Best Tax Software for Small Business of February 2025
Summary: Best Small Business Tax Software Of February 2025
What Is Tax Software for Small Business?
Tax software is usually online and makes it easier for you to file your small business tax return from start to finish. Online tax software enables you to input your business income and deductions so that you can submit your tax return to the IRS and state agencies. Small business tax software provides helpful guidance and ensures you take advantage of different tax deductions or credits to reduce your tax liability.
Online tax software also gives you an option to pay any taxes owed or receive your tax refund electronically.
Tax Software vs. Tax Preparer for Small Business
Online tax software providers typically offer a self-employed option where users can file a Schedule C (“Profit or Loss From Business”). Although some online tax software providers offer filing options for more complicated tax situations, such as a partnership or corporate tax return, you may want to hire a certified public accountant (CPA).
A CPA is a licensed accountant who helps business owners keep track of their finances, including taxes and government filings. Hiring a CPA to do your business taxes will generally cost more than using tax software, but typically the accountant can help you with tax planning and strategies all year long.
Advantages of Using Tax Software for Small Businesses
If you opt to prepare your own small business tax return, it is important to use good tax software. Here are some advantages:
- Tax software can guide even tax novices. Even if you have little or no tax knowledge, software can help ensure your tax filing is accurate and complies with the most up-to-date tax laws.
- It can save time. Using tax software ensures you can quickly prepare the return without unnecessary steps. Most online tax software will guide you by asking guiding questions so that you can understand what’s needed and cut the time it takes to prepare your return.
How To Choose the Best Tax Software for Small Business
Forbes Advisor offers several best tax software guides to help you choose the right product for your small business needs. Some aspects you may want to consider, based on your business requirements and comfort level, include:
- Fees
- Value for cost
- Ease of use
- Customer service options and quality
- Free filing options
After Forbes Advisor analyzes and scores each online tax product, the software is given a star rating. The highest overall is rated as the best within its field.
Methodology
We looked at nine popular online tax software providers: Cash App Taxes, eFile.com, FreeTaxUSA, FileYourTaxes.com, H&R Block, TurboTax, Jackson Hewitt, TaxSlayer and TaxAct.
We narrowed our list to four finalists offering the overall best online tax software for small businesses.
To evaluate the four, we created a profile for a small business owner with business income and deductions. We ran the profile’s details through the software and scored each option across four categories: ease of use; quality of customer service; pricing; and help with filing. The scores were used for our final ranking.
Online tax software providers typically offer a self-employed option where users can file a Schedule C, “Profit or Loss From Business.” If you have a more complicated tax situation, such as a partnership or corporate tax return, you may want to hire a certified public accountant (CPA).
Frequently Asked Questions (FAQs)
What are some tax write-offs for small businesses?
Small business owners should claim deductions to reduce their tax liability. Depending on the type of business you own, there are many deductions you may be able to claim, including:
- Credit card interest
- Education expenses
- Travel
- Meals
- Advertising
- Rent
- Retirement savings
When must you pay taxes on small business earnings?
Small business owners typically pay quarterly estimated taxes, which may include self-employment tax plus income taxes. Generally, quarterly taxes are due April 15, June 15, September 15 and January 15. If a due date falls on a weekend or holiday, the taxes are due the following business day.
You can use Form 1040-ES, “Estimated Tax for Individuals,” to figure the amount of your estimated taxes.
Can a small business do their own taxes?
Yes. If the business owner uses online tax software, a small business can file its own tax returns without having to pay a professional. Even so, depending on the complexity of the tax return and the business owner’s tax knowledge, it may sometimes be a good idea to seek help from a certified public accountant (CPA) or another tax professional.
How does tax software help small businesses?
Online tax software can help small businesses complete their tax returns quickly. Most of the software is easy to use, provides step-by-step guidance and offers professional tax help. Since you won’t need extensive tax knowledge to use tax preparation software, it may be a good option for small business owners who want to complete their tax returns themselves.
Will I get a tax refund if my business loses money?
It depends.
A small business may experience a net loss if its expenses exceed its revenues. And depending on how a business files its tax return, in some cases, the loss can generate a refund.
For example, let’s say a small business owner chooses to file as a sole proprietorship for the tax year. During the year, he also has income from a part-time job that includes taxes withheld. Since he paid federal income tax throughout the year, the loss on his business may generate a tax refund.
Can I file my small business earnings on my personal tax return?
If you are a sole proprietor, you can include your small business profit (or loss) on your tax return, Form 1040, “U.S. Individual Income Tax Return.” To do so, you would first complete Schedule C, “Profit or Loss From Business,” and report your income and expenses for the taxable year. Next, you would transfer your net profit (or net loss) from Schedule C to Form 1040.
Why are small businesses audited?
The IRS may audit your tax return for several different reasons.
For starters, the IRS uses an internal scoring system to compare your tax returns against the norms for similar tax filings. Your return’s score may suggest a potential audit.
Or the IRS may select your tax return for audit in the event that another related tax return was audited. For example, the return of a business partner or investor may raise questions about transactions included on your tax return.