Best Tax Software for Small Business in 2019
Filing tax returns electronically gets more popular every year—now over 90% of tax returns are filed online.1 Which software will work best for your business?
Best OverallMost reliable guaranteesMost perks and features
Best for Accounting HelpTax Pro Review to ensure the best returnIntegration with accounting software
Best for BeginnersTax education coursesBoth online and on-site filing
Best for Small BusinessApproachable, personable websiteFairly inexpensive and upfront pricing
Best Budget OptionBest priceSurprising amount of features
Perhaps you’re a veteran of the tax software debates on TurboTax vs. H&R Block. Or maybe you’re a business owner who’s ready to make the switch from a personal tax preparer to software. Or maybe you’re a new freelancer wondering if tax software has more benefits than just filing it yourself.
Finding the tax software with the right features will help you file on time, file correctly (audits aren’t fun!), and get a better tax return, putting more money in your pocket.
Here’s our take on the five best tax software options for small businesses, with a runner-up included as well.
Best overall business tax software: TurboTax
With a clear and comprehensive approach to tax filing, business owners can trust TurboTax to answer their questions and maximize their returns.
Features and cost
TurboTax is one of the most recognizable names in the business. But do the features live up to the hype? The answer is a decisive “yes,” but you will pay more for all those helpful features. Here’s what you’re getting when you file with TurboTax:
- Error checks while filing and a double check of your finished return
- Maximum refund guarantee (or your money back)
- W-2 uploading through your company or by taking a photo
- Sharing accounting info through QuickBooks
- One-on-one help with a specialist
TurboTax Self-Employed costs $119.99, while TurboTax Business costs $169.99. You’ll also pay $44.90 for state filing.
Is TurboTax right for my business?
TurboTax fits a lot of small business needs, but this tax preparation software works especially well if you relate to any of the following:
- You have doubts about which deductions to claim for maximum profit.
- You worry about mistakes and want to cover any holes in your return.
- You want a streamlined system for your business to make the filing process easier and faster.
While all the extra features might be tempting, you may want to search other options if this matches your situation:
- You’re confident about which small-business tax deductions will apply to you, and
- You want to save money when filing.
TurboTax ticks a lot of boxes. It’s easy to use and helps you file quickly. The software’s user interface makes sense and guides you through the process smoothly—and if you still need help, one-on-one support will soon be on the way. And its guarantees (including a maximum refund guarantee) provide peace of mind that you’ll file taxes in a way that benefits your business most.
That said, the features and reliability definitely come with a cost. If you’re self-employed or freelancing, you could save some money with a cheaper service if you already know which tax deductions to claim. The more complicated your business is, the more attractive an option like TurboTax becomes.
Best for complex businesses: H&R Block
For some small businesses tax filing is a relative breeze, but not every business is so lucky. Maybe you have a lot of tough deduction decisions to make, or perhaps your company needs additional software for accounting or HR.
Features and cost
H&R Block is a popular company with plenty of experience—they’ve been around for over 60 years. They don’t provide the cheapest software, but they reassure businesses that every expense and deduction is accounted for. Here are some of the benefits H&R offers:
- Quick, easy integration of past tax return info (even if it’s from a competitor’s software)
- Free audit representation if needed
- Chat help with a tax professional
- Partnership with Xero for day-to-day business accounting needs
- Extra assurance if you choose Tax Pro Review
Software costs for businesses range from $74.95 to $89.95. Filing online as a business has a wider range, from $69.99 to $104.99. Additional resources like Xero or Tax Pro Review cost extra.
Is H&R Block right for my business?
H&R packs plenty of features into its software, but do you need them? Consider H&R if your business checks off these boxes:
- You have a complex set of itemized deductions and expenses to deal with.
- You want to consult someone on some of your decisions.
- You think you might miss out on some of your deductions without help.
On the other hand, consider a different option if your business matches this scenario:
- You have straightforward freelance or self-employment income.
- You want the cheapest filing option possible.
