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Grow Your Business Finances

How to Choose the Best Tax Software for Your Business

How to Choose the Best Tax Software for Your Business
Choosing the right tax software is the key to making tax preparation easier. / Credit: Man at adding machine image via Shutterstock

One of the most confusing aspects to running a business can be figuring out all of the associated tax laws.

To help ease the process, many small business owners are outsourcing their tax needs to ensure they are always complying with ever-changing laws.

Jonathan Barsade, CEO of the tax solutions firms Exactor, said outsourcing allows small business owners to streamline their workload to let them concentrate on what they do best – managing their business and focusing on sales.

With so many automated tax solutions options available, Barsade offers several tips to help businesses identify the features they should be looking for, including:

  • Find a comprehensive solution: Business owners need to make sure they find a solution that can handle multiple tax jurisdictions and update information in real time. Look for a solution that weighs factors such as local tax holidays, and which can differentiate between the taxability and tax rates of different items. Static tax tables simply cannot provide this kind of knowhow.  Finding an all-in-one, automated solution ensures businesses won't have to cross-reference information and worry about manual compliance with changing rules.
  • Look for a low-maintenance solution: It's also crucial to find a system that won't tie you up the business with constant maintenance. Tax laws change frequently all over the country, these are promoted at least monthly, and when running a busy company, it can be hard to keep up with new developments. Business owners will want a system that handles changes and updates automatically. It should be one that does not require them to remember each month to do a manual intervention from their end.
  • Make sure the software is easy to install and integrate: When selecting a tax engine, it's vital to ensure it can easily integrate into a business's current operation. Look for a system that doesn't require more than a few hours to set up and connect with the current online shopping cart. It should be simple enough to install without requiring any significant support from a software expert.
  • Find a solution that files all tax returns for you: Business owners want to make sure the tax software generates and files the returns for them across the board, including sales tax for all state and local jurisdictions. Look for a solution that continuously updates information to capture changes in local laws and automatically files returns.  Just like you would not invest in a payment- processing solution that processes payments only in certain states, you do not want a tax solution that is limited in scope.  Even if businesses do not sell to certain states, they do not want to have to change their technology provider in the future as they potentially expand and start selling in new states down the road.
  • Ensure that the tax solution partner will back you up: Technology has also made it much easier for taxing authorities to step up the number of notices and assessments they send out to businesses over the past year. When a notice is received, the business has to collect information, provide proof of filing and show evidence of payment to resolve it. Make sure the tax solution partner will do this for you – and will not charge you any extra fees for this service.

Barsade said the bottom line is that business owners need to find an affordable, fully automated, single-source solution that addresses all of their tax compliance needs

"There are affordable services on the market now that can streamline and automate tax filing, giving you more time to focus on your business," Barsade said. "By following these tips, you can find the right fit for your company."

Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.

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