3 Tips to Make Selecting Tax Software Not Taxing

By Dennis Byrne

If you keep a clearly marked supply of cigar boxes with all your receipts and expenses in them you’ll be sufficiently organized come tax time. Right?

Wrong! This is 2011 for crying out loud. Savvy businesses scan, store and organize essential information and tax laws and regulations, depending on the business, can be complex.

As a small business owner, tax software packages can help make filing and paying your taxes easier, but how do you know which one to choose? Here are three tips to consider when selecting your tax software.

Choose Software by Correct Business Entity Type

When buying software, many people debate between purchasing the most expensive package, thinking it will definitely have what they want, or the cheapest, thinking it will get them by. This is not a good model when buying your tax software. Different software packages are designed to help different types of business entities.

Sole proprietors, consultants, contractors and single-owned LLCs have different forms than S Corps, C Corps, partnerships, and multiple-owner LLCs. In order to keep the price down, many software developers split their small business packages by business entity. The more complicated your tax situation, the more expensive the software gets (but still usually no more than $150-$200.)

If you simply buy the most expensive package, it may overcomplicate your taxes and not have the correct forms preloaded into it. If you buy the cheapest software it likewise, may not contain the tools you need to file. Take some time and research what software version will best suit your business.

A Simple Check Will Make Sure it is Compatible Software

Another possible issue is compatibility. Computer compatibility is not as big of an issue, since most software will run on recent Windows or Mac operating systems. Most compatibility issues are due to other software. There are standards, so even if you used specific software last year, most of the data should be able to be imported, but that will vary from software to software. 

Another issue is compatibility. Is your tax software compatible with your accounting software? Some software packages work well together, so you do not have to take time to retype in data.

Is Technical Support Included?

When buying any type of software, you should consider what technical support is included in the price. Many will offer 24/7 technical support on installing and troubleshooting issues, however you may want to consider how much tax support you receive. Well-known tax preparation companies have collaborated with the tax software companies to provide tax support. If you have a specific question on a deduction you can take or any other specific tax question, you can call someone and ask him or her. This support is not always included, so take into account the cost per call or per minute if you do need to contact them. And remember, when it comes to taxes IRS gets the final word.

Tax software lets you do your taxes anytime and without needing extensive knowledge of taxes. However, if you feel that you have a special circumstance, it may be better for you to go and get your taxes done in person by a professional. Having the peace of mind can be worth the extra cost. For help, see Selecting a Small Business Accountant.

If you have additional questions about filing and paying your taxes, post them on the Filing and Paying Taxes discussion board.

Related Resources

• The Ultimate Guide to Business Taxes
• Tax Preparation: 3 Essential Online Tax Resources to Add to your Toolkit
• Small Business Tax Preparation Tips – Stay a Step Ahead of “Tax Season” Today