There are two major circumstances where H&R Block’s services will benefit your business. The first circumstance is if you worry whether your small business is maximizing every advantage possible. Thanks to online chats with professionals and the option for pros to sign off every last inch of your return, you can rest easy knowing that you did right by your taxes.
Second, H&R could work great if you are also looking for accounting support in addition to help with filing taxes. Through a partnership with Xero, you’ll have several accounting tools that should smoothly integrate with H&R Block when tax season comes around.
But some businesses might not use all those features—in that case, investing in H&R Block would just be throwing money away. If you know which deductions you can claim, or if your business just doesn’t have that many direct expenses, there are cheaper options for filing.
Best for beginners: Liberty Tax
Why lean on experts when you can become the expert yourself? Liberty Tax’s Tax Education School, which offers online and classroom tax courses, is a unique feature that helps tax novices gain tax know-how.
Features and cost
Beyond their unique branding—if you’ve seen someone twirling a sign dressed as Lady Liberty on a sidewalk, it was likely for Liberty Tax—most of Liberty Tax’s features are fairly standard.
- Double-check system to make sure your return checks out
- Multiple support options, including chat, email, or even in-person help
- Audit assistance if needed
- Online-to-office transition if you ever get stuck mid-filing
- Free tax education courses
For a business, you’ll need at least the Deluxe edition, which costs $64.95. More complex businesses, like S corporations, might require the Premium edition for $89.95.
Is Liberty Tax right for my business?
Liberty Tax has reasonable prices and some standard features, but when does it make the most sense for your small business? Consider Liberty Tax if you relate to these factors:
- You want to take its tax education courses.
- You feel more comfortable with the option to meet face-to-face if needed.
- You don’t need too many extra features.
On the other hand, consider looking elsewhere if either of these match your situation:
- You definitely want to file from your computer only.
- Liberty Tax’s unique features don’t benefit you.
Similar to H&R Block, Liberty Tax combines brick-and-mortar storefronts with online offerings. That combination might appeal to some small-business owners, especially anyone who is just starting out. For most people, face-to-face contact works best when working out a tricky tax situation. This makes the online-to-office filing transition especially appealing.
In contrast, if you don’t see yourself visiting in-store or attending the tax education courses, there might be better options at both lower and higher price points. Liberty Tax’s interface and features are pretty standard, and the price is average as well.
Best for small businesses: eFile.com
While eFile.com has a mixture of useful features, its quirky sense of humor and personable approach to taxes stands out.
Features and cost
Moving past the entertainment aspects of the site, eFile promises a lot of standard features. You won’t be able to file a Form 1120 for corporations from the site, but smaller businesses will score a solid value with eFile. Here are some of the features eFile offers:
- Calculator systems for quick estimates before you file
- A personally assigned “Taxpert” support agent
- Free audit assistance
- Unlimited state returns
Businesses will need to buy the premium edition for $39.95. If needed, the fee for unlimited states returns will be $23.95.
Is eFile.com right for my business?
With a straightforward approach to pricing and a smaller price tag than other options, eFile.com is a compelling option for small-business tax software. Consider eFile if you relate to the following:
- You feel like some humor and diversions might motivate you to file.
- You aren’t sure what features you’ll even need from your tax software.
- You’d like to do some basic number crunching before you file.
On the other hand, consider another option if your business fits these descriptions:
- Your business is not a pass-through entity and needs to file Form 1120.
- You don’t like distractions.
You could benefit from eFile.com if you own a pass-through business, even if you don’t appreciate their more light-hearted approach to filing. Their pricing structure is direct and affordable, and several basic filing features are covered.
However, some might find the website unprofessional, and some of the pop-ups and menus make navigating the site difficult. Since you can’t fill out Form 1120 on eFile.com, you’ll need to find another option if your business is registered as a C corporation.
Best budget option: FreeTaxUSA
FreeTaxUSA’s appeal is obvious from its name alone.
