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How to Choose Online Tax Software for Business: A Buyer's Guide

How to Choose Online Tax Software for Business: A Buyer's Guide
Credit: topseller/Shutterstock

Doing your taxes yourself can be overwhelming and stressful, especially if you own a small business. Still, if you're looking to save money by avoiding the accountant's office, tax preparation software can make the process far less painful. But since taxes are so important and sensitive — you can be fined or audited if you file your taxes improperly — you have to choose the right software.

To help you pick a product that will get the job done right the first time, Business News Daily studied and reviewed some of the leading companies in the online tax software space. Ultimately, we came up with best picks to suit entrepreneurs of all stripes, and we created this guide to help you through the selection process step by step so that you end up with a solution that best suits your business.

Already prepared to choose your online tax software? Here's a breakdown of the rest of our coverage:

There are some important questions to keep in mind, like which forms the software can file, whether state returns cost extra, how many deductions and credits the software searches for, and how it will disburse the money from your tax returns. Most importantly, how accurate is the software? Does it double-check every field, and will it correct any human errors? These aspects and more are imperative to consider when choosing an online tax software.

Most online tax software vendors have several tiers of pricing plans, depending on your needs. For business owners, the highest tier is generally required. However, even if a lower tier could cover your needs, it's worth considering spending the extra cash. It could pay for itself many times over in the long run. Every company is different, so be sure to examine pricing structures and the features you have access to at each level. Sometimes less is more, but you typically get what you pay for with tax software. You can easily find cheaper solutions, but usually they cut corners or lack essential features. On the other hand, sometimes cheaper services prove highly effective. It all depends on your needs, but be wary of the variations in pricing when browsing companies.

Let's face it — most people aren't programmers, and some aren't even very computer savvy. You're going to want to test any tax software before you buy it, and for the most part, there will be many free demos available. You don't want to take a shot in the dark only to find out the software you purchased is a nightmare to navigate and makes the process of completing your filing forms confusing. You have enough on your plate running a business; don't add a technological fiasco to your agenda. Most systems are simple to learn and easy to use once you take a few minutes to get acquainted with the user interface, but it never hurts to try before you spend any money. If a company doesn't offer a free demo, ask for one; if they still refuse, that should be a red flag. Most reputable companies will let you take their software for a test drive before expecting you to buy.

It's also important to consider how you'll be paid any money that you're owed on your tax returns. Some software makes this supereasy, with direct deposits, PayPal options or even just the traditional check-by-mail. Others support only specific delivery methods. It's wise to check that the software you choose supports whichever disbursement method is most convenient for you.

Of course, one of the most important features of any tax software is the sort of forms it can file. If the specific forms you need to fill out are unavailable, that just makes your decision easier! Make sure the forms you need are supported. Most of the leading software programs on the market support an avalanche of forms, so odds are good you'll be able to find what you need. But you also need to consider state taxes, not just federal. Does the software offer all the state forms you require? Does it charge an additional fee for state returns? If so, how much? These are key questions to ask before moving forward with any product.

Any tax software worth its salt maintains a database of hundreds of tax deductions and credits. Unless you know for sure how the company has built deductions into its system, it's hard to tell if your software will overlook opportunities for you to reduce your tax burden. Make sure you speak at length with a company rep about how the software deals with deductions and credits, and about how you can be sure of its accuracy. Most online tax software runs an accuracy check on itself to ensure precision; press the reps for details on this information. Your tax filing is only as good as it is accurate. Hold the company to account for its product.

This one is pretty straightforward: How can you access the software, and how do you intend to use it? Some programs are accessible entirely online, while others are downloadable. Some online tax software is both online and downloadable. Also important is whether the software is mobile-friendly. If you intend to use the program on the go, whether you just want to check up on your financials or it occurs to you that you've forgotten some key piece of information, mobile access is essential. Some companies offer all three: online, downloadable and mobile; others only offer one. Be sure you know what the software you buy can do.

You can still run into snags with even the best online tax software, and so it's useful to have a layer of human support behind the program. Many companies offer on-call tax preparers that you can rely on in a pinch. In some cases, they are included with the price of the software package; in others, they represent an additional cost. Be sure you know the plan your vendor-partner provides and whether you actually need the added support.

Of course, the quality and availability of both technical support and customer service are important. If something goes wrong, you want reliable, helpful and forthcoming staff members responding to your requests for information. Become acquainted with the company before making a final decision; good tech support can turn a crisis into a minor inconvenience, so don't compromise value here.

So long as you do your research, you can be confident that the tax software provider you choose will make the headache of tax season a little bit easier to handle. At best, you might even collect some money you didn't realize you were entitled to.

Ready to choose an online tax software? Check out our best picks list here.

Adam C. Uzialko

Adam received his Bachelor's degree in Political Science and Journalism & Media Studies at Rutgers University. He worked for a local newspaper and freelanced for several publications after graduating college. He can be reached by email, or follow him on Twitter.