Best Tax Software for Small Business 2021
If you’re one of the many people that picked up a side hustle, freelance work, or ran a small business this past year, you’ll need to file business taxes. So in this article, we’ll outline the best tax software for small businesses. Let’s get started.
Best Tax Software for Small Businesses
TurboTax remains one of the best tax software solutions for small business owners. It’s been around for a long time and has one of the best platforms you can find. What I like most about TurboTax is the overall design of how you do your taxes. Intuit (the makers of TurboTax) does an excellent job focusing on user experience.
For example, it’s easy to input your W-2, 1099, or any other tax-related income document into the system. From there, TurboTax will take you through a series of sections, each with its own detailed questions. And the questions are dynamic, so they change based on how you answer previous ones.
If you’re self-employed, TurboTax Premier is going to be your best option. It caters to the small business owner and ensures you’ll have all the right documents available for filing your business taxes. Premier has several other advanced features, too.
To learn more visit TurboTax or read our full TurboTax review.
H&R Block has also been around for a while. And for a long time, their value proposition was the ability to go to a physical H&R Block location to have your taxes done by someone. While that option still exists, H&R Block has definitely put more of a focus on their online tax software.
It’s overall less expensive than TurboTax but has many of the same features (though their platform isn’t quite as intuitive). You’ll also get asked questions as you go through the flow of doing your taxes, however, some of the feedback isn’t as detailed as I found with TurboTax. Meaning, TurboTax does a better job of providing you with additional resources based on your answers.
If you’re self-employed, however, you’ll save some money with H&R Block and they do offer a 100% accuracy guarantee. So if anything is messed up on their end, they can reimburse you for any fees, late charges, etc. They can also provide additional support specifically to help you navigate small business or self-employment deductions. Freelancers, for example, will find this feature helpful.
Learn more here or check out our H&R Block review.
Liberty Tax was actually founded by the same person that founded Jackson Hewitt (John Hewitt). It has physical locations you can go to if you want your taxes done by a professional, but it also has an affordable online tax preparation software you can use. In fact, Liberty Tax is a lot cheaper than others on this list.
Its self-employment plan is no different. It’s affordable and is catered toward small business owners, contractors, and freelancers. Like Jackson Hewitt, Liberty gives you the ability to do more on your own as it doesn’t have the same level of guidance you’d find with, say, TurboTax.
One thing I like about Liberty Tax is its Tax Lounge blog. It offers a ton of tax-related resources that are incredibly helpful. So if you are filing on your own, you should have more than enough information at your fingertips.
Read more at Liberty Tax, or read our Liberty Tax review.
TaxSlayer has come a long way in the past couple of years. It’s a family-owned business now competing with giants like H&R Block and TurboTax, mostly because the software is great and its prices are unmatched for similar services. In fact, TaxSlayer kept all its pricing the same from 2020 (so no changes for this year).
It has four different packages to choose from, and the Self-Employed package can suit anyone who owns a small business, does freelance work, or just has a side hustle. The Self-Employed package is just $47 (state additional), which blows most of the competition out of the water.
TaxSlayer is also laser-focused on providing the best customer experience possible. So you’ll find tons of tax-related resources on the site and within the app. It’s also made a few notable improvements to the app this year, to make doing your taxes on your phone a lot easier.
Check out our full TaxSlayer review for more details or visit TaxSlayer.
FreeTaxUSA is by far the cheapest option available that I would recommend. Federal filings are free, and each state you file is just $12.95. Plus, you can import prior year returns from TurboTax, H&R Block, and TaxAct.
So what’s the catch? Honestly, not a lot. You’re not going to get as much guided advice as you would with TurboTax, and the questions aren’t going to be as detailed or dynamic. But, if you know roughly how to do your taxes on your own, this might be the best way to go since it’s such a low cost.
FreeTaxUSA also gives a 100% accuracy guarantee and ensures you’ll get the maximum refund possible. And the Self-Employed plan is free, too. It supports all the major forms you’ll need as a small business owner, freelancer, or contractor. The reviews are excellent from over 300,000 happy customers, so it’s definitely worth a try.
Read our FreeTaxUSA review to learn more or go straight to FreeTaxUSA.
TaxAct is another low-cost online tax preparation software. You aren’t going to get the level of guidance and robust features you’ll find with TurboTax or even H&R Block, but it does the job. And it does it at a great price. They have software designed for freelancers and those who own small businesses, too, so you’ll be in good hands.
One of the unique features of TaxAct is their life events section, which allows you to select major life events that you’ve had in the past year to ensure the software accounts for those events as you’re filing your taxes (questions, forms, etc.). TurboTax does a nice job at this, but honestly, its life events area can be incredibly overwhelming. TaxAct keeps it simple and straightforward.
