Tax season arrives whether you’re ready or not, and the software you choose can mean the difference between a smooth filing process and hours of frustration trying to figure out which forms your business actually needs.
The right tax software depends on your business structure, budget, and how much guidance you want along the way. This guide breaks down the top options, what features matter most, and how to know when you’ve outgrown DIY filing altogether.
What is small business tax software
Small business tax software refers to programs that help business owners prepare, calculate, and file federal and state tax returns. The best tax software for small business owners depends on your business structure and budget—H&R Block earns high marks for overall value and support, while TurboTax offers seamless QuickBooks integration and an intuitive user experience. For more affordable options, TaxSlayer and TaxAct deliver solid functionality at lower price points.
These programs work by asking you questions about your business income, expenses, and structure, then automatically filling in the correct IRS forms based on your answers. Think of tax software as a guided interview that translates your financial information into the language the IRS expects to see.
One important distinction: tax software differs from accounting software like QuickBooks or Xero. Accounting tools track your finances throughout the year, while tax software focuses specifically on preparing and filing your returns when tax season arrives. Many business owners use both—accounting software to record the story of their finances, and tax software to report that story to the government.
Best tax software for small business owners
Choosing the right tax software comes down to matching your business type with the right tool. Here’s how the leading options stack up:
| Software | Best For | Entity Types Supported | Notable Feature |
|---|---|---|---|
| TurboTax Business | Guided experience | All types | Expert access available |
| H&R Block Premium and Business | Combined personal and business filing | Sole props, S-corps, partnerships | In-person audit support |
| TaxAct Business | Budget-conscious filers | All types | Lower price point |
| FreeTaxUSA | Simple filings | Sole props, Schedule C | Free federal filing |
| TaxSlayer Self-Employed | Freelancers and contractors | Self-employed, 1099 | Industry-specific deductions |
TurboTax Business
TurboTax Business walks you through each section of your return using a step-by-step interview format. The software handles Form 1120-S for S-corporations, Form 1065 for partnerships, and Schedule C for sole proprietors—essentially covering every common business structure.
What sets TurboTax apart is access to tax experts who can answer questions or review your return before you file. This guidance comes at a premium price, though many business owners find the extra support worth the investment, especially when filing for the first time.
H&R Block Premium and Business
H&R Block’s Premium and Business package lets you file personal and business returns together in one program. If you’re a business owner who wants everything in one place, this approach saves time and reduces the chance of missing connections between your personal and business taxes.
The software includes accuracy guarantees and offers in-person audit representation if the IRS ever questions your return. That safety net appeals to business owners who value peace of mind alongside solid functionality.
TaxAct Business
TaxAct positions itself as the budget-friendly alternative. The software supports partnerships, S-corps, and C-corps with capable guidance through the filing process, though with less hand-holding than TurboTax provides.
For straightforward business filings where you don’t anticipate needing extensive support, TaxAct handles the job at a fraction of the cost. It’s a practical choice when your tax situation is relatively simple.
FreeTaxUSA
FreeTaxUSA offers free federal filing with paid state returns, making it one of the most affordable options on the market. The platform works well for sole proprietors and single-member LLCs filing Schedule C.
The trade-off is limited support for complex entity structures like S-corps or partnerships. If your business is straightforward and you’re comfortable navigating the process with minimal guidance, FreeTaxUSA delivers real value.
TaxSlayer Self-Employed
TaxSlayer Self-Employed focuses on freelancers, contractors, and gig workers. The software covers 1099 income, home office deductions, and self-employment tax calculations with features designed specifically for independent workers.
Pricing falls below premium competitors while still offering access to tax professionals when questions come up. For self-employed individuals who don’t need full business entity support, TaxSlayer hits a useful middle ground between affordability and functionality.
Key features to look for in business tax programs
When comparing business tax filing software, certain features determine whether a program can actually handle your specific situation. Here’s what matters most:
- Support for your business entity type: Different entities require different forms. Sole proprietors file Schedule C, partnerships file Form 1065, and S-corps file Form 1120-S. Before purchasing any software, confirm it produces the specific forms your business requires.
