Business Tax Programs Can Make a Hard Job Easier for Entrepreneurs
I haven’t found a way to make paying taxes pleasant or even particularly easy, but tax-preparation programs are now available for small businesses that take away some of the drudgery.
The two leading personal tax programs--TurboTax and Kiplinger TaxCut--are designed for individual returns but allow sole proprietors to file a Schedule C. These programs are adequate for some small businesses, but many will need more specialized tax services.
Intuit, the publisher of Quicken, Quickbooks and TurboTax, has created a special version for small businesses. TurboTax for Business prepares returns for sole proprietorships (Schedule C), corporations (Form 1120), S corporations (Form 1120-S) or partnerships (Form 1065). You get to choose which type of return you want to prepare, but if you want to use it for more than one type of business, you have to call the company to purchase a code ($54.95) that lets you install another module.
Like the programs designed for individual returns, the business software takes you through an interview process, asking you the same questions that a tax professional might ask. Once you enter information into the program, that’s it. The software carries all data to the appropriate form. Another advantage to tax-preparation software is that the program does the math for you, virtually eliminating arithmetical error. Of course, the software has no way of knowing if you’ve entered the correct information. And, just as with a professionally prepared return, the IRS holds you responsible for any errors or omissions.
The program is especially useful if you use Quicken or Quickbooks to maintain your books throughout the year. You can save a lot of time by importing the bulk of your data from either program.
TurboTax for Business has all the features of TurboTax Deluxe, so you can use it to prepare personal returns for all members of your family. In addition, it has a depreciation expert, which provides considerably more help in an area that I have always found to be puzzling. The program also provides a two-year side-by-side breakdown of your 1996 and 1997 income and expenses. Other business-specific features include “U.S. Averages by Industry” to determine how your income and expenses compare with other businesses in your industry and industry-specific ratio analysis to help you measure your company’s profitability and performance compared with similar businesses.
You’ll also find a deduction finder, an audit alert feature and extra guidance for those of us who operate a home-based business.
One thing I like about the program is the immediate access to online help. The program comes with on-disk versions of the book “Tax Savvy for Small Business” as well as “J.K. Lasser’s Tax Deductions for Small Business.” There are also links to World Wide Web sites for additional information.
Like the personal edition of TurboTax Deluxe, the CD includes video advice from Marshall Loeb, former Fortune magazine managing editor, and from tax attorney Mary Sprouse. Some videos are specifically aimed at small business users. As a frequent business traveler, I paid special attention to the video on what is and isn’t allowed when traveling overseas and in the United States.
The best software in the world isn’t necessarily a replacement for a tax professional if you need strategic advice or just don’t feel comfortable doing your own business tax returns. Some people use a tax program to help them organize their data and get an initial estimate of what they owe, then go to a professional for advice or for their final return.
Intuit also publishes a ProSeries line of software for tax professionals, which is able to read data from an individual’s TurboTax return. You can find a tax professional who uses that software by calling (800) 765-2894.
TurboTax for Business retails for $69.95. The software for your state personal return costs an additional $24.95. For California and some other states, you can also purchase corporation and S corporation state modules for $34.95. If you simply need a personal return and a Schedule C, you can purchase TurboTax Deluxe for $49.95 or standard TurboTax (without the multimedia help) for $34.95. TaxCut Deluxe Multimedia costs $39.95. For $19.95 you can also download a copy of TaxCut without the multimedia help features at https://www.taxcut.com.
Having access to the World Wide Web can also help you at tax time. The IRS, believe it or not, has a pretty user-friendly Web page (https://www.irs.ustreas.gov/) that includes an area called “Tax Info for Business.” The agency also has a “Tax Professionals Corner,” designed to “make it easy for tax professionals to find everything they need.” The IRS also has a page where you can download and print out most tax forms. You’ll find a useful directory of other tax sites at https://www.taxsites.com/. Another useful site is https://www.1040.com, where you’ll find advice, news and an easy-to-use directory of federal and state tax forms that you can download, print out and use.
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Lawrence J. Magid can be reached by e-mail at magid@latimes.com
