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Best Tax Software for Very Small Businesses: H&R Block

Best Tax Software for Very Small Businesses: H&R Block
Credit: H&R Block

After conducting significant research into online tax software, we recommend H&R Block as the best tax software for very small businesses. We chose H&R Block from dozens of online tax software options for companies incorporated as limited liability companies (LLCs) or partnerships. To understand how we chose H&R Block, you can read our methodology and a list of online tax software vendors on our best picks page.

We found H&R Block to be the most suitable software for very small businesses because it's easy to learn and use, and provides access to personalized attention from H&R Block's tax professionals. Although the software also provides useful corporate income tax services, we specifically focused on its application for pass-through entities filing personal income taxes, such as LLCs.

In short, of all the online tax software products we reviewed, H&R Block was among the easiest to learn and use. Ease of use is essential for busy entrepreneurs, so H&R Block scored big points with its simplicity.

Moreover, H&R Block includes strong features and a wide array of filing forms. The software has federal taxes completely covered and also offers generous state filing options. Overall, the system searches through a database of 350 deductions and credits to make sure you're really getting what you're owed, and it will correct any errors it comes across to ensure the accuracy of your filings. Users can either download the software or complete their filings online.

Put simply, H&R Block is highly user-friendly. The whole point of tax software is to simplify the process of filing taxes without having to turn to an accountant, and thus difficult or complex tax software defeats the purpose. H&R Block excels at making the filing process straightforward and easy to navigate; you don't need to be a tax professional to navigate it.

The main screen displays several tabs, including a welcome screen, your federal taxes, state taxes, an e-filing tab and tax planning. It also includes a sidebar that shows your current federal and state return numbers, a help screen and a list of frequently asked questions.

When you begin filing your taxes, you are asked to complete a survey about life and such as your name, address and Social Security number, as well as employer information. The software is secured with bank-level encryption so your information will be protected.

From there, the software fills out the appropriate form and displays the results for your inspection. It will correct any errors it catches along the way.

Listed below are some of the most useful or impressive features H&R Block offers. In essence, all of these features work together to provide an automated tax experience that takes minimal effort from the user to produce an accurate tax filing to the IRS. Here's a look at what this software can do:

  • Free imports: H&R Block can import your data from your W-2 or from other leading software, such as TurboTax or Quicken, so you don't have to redo all that entry if you're switching from another vendor. Simply import the information into your new software, and let it take care of the rest.
  • Step-by-step filing: The software guides you through the filing process by bringing up on-screen prompts in plain language. The instructions are easy to understand and follow, and help keep you on the right track as you proceed.
  • Filing forms: The premium version (essentially required for business) includes support for itemized deductions, investment income, retirement income, self-employment income and rental properties. For businesses, these include corporate filings, such as Form 1120; pass-through filings, like Form 1065; and nonprofit filings, such as Form 990.
  • E-filing: Send your tax filings directly to the IRS through the software. The data sent through the program is encrypted and secure.
  • Free, unlimited tax advice: H&R Block comes with free access to a tax expert, as well as free in-person audit support. Users of the paid service can schedule a face-to-face meeting at one of H&R Block's 11,000 locations across all 50 states online.
  • Reporting assistance: This feature is available for managing income from capital gains, home sales and retirement assets.
  • Free storage: Archive your documents for later use, whether for a personal accounting need or in the event of an audit.
  • Maximum-refund guarantee: If using another vendor's software results in a larger tax refund, H&R Block will refund any fees you paid to that provider for your tax return.

One of the most impressive aspects of H&R Block's tax preparation software is its accuracy. The software typically alerts the user when erroneous information has been entered, or when information is entered in the wrong field. The software was particularly effective at catching mistakes made by human error; it fared as well, if not better, than our other leading contenders. Confidence in your tax software's outputs is essential, so this was a big plus for H&R Block.

In addition to being accurate, H&R Block is thorough. It compares your tax filings with a database of hundreds of deductions and credits to make sure you're getting everything you're owed. Beyond the automated assistance, users can get advice from the tax experts at H&R Block for no additional cost. So when you're not sure if everything is quite right or you just have general questions, there will be a person prepared to offer you some answers.

One of H&R Block's standout qualities was its high level of customer service. To test H&R Block's customer service, we called the company, posing as a business owner. The representatives we spoke with were highly engaged, knowledgeable and eager to answer all of our questions about the software. After our call, we confident that H&R Block's customer service team was honest and largely helpful in our search for the most suitable tax software for our hypothetical business.

There is online live-chat assistance for both customer service and technical support, as well as 24/7 phone support. Plus, H&R Block is one of the largest tax preparation companies, with more than 11,000 locations across the U.S., so there is likely an office near you in case you need in-person assistance.

For an additional fee, H&R Block also offers tax audit services and assistance from tax professionals. If you're targeted for an audit, these additional services might prove especially useful.

One downside of H&R Block is that state business filings are not included; those cost an additional $29.99, which makes the total cost somewhat high. Although the additional fee might be a surprise, the software remains relatively inexpensive for the level of service it provides.

Another limitation is that the import feature supports only the W-2, 1099 and previous year's data from other supported programs. Business tax filings will have to be redone through the software. Fortunately, filing step by step takes only about a half-hour and isn't a particularly strenuous process.

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

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.