When you freelance or run a small business, you’re likely to have a million things to do, so getting your taxes done can be a real challenge. Fortunately, good tax software can help you. The right software can not only help you to handle your returns during tax season, but it should be budget friendly and easy to use, so you can ensure that you find all the deductions that you’re entitled to.
The Basics of Small Business Taxes
If your business is a partnership, S-Corporation or multi member LLC, you are required to file a tax return every year and report your income, deductions, and the profits and losses for your business.
These organizations are flow through entities, so the owners, partners and shareholders must pay taxes on the income. General partners need to file a Form 1065, while a Form 1120S is needed for S-Corps.
LLCs are a little more complex as you can choose how to be taxed, which means that you could choose sole proprietorship, S-Corp, C-Corp or partnership.
As a freelancer, you’re likely to be a sole proprietor, which means that you need to report your income as a self employed individual. This means that you are not required to file a separate tax return, as you can report your business taxes on Schedule C.
Once the business forms for a partnership, LLC or S-Corp are filed, each partner or owner will receive a Schedule K-1. This details their share of income which needs to be reported on their personal tax returns. Independent contractors or business employers should also receive the forms necessary to complete a personal tax return.
Tax Filing Options for Freelancers and Small Business Owners
| Method | Best For | Time Required | Support Level | Accuracy |
|---|---|---|---|---|
| DIY Tax Software | Tech-savvy, budget-conscious filers | Moderate | Basic to advanced (chat, phone) | High (with user input) |
| CPA/Tax Professional | Complex finances, need for advice | Low (time-saving) | High (personalized support) | Very High |
| Hybrid Services | Want automation + human support | Low to moderate | Medium to high (human review) | High |
| In-House Accountant | Larger small businesses with steady income | Very low (ongoing) | Very high (dedicated) | Very High |
Online Tax Software
As a freelancer or small business owner, there is the potential to save money by doing your own taxes using tax software. This can also provide a more hands on experience rather than simply sending all of your paperwork and documentation to an accountant.
According to a National Association of Tax Professionals report, the average fee that tax preparers charged for business returns in 2023 was $604. Depending on your business and the choice of software, you could file your return for a fraction of this amount and still access guidance from tax experts.
Even if you have a more complex business structure and the cost of filing a return through tax software is higher, it is still likely to be far cheaper than hiring a professional.
Online tax software is designed to make it easier for you to prepare your own tax returns. The software typically has easy navigation tools, using a simple question and answer format, so you can follow prompts to enter your income details and deductions to prepare accurate tax filings. Many software platforms allow you to import tax forms, such as W2s directly into the program to make the preparation process even more simple.
While working with a tax preparer can be helpful, tax software aims to provide a similar experience using a guided process, so you can feel as if you’re getting help along the way. However, if you feel confident about filing taxes, there is usually the option to bypass this stage and simply enter your details into the software directly, which can speed up completing the return.
The tax software will also allow you to file your returns electronically. You can also pay any taxes and request a direct deposit payment for any refunds due. This means that you don’t need to spend hours on the phone or take the time to visit your local IRS office.
The Best Tax Software for Freelancers and Small Business Owners
Now you can appreciate the benefits of tax software, you’ll want to know the best options? Of course, every business and enterprise is unique and you’ll have your own personal preferences and requirements, but here are some of the best options in the marketplace.
TurboTax Premium
Small business owners and the self employed can need extra help filing tax returns due to the numerous available deductions. This is where TurboTax Premium shines. While this is one of the more expensive tax software options, it provides excellent customer service and some great tools that can help you to file, including a step by step navigation guide, IRS audit risk assessment and multiple channels to speak to the customer service team.
If you’re worried about the accuracy of your returns or have concerns that you won’t get all the deductions that you’re entitled to, these services are likely to be well worth the additional cost. Providing access to superior support is a real plus for those who are new to filing. You can reach out to the support team via phone, chat or email and you’re likely to only have to wait a few minutes to speak to a representative. Additionally, the TurboTax support team are incredibly knowledgeable, so they can provide accurate answers to any queries you may have.
The software also has some great security features including having a code sent to your phone when you want to log in. This means that you don’t need to remember a password or have to reset the password if you’re a little forgetful.
The only real downside to TurboTax is that there are continual upselling prompts throughout the filing process. Add ons such as identity theft insurance and IRS audit representation may be useful, but since these things are not needed to complete a tax return, the interruptions can be annoying.
TaxSlayer Self Employed
If you’re self employed or operate a very small business, TaxSlayer Self Employed is a solid, low cost tax software. It costs approximately $100 to file a federal return and one state tax return, which is extremely cost effective, particularly when compared to other software options that charge closer to $200 for the same service.
While there are options that offer free filing for self employed people, these often lack customer support, which means that you won’t have expert input into the potentially complex filing process. TaxSlayer offers great value, since you can access a priority phone line if you run into any issues and this expert assistance is incorporated into the software cost, so you won’t get any unpleasant extra charges.
However, TaxSlayer Self Employed is a rather simple software. While it is ideal for self employed returns, if your situation is more complicated, it can be more challenging. For example, if you’re self employed and have a depreciation expense, you would need to fully understand the depreciating terms in order to be able to file correctly.
FreeTaxUSA
Unlike many DIY tax software options, FreeTaxUSA allows free federal filing for almost all tax situations, including the self employed and those with rental properties or small businesses. You can file itemized deductions, claim child tax credit, income tax credit, and more, reporting income from investments, rental properties and more. However, there is a charge for state filings.