Features and cost
If you know the price is right, the real question is whether FreeTaxUSA has the features you need to file properly. Here’s a rundown of what they offer:
- Over 350 credits and deductions accounted for
- Integration of previous tax returns, even from competing tax software
- Email-based customer support
- Tax return backup if you need to print old returns
- Chat support and audit assistance (with Deluxe edition)
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.
Is FreeTaxUSA right for my business?
With fewer features and less support than other small-business tax software, who can benefit most from FreeTaxUSA’s low cost? Consider FreeTaxUSA if the following describes your business:
- Your business is simple self-employment or freelance work.
- You want the cheapest filing option available.
- You need little to no support to fill out your tax forms.
On the other hand, consider shopping elsewhere if this matches your business:
- You need to file Form 1120 for a corporation.
- You plan on having lots of questions during the filing process.
FreeTaxUSA will work perfectly for freelancers and other people who file as sole proprietors. You don’t need to spend any extra money on unneeded features, and if you happen to be in a state without income tax, you might file absolutely free.
But this online filing service won’t work at all for more complex businesses. Many business tax forms are unsupported. FreeTaxUSA might also be a poor fit if you need help with questions as you file—its support options and help features aren’t top of the line.
TaxAct is the Toyota Corolla of tax software: affordable, straightforward, and well-rounded when it comes to the benefits it offers.
Features and cost
So what are those balanced benefits? You can generally expect all standard features—plus a few nice bonuses—with the TaxAct software.
- Integration with tax data from a previous TaxAct return
- 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
TaxAct helps you file a single return, no matter what type of business, for one price: $69.95. They also sell a Self-Employed+ edition with extra features for $77.95.
Is TaxAct right for my business?
Consider TaxAct if these benefits appeal to you:
- You have a larger business but want a cheaper filing price.
- You want the comfort of one-on-one support with a tax expert.
On the other hand, consider an alternative option if you identify with these priorities:
- You value a range of additional features.
- You want a cheaper filing option for simpler businesses.
TaxAct is a great middle-of-the-road option for businesses who want a few extra features, such as tax expert support, for a reasonable price. If you or your business is already familiar and happy with TaxAct, you shouldn’t feel pressured to change.
If nothing about TaxAct immediately grabs you, your business might want to find an option that either offers more support and features, like TurboTax and H&R Block, or a cheaper price, like eFile.com and FreeTaxUSA.
The States with the Best Tax Deals for Businesses
If you’re looking for the best tax rates for your business, these states lead the pack.
They say the only things we can be certain of are death and taxes. There’s not a whole lot you can do about the former, but when it comes to taxes, a range of factors determine how much you’ll pay. For business owners, these factors can be key to the profitability and long-term success of the company.
One of the most important factors in determining taxes is location—in the case of business owners, where you own and operate your business—and some states’ business tax rates are friendlier than others. Of course, making sense of the ins of outs of state-by-state taxes can get complicated. So we at Business.org partnered with MoneyDoneRight.com and set out to make it a little easier. After plenty of research and data crunching (you’re welcome), we’ve determined the top 15 states for businesses come tax season.
The top 15 states for business taxes
- South Dakota
- North Dakota
Some of the states in our top 15 make a whole lot of sense. In places with fast-developing startup communities, such as Washington and Texas, it checks out that those states would incentivize business owners with favorable tax conditions. Some states, such as Alaska and Florida, have no income tax, while others, like Ohio, have no corporate tax. The sweet spots—and all of our top four picks—have neither corporate nor income tax, making it a winning situation no matter what kind of business setup you have.
At first glance, you might also be surprised by some of the states on our list. Plenty of rural states, like Ohio, Arkansas, and the Dakotas, made it into the top 15. But on another level, it makes sense: if you’re someone with an online business, settling down away from bustling startup ecosystems could be an attractive option—and make tax season a breeze.
Here’s another surprise: Even in states that ranked well in every other factor, sales tax can sometimes be an issue. For example, Nevada is a great state for service-based businesses, but for those selling goods, the 6.85% sales tax rate can be a bit steep. That said, most of these top 15 states offer tax situations that are optimal for most business owners, whether they sell goods or not.