The design and flow are a bit more flawed than others on this list, so you might run into issues with the cluttered interface. That said, TaxAct is a solid product at a great price. And if you’re a freelancer looking for a middle-of-the-road option, this is it.
Read our TaxAct review to learn more about this product or go straight to TaxAct.
Like H&R Block, Jackson Hewitt has been around for a long time (since 1982). Its core business model was focused on in-person tax filings, but it’s now up to speed with the times and is offering online tax preparation.
The online platform doesn’t have many bells and whistles, but it does give you a bit more control over specific pieces of your taxes. So if you typically do your taxes on your own, you might really like Jackson Hewitt. Plus, if you get stuck or you just want to hand the work over to a trained professional, you can do that at any time during the process. That will be helpful for those who are self-employed and may run into complexities they either don’t know how to solve or don’t want to deal with.
Jackson Hewitt also has a 100% accuracy guarantee, so if any mistakes are made on their end, you won’t be penalized. You can also get live support via chat as you’re doing your taxes, so if you really want to push through it on your own but need just a bit of extra help, you’ll find lots of live support through Jackson Hewitt.
Read our Jackson Hewitt review for more details.
Additional Resources for Small Businesses
While we’re talking about taxes, let’s make sure we point out some other resources you’re bound to need as a freelancer or small business owner. Here’s a list of articles you may find helpful:
Absolutely, you can use TurboTax for a small business – regardless of its size. Its Self-Employed package gives you everything you need to file both personal and business taxes all at once. Regardless of whether you’re a freelancer, independent contractor, or larger business.
Even if your LLC made no money in the past year, you still may be required to file a tax return. Also, if your net income is $0, that may still indicate that you had business earnings, but business expenses wiped those earnings out (from a tax perspective). It’s best to err on the side of caution and file a tax return, anyway.
Owning a business allows you to, within legal guidelines, deduct business expenses from your business’ revenue. So for example, if your business made $50,000 and you had $10,000 in business-related qualifying expenses, conceptually you could “write-off” the $10,000 and you’d pay taxes only on $40,000 of income. As always, there are exceptions, so it’s best to talk to a tax professional first.
The best do-it-yourself tax program is going to vary depending on your specific circumstances. TurboTax is widely regarded as the best tax preparation software, and its Self-Employed package allows you to file both personal and business taxes at once. However, software like FreeTaxUSA offers the same outcome through a different means – you won’t get all the bells and whistles – but it’s completely free to file your federal return.
The IRS doesn’t actually define what a small business is or isn’t. It does, however, enforce the definitions that are outlined in each state’s tax laws. Meaning however the state defines a small business will be supported by the IRS.
The primary difference between a small business and being self-employed is that a small business has a company behind it (which may include a physical location, employees, inventory, etc.). Someone who is self-employed is the business, for all intents and purposes. When it comes to taxes and legalities, the differences are stark. For example, if someone who is self-employed (like a freelancer) is sued, they could have their personal assets taken as part of a lawsuit. A business (at least one that is legally-structured as such) only risks the assets of the business, since it’s a separate legal entity from its owner. Make sure you speak with a legal or tax professional for more information on this circumstance, however.
How We Came up With This List
The online tax preparation software landscape is increasingly competitive. It seems as if there are new options available every year with existing brands evolving as the space gets more and more competitive. Because of that, there were a few qualifying factors we looked at when choosing this list:
- Self-Employment options. This one is a no-brainer. We wanted to find tax preparation software that had not only a self-employment option but a good self-employment option. All of the options here have everything you need to file your taxes as someone who is self-employed.
- Supports freelancers and independent contractors. Small business taxes are one thing, but what if you have a side hustle or you’re a freelancer? We found options that suit those folks, too. So even if you’re doing five hours of freelance work a month, these options can be well-suited for you.
- User experience. This varies with the list above, but for the most part, the user experience of all these options is good. Meaning, you should have no issues signing up and doing your taxes. Now, some have a better UX than others (like TurboTax for example), but there are pros and cons to each option.
- Cost. We wanted to find options that are affordable, as well as include a range. For example, a business making exceptional revenue might have no issues paying for all the bells and whistles of TurboTax (and their many add-ons). A freelancer just getting started, though, might opt for something like FreeTaxUSA. Regardless, we consider the costs of the options here to be affordable and reasonable.
Before you dive into doing your taxes, especially as a small business owner or freelancer, make sure you have all the documentation you need. And take some time to review the options laid out in this article. Not every option will be right for every person. Pick the one that suits your price range and tax needs best. Either one you choose should allow you to knock out those taxes in no time.