FreeTaxUSA guarantees 100% accuracy, so you can feel confident with a maximum refund and you can upgrade to the Deluxe plan to access live chat and priority support. You can purchase audit support from tax experts and identity theft protection. There is also debt relief consultation if you’ve fallen behind with your filings. The Pro Support tier also adds phone support, live screen share, access to a tax pro and help with your federal and state returns.
H&R Block
H&R Block offers a number of plans with varying prices, so you can find one to suit your circumstances and budget. There are two ways to prepare and file as a small business or you could opt for the full service plan, which is far cheaper than TurboTax. The online plans provide access to a tax pro with no additional charges and the document upload and import is simple, saving time on your income and expense data entry.
All paid plans include unlimited live chat and AI Tax Assist, which makes it appealing if you feel you need additional help. The plans also include five federal filings and one state filing, so there is something for everyone, whether you need expert advice or want to file everything yourself. Although it may not have the smallest price tax, this tax software provides a quality user experience that justifies the higher cost.
Features to Look For In Your Tax Software
If you’re not convinced by the picks above, there are plenty of other options on the market. Most tax software options aim to guide the user using prompts to help report all your business income, deduction, and depreciation to help you file the correct federal and state forms. Many platforms have deduction databases, so you can explore the industry specific write offs. However, not all tax software is created equal and there are some stand out features that you should look out for.
Expense Tracking
Ideally, your tax software should help you to keep track of your income and expenses throughout the year. This can save you a lot of time and hassle, particularly during tax season when you need to go through all of your deductions.
There are many software options which are compatible with popular accounting and bookkeeping programs, so you can avoid needing to manually enter the data. You should be able to easily upload expense records, profit and loss statements and other documents.
Accuracy Guarantees
Any tax software that you’re using to file your returns should come with a safety guarantee or some assurance of accuracy. This provides peace of mind that you can accurately calculate your taxes and find all the available deductions. Should the software fall short, you should be able to get a refund of the fees paid or any reimbursements for underpayment tax penalties.
Customer Support
Small business and freelancer taxes can get confusing, so it is crucial that you are able to access expert help. You should look for a software that includes access to specialists or help if you have any queries or questions.
Should You Use a Tax Pro or Tax Software
If you’re preparing your own taxes, you will be taking time away from other areas of your business, so using a tax pro could be a viable alternative. Tax professionals can help you to understand how to maximize your business deductions, determine the taxes you need to pay, which tax forms you need to file and how to take advantage of certain credits. Some professionals will also take a look at your bookkeeping to ensure that it is accurate and correct.
Tax professionals such as CPAs (certified public accountants) are likely to be more costly compared to tax software, but they can be a good alternative if your tax situation is complicated.
However, if you have a rather straightforward situation and you’re familiar with the tax preparation process, tax software can be a user friendly and simple way to quickly and accurately get the job done. The best software will store your returns, making it easier to pre-fill your forms in subsequent years.
While it can take a little time to explore the different software options, it is worth considering which one is best for you. If you’re new to filing and want to go it alone, you need to make sure that you choose a software plan which includes expert advice and guidance. This way if you have a specific question or query, you can reach out to a professional for an answer.
So, think about your requirements, your business situation and your preferences to choose whether tax software or a tax pro is best for you.
FAQs
Can I File For Free If I’m Self Employed?
If you’re self employed and have a simple return, you can file for free using IRS Free File. You do need to have an adjusted gross income of $79,000 or less to use Free File, and it supports self employed tax forms including Schedule SE and Schedule C. There are also some other platforms that offer free filing, so before you decide which option is best for you, explore the free product tiers and options.
For example, FreeTaxUSA offers free filing and may be a better fit for you. So, compare the options to see which is the best fit for your preferences and circumstances.
What’s the Best Tax Software for Small Businesses?
There are some great options on the market, but TurboTax is considered one of the best for small businesses. Although it is not the cheapest option, the software does have some great features for business owners including being able to access personalized tax pro help and creating tax forms for your employees.
Can Tax Software Handle Business and Personal Taxes?
There are tax software options for the self employed who have 1099 income and want to file both personal and business taxes. If you’re a partnership, C-Corp or S-Corp, you will need a separate business tax return, but tax software will often offer online filing bundles that can help you to save money.
Can Tax Software Integrate With QuickBooks?
Many tax software programs can integrate with popular accounting software, but for QuickBooks specifically, TurboTax is owned by the same parent company Intuit. Some QuickBooks plans will allow you to directly do your taxes on the platform without even needing to log into TurboTax, but otherwise, you can simply import your information into TurboTax.
Is Tax Software Secure?
There is no simple answer to this as it depends on the specific software you choose. However, you should look for a software that uses industry standard encryption to ensure that your personal and business information is safeguarded.
How Much Does Tax Software Cost?
This can vary greatly, as it depends on the specific products and plan levels. So, it is important to check the costs for your circumstances.
Can I Get Quarterly Tax Estimates?
The top software such as TurboTax and TaxSlayer do offer all year round tax planning, with tools such as quarterly tax estimates, expense tracking and reminders. If you opt for a cheaper software, it can be a little more complicated and you may need to do a little work to create an estimate. Of course, your tax bill will depend on a number of factors, so it is a good idea to set aside 25% or more of your net profits for taxes. Ideally, you should save 30 to 40%, so you will not face any unpleasant surprises when it comes time to pay your tax bill.
Should I Hire a CPA?
If you’re self employed or a small business owner and are worried about making a mistake on your return, hiring a CPA can be a good idea. If you have employees, you started the business during the current tax year or want to max out your SEP IRA contributions, getting input from a CPA can be invaluable as your return can become very complex. However, if your situation is quite straightforward, good quality tax software will guide you through the entire process, with the option to consult a tax pro if you run into any issues.
