales Tax Rate
Median Property Tax Rate
Score

51

New Jersey

10.80%

29.30%

6.60%

1.90%

14.29

50

California

13.30%

28.00%

8.70%

0.70%

18.81

49

Minnesota

9.90%

28.70%

7.50%

1.10%

26.43

48

Iowa

8.50%

29.50%

6.90%

1.30%

26.8

47

Vermont

8.80%

27.70%

6.20%

1.60%

28.37

46

Illinois

5.00%

28.50%

9.10%

1.70%

30.28

45

New York

8.80%

26.10%

8.50%

1.20%

31.31

44

Nebraska

6.80%

27.20%

6.90%

1.80%

31.82

43

Wisconsin

7.70%

27.20%

5.50%

1.80%

32.47

42

Connecticut

7.00%

26.90%

6.40%

1.60%

34.81

Our methodology

To determine the best and worst states for business tax deals, we looked at four tax rates in each state:

  • State income tax rate (weighted 40%)2
  • Combined state and federal corporate tax rate (weighted 20%)3
  • Combined state and local sales tax rate (weighted 20%)4
  • Property tax rate (weighted 20%)5

We weighted each rate and assigned the states’ scores based on how high or low their tax rates were. Specifically, we normalized each measurement on a 0–1 scale with 1 as the measurement that would most positively affect the final score and 0 as the measurement that would most negatively affect the final score. These adjusted measurements were then added together with the weights mentioned above to get a score of out of 100.

Tax software FAQ

If I’m self-employed, do I file individual taxes and business taxes separately?

No. If you’re self-employed, a sole proprietor, or a freelancer, you cannot file your business and individual taxes separately. Instead, you’ll file your business’s tax returns alongside your personal tax return. That’s what a Schedule C Form is for—this form attaches to your personal tax return (Form 1040) and details your business’s profits and losses for the tax year.

What forms do I need to file business taxes?

Different business entities each use different tax forms—we’ll give you a quick rundown.

Sole proprietors

If you’re self-employed and your small business isn’t registered as a legal entity, you should fill out a Form 1040, which is your personal tax return. As part of your 1040, you’ll also need to complete the Schedule C portion, which allows you to report the income and expenses from your sole proprietorship. These same forms will also work if you registered your business as an LLC with you as the sole member.

Partnerships, LLCs, and S Corporations

Every member of a partnership, LLC, or S Corporation needs to fill out Form 1065 and a Schedule K-1. Each of these business organizations pass through business income to the owners or shareholders, so the members will need to account for those earnings under Schedule E in their personal income taxes.

C Corporations

Unlike the organizations above, C Corporations do not pass through income to the business owners. These businesses file their corporate taxes using Form 1120. If you’re a business owner, you should get a Form 1099 to inform you of the income you made from the business for your personal return.

Other considerations

Different situations require extra forms, like a Form 720 for excise taxes (necessary if you sell items like tobacco, alcohol, or gasoline) or Form 941 for taxes withheld from paychecks.

Do I file taxes annually or quarterly?

If you pay employees, then you’ll need to file Form 941 quarterly. (This form is for reporting and remitting payroll taxes to the IRS.) And if you sell tobacco, alcohol, gasoline, or other products that require an excise tax, you’ll file Form 720 quarterly as well.

If you don’t have employees and you don’t sell excise taxable items, you can usually choose if you’d rather make quarterly tax payments or file a single year-end payment. Many businesses choose to file quarterly since the payment will be lower. But if you’re able to set aside money for one large payment, you can simply pay at the end of the tax year.

The takeaway

We doubt most business owners would refer to tax season as a breeze. But with the right tax software, February, March, and April become less stressful for sole proprietors, employers, and freelancers alike. Instead of stressing about tax filing, let your software take the front seat while you spend more time doing what you love: focusing on your business.

Want a little more info on filing small-business taxes before you dive into software? Check out our guide to filing taxes as a small business for even more tips.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

Sources
1. eFile.com, “Income Tax Return, eFile Statistics,” June 1, 2020. Accessed January 12, 2021.
2. Tax Foundation, “State Individual Income Tax Rates and Brackets for 2019.” Accessed January 12, 2021.
3. Tax Foundation, “Combined State and Federal Corporate Income Tax Rates in 2020.” Accessed January 12, 2021.
4. Tax Foundation, “State and Local Sales Tax Rates, 2020.” Accessed January 12, 2021.
5. World Population Review, “Property Taxes by State 2020.” Accessed January 12, 2021.

Business.org Staff Writer
Written by
Business.org Staff Writer
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