Software to Make Tax Filing Less of a Burden
Congratulations if you’ve already filed your business tax return. If not, read on.
The leading companies that publish tax software for individuals also make versions for sole proprietors and other small businesses.
Intuit’s TurboTax (https://www.turbotax.com) for years has been the leading program for individual tax returns, followed by Block Financial Corp.’s Kiplinger TaxCut (https://www.taxcut.com). Both companies have versions to ease the paperwork for small businesses.
Intuit offers TurboTax Home and Business ($69.95) for sole proprietors; and TurboTax for Business for corporations, S-corporations and partnerships ($84.95). Both programs are built around a question-and-answer session that’s modeled after the oral interview a tax professional conducts to gather information for preparing a return.
The Home and Business program is a souped-up version of the popular TurboTax Deluxe that is used by millions of individual taxpayers. In fact, it can also be used for your personal return.
In addition to the features you need to prepare your personal taxes, it provides extra help with the home office deduction and business tax planning and depreciation, and it comes with on-disk tutorials aimed at small-business owners, including J.K. Lasser’s “Tax Deductions for Small Business.” All versions of TurboTax help taxpayers understand how their situation compares with others’, but the Home and Business version also includes industry-specific advice that compares the deductions you take for your business with U.S. averages of other companies in your industry. The program does your math, so the likelihood of an error is greatly reduced.
The basic program handles federal returns only, but Intuit also publishes compatible individual tax-return software for California and most other states.
A separate program, TurboTax for Business, is designed for corporations, S-corporations and partnerships. It, like the Home and Business version, helps you maximize depreciation deductions, provides industry-specific advice and is based on an interview format. State returns are handled by compatible business state tax versions of TurboTax. Both the Home and Business and Small Business versions of TurboTax also provide a two-year side-by-side breakdown of 1997 and ’98 income and expenses.
New this year is Kiplinger TaxCut for Your Business ($49.99), from Block Financial. This product, which covers corporations, S-corporations and partnerships, provides the basic business forms and official IRS publications and instructions. The software can also be used for a regular 1040 and a Schedule C. Sole proprietors can use the software to file electronically for free.
All three programs do an audit of sorts to help check the accuracy of your return. The audit can’t guarantee that everything is correct, but it helps find inconsistencies as well as numbers that are out of line with the norm and therefore more likely to attract IRS scrutiny.
As a sole proprietor, I use tax software to get a rough idea of what I owe Uncle Sam, but I don’t use it for my final return. I still prefer to get advice from a CPA, who, admittedly, happens to be my brother. TurboTax has lots of answers, but sometimes I’m not 100% sure what questions to ask. When it comes to large sums of money, I just feel better consulting with a pro.
Another option is to use the software to fill out your return but spend some time with a tax professional to be sure you’ve covered all your bases. Any good tax professional can give you advice, but if you want someone who also knows about TurboTax, you can find such a person through the TurboTax Web site. Just click on Services and then select Intuit Professional Financial Network. You can enter your area code or ZIP Code to find a tax professional who also knows about TurboTax.
The IRS also provides some tax assistance for small businesses from its Web site (https://www.irs.ustreas.gov), which includes an extensive collection of articles extracted from the agency’s voice-response system. Another useful site, Drake Software’s 1040.com (https:// www.1040.com), contains lots of advice and downloadable federal and state tax forms as well as listings of IRS office addresses.
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Technology reports by Lawrence J. Magid can be heard at 1:48 p.m. weekdays on KNX 1070. He can be reached at larry.magid@latimes.com.