The taxation situation
Each state has its own tax rates for different types of companies, so determining the best tax situation for your business might take a little comparison. But if you’re looking to find the most tax-friendly state for your business, this top 15 is a great place to start.
All data was gathered by MoneyDoneRight.com and analyzed in conjunction with Business.org on a state-by-state basis using 2019 tax rates. Business.org ranked the top 15 states, as determined by MoneyDoneRight, based on a set of factors including income tax rates (lowest and highest), corporate income tax rates (lowest and highest), state sales tax rates, and state average property rates.
Choosing the right tax software for your business plan
Looking for some more tips on picking the perfect software for your small business? With so many features offered by even the simplest software out there, it can be tough to narrow down what you need while checking prices at the same time.
A tax software with the right features will help you file on time, file correctly (audits aren’t fun!), and get a better tax return, meaning more money in your pocket.
It might make sense to put features first—after all, any gains from a correctly filed return tend to outweigh the price difference from product to product. But don’t just “ooh” and “aah” over an impressive list of capabilities and extras. Instead focus on the features you know you’ll need. Then find the cheapest product that still gives you everything your business requires.
Take a look at your business plan and make sure your legal structure, products, services, and staff will all work with the tax program features you choose. If you don’t have an official business plan, consider creating one before choosing your software.
Personal vs. business taxes
You’ll also need to decide whether you’re using tax preparation software mostly for personal income taxes or for business taxes.
The biggest shift from personal to business taxes is probably the shift of responsibility. With personal taxes, a lot of the tax preparation falls on the shoulders of your employer. Generally, you just fill out a relatively short form once a year and claim the proper refund.
But if you own a business, you need to know a bit more and you need to prepare a bit more. Depending on what type of business entity you registered, you’ll need to track a variety of forms and deadlines.
For typical full-time employees, the employer withholds taxes from an employee’s paycheck. That means many employees look forward to a nice tax refund as a reward for filing. But with business taxes, you probably shouldn’t expect a refund unless you overpay on your quarterly filings.
For both personal and business taxes, it’s important to keep solid records of your finances. However, personal returns have more restrictions when it comes to tax deductions. Since so many business expenses are tax deductible, keep those business receipts if you want those deductions.
The IRS issues more than 800 types of tax forms and schedules. That’s more than the world’s population of Siberian tigers.2
Forms you’ll need to file business taxes
One key difference between filing personal and business taxes will be the various forms you need to complete. Different business entities each use different tax forms—we’ll give you a quick rundown here.
If 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
What if you’re not running a solo gig? Every member of a partnership, LLC, or S corporation will need 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.
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.
Different situations will 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. As the complexity of your business grows, you’ll probably need more powerful tax software to keep up with all the required filings.
Annual vs. quarterly taxes
After years of ignoring taxes until April tax season comes along, switching to a quarter-based tax schedule can be jarring. Depending on whether you have employees or what goods you sell, you might not have an option.
If you pay employees, then those Form 941s will need to be filed quarterly. Likewise, Form 720, used for excise taxes, will also need to be filled out every three months. Unsure if you’ll need to report excise taxes? If your business plans on selling items like tobacco, alcohol, or gasoline, you are required to charge excise taxes and will need to file those earnings.
Outside of those categories, you have the option of making quarterly payments or a single year-end payment to the IRS. Many businesses choose to file quarterly based off an estimated return. But if you’re willing to set aside money for one large payment, you can simply pay at the end of the tax year.
Take the worry out of tax season
That wraps up our list of the best tax software for small businesses. Whether you found the perfect software to fit your unique situation or chose the reliability of our overall winner, TurboTax, you can rest assured that tax season will be less stressful with the right kind of help.
Check out our guide on filing taxes as a small business for even more tips.
eFile.com, “e-file Tax Return Statistics (by Tax Year)”
TurboTax, “Seven Things You Didn’t Know About Taxes”