Preparing taxes is notoriously complicated, tedious, and expensive, especially for freelancers and small business owners managing their finances independently. Fortunately, the emergence of user-friendly cloud-based tax software now provides an affordable automated solution to radically simplify the entire tax filing process.
In this comprehensive guide, we will cover:
- Must-have features to look for in DIY tax prep software
- Top 3 affordable options under $50/month
- Pricing breakdown across tiers
- FAQs on selecting the right tax solution for your needs
- Leveraging integrations with other business systems
- Tax policy resources and staying updated
By the end, you’ll have the knowledge to confidently choose tax software that saves money, reduces stress, and sets your small business up for streamlined success this tax season and beyond.
Chapter 1: Essential Features in DIY Tax Software
Tax prep software eliminates the need for manual form filling, complex math calculations, and trips to an accountant. The best solutions provide these essential features:
Data Importing
Automatically import financial data from accounting systems, bank/credit accounts, payroll processors and other platforms. Eliminates 100+ hours of manual data entry.
Tax Form Library
Instant access to complete federal and state tax form libraries. Auto-populated based on imported financial data.
Payment Estimates & Planning
Preview granular tax payment estimates across potential scenarios. Proactively plan quarterly payments and maximize deductions.
eFiling
Electronically file completed federal and state tax returns directly to IRS and state agencies in one click after completion.
Multi-User Collaboration
Securely share tax documents, data and tasks with staff or external accountants also using software.
Support & Advisory
Access context-sensitive FAQs, chatbots and tax experts to resolve queries on complex tax code application.
Chapter 2: Leveraging Integrations with Other Business Systems
To maximize the time and cost savings derived from tax software, explore what critical small business systems can integrate directly:
Accounting Software
Sync transaction details from Quickbooks Online, Xero, FreshBooks and others to eliminate duplicate data entry.
Bank & Credit Card Accounts
Connect financial accounts to automatically import income, expenses, deductions etc.
Payroll Processors
Import W2s, payroll summaries and other data from Gusto, OnPay and similar platforms.
Payment Processors
Integrate Stripe, Paypal, Square transaction data containing customer payments.
Comparison Shopping
Evaluate which platforms your existing systems integrate with. More connections = bigger time savings.
Chapter 3: Tax Software Pricing Breakdown
DIY tax software is available across diverse pricing tiers to suit all budgets and needs.
1. Free Plans
Limited basic features and tax form access, ideal for very simple filing needs.
2. DIY Under $50/month
Optimized for freelancers, consultants, and very small business owners handling taxes internally.
3. Growing Business $50-$100/month
Additional features like multi-user access and more integrations are needed to expand businesses.
4. Accountants & CPA Firms: $100-$300/month
Comprehensive practice management and advisory tools for tax professionals.
5. Large Enterprises: $300+/month
Full suite of tax functionality for complex multi-entity organizations.
Chapter 4: Staying Updated on the Latest Tax Policies
With constant tax policy updates from the IRS and state agencies, here are pro tips to stay compliant:
Cloud-Based Software
Choose internet-based tax software that regularly updates with new IRS rules automatically.
Resources for Tax Professionals
Consult reputable sites like IRS.gov and journals to learn about new policies.
Continuing Education
Consider tax-focused finance courses to keep your knowledge sharp. Some count as CE credits.
Set up Google Alerts
Be the first to know about relevant tax changes via email and app alerts from Google.
Meet With Your Accountant
Schedule an annual tax planning meeting to discuss new regulations and your optimal filing strategy.
Conclusion & Next Steps
The key to radically simplifying tax preparation is ultimately choosing affordable DIY software that provides robust automation that eliminates the complexity, frustration, and potential penalties of manual filing.
For freelancers, consultants, and small business owners, the top solutions discussed here can save countless hours this tax season while optimizing deductions and planning for future growth.
Focus your search on offerings providing integrated features that eliminate archaic paperwork, manual calculations, form lookups, and unnecessary accounting costs. Then tax deadlines should go smoothly and painlessly for years to come, following the guidance above!
FAQs: Choosing DIY Tax Software
Here are answers to other commonly asked questions about selecting affordable tax prep software:
Q: What features do freelancers specifically need?
Mileage tracking, quarterly estimate planning, bank data imports, and self-employment deductions.
Q: What is the ideal budget range I should target?
DIY software plans under $50 per month provide robust freelancer features without breaking the bank.
Q: Which federal and state tax forms are covered?
Common self-employed filings like Schedule C, plus layers of less common forms. Verify specific federal and state form support before purchasing any DIY tax software solution.
Q: How up-to-date is the handling of the latest tax law changes?
Opt for newer cloud-based software offerings that update regularly based on the latest IRS rules and tax policies.
Q: What other small business platforms should I evaluate for integrations?
Banking, accounting software, payroll processors, and payment systems. Automate data transfers into tax software.
Q: Can I import last year’s tax return data as a starting point?
Yes, retrieving your prior year’s data pre-fills abundant information for easy multi-year filing, projections, and planning.