- Expense tracking and deduction maximization: Good software identifies industry-specific deductions and guides you through common business expenses like home office costs, vehicle use, and equipment depreciation.
- Multi-state filing capabilities: If your business operates in multiple states or has remote employees in different locations, you’ll want software that handles multi-state returns. Keep in mind that state filings typically cost extra per state.
- Audit support and accuracy guarantees: Audit support means assistance if the IRS questions your return, while audit defense means actual representation. Accuracy guarantees typically cover penalties from software calculation errors—not mistakes in the information you enter.
- Integration with accounting software: Importing data from QuickBooks, Xero, or other accounting tools reduces manual entry and the potential for errors during tax preparation.
Best business tax filing software by entity type
The “best” software depends heavily on how your business is structured, since each entity type has different filing requirements.
Sole proprietors and single-member LLCs
Sole proprietors and single-member LLCs file on Schedule C, which attaches to your personal Form 1040. Most tax software handles this well, making it the easiest business structure to file. FreeTaxUSA and TaxSlayer offer affordable options, while TurboTax provides more guidance if you want extra support walking through the process.
Partnerships and multi-member LLCs
Partnerships require Form 1065 and Schedule K-1s for each partner. This is more complex than sole proprietor filings because you’re dealing with multiple owners and their respective shares of income. TurboTax Business and TaxAct Business handle partnership returns effectively, though the additional forms mean higher software costs.
S-Corporations
S-corps file Form 1120-S plus shareholder K-1s. There are also considerations around reasonable compensation—the IRS expects S-corp owners who work in the business to pay themselves a fair salary before taking distributions. TurboTax Business and H&R Block Premium and Business support S-corp filings with guidance on common issues like officer compensation.
C-Corporations
C-corps file Form 1120 separately from owner personal returns. This is the most complex structure, involving double taxation considerations and more sophisticated compliance requirements. Dedicated business tax software is required, and many C-corp owners find professional guidance valuable given the complexity involved.
Limitations of DIY tax software for growing businesses
As businesses scale, tax software reveals natural limitations. These aren’t software failures—they’re simply boundaries of what automated tools can accomplish.
Missed tax savings opportunities
Software follows your inputs. It calculates taxes based on what you tell it, but it cannot proactively restructure your situation for savings or suggest strategies you haven’t considered. The difference between reactive tax preparation and proactive tax planning often amounts to significant dollars for growing businesses.
No industry-specific guidance
Generic software lacks context about law firm trust accounting, medical practice overhead structures, or SaaS revenue recognition rules. It applies standard tax rules without understanding the unique characteristics of your business model or industry.
Lack of proactive tax planning
Software addresses the current year only. You won’t receive guidance on optimizing estimated payments, restructuring your entity for tax efficiency, timing retirement contributions strategically, or shifting income and expenses across years for maximum benefit.
Complexity ceilings as revenue grows
As businesses approach and exceed seven figures in revenue, tax situations often involve multiple entities, interstate operations, and sophisticated deduction strategies. At a certain point, DIY software becomes inadequate without professional interpretation of the results.
When to move beyond tax software to a financial professional
Several indicators suggest it’s time for professional help:
- Multiple entities or complex ownership structures: Holding companies, multiple LLCs, or partnership interests require coordination that software cannot provide
- Revenue approaching seven figures: Higher stakes mean optimization matters more
- Significant tax liability: When you’re writing large checks to the IRS annually, strategy becomes essential
- Planning a major transaction: Buying or selling a business, bringing on partners, or raising capital all have tax implications that benefit from professional guidance
- Industry-specific compliance: Trust accounting, ASC 606 revenue recognition, or R&D credits involve specialized knowledge beyond what software offers
Software handles compliance—getting the forms filled out correctly. Professionals provide strategy—structuring your situation to minimize taxes legally.
How to choose the right business tax programs for your needs
1. Assess your business complexity
Consider your number of income sources, expense categories, and whether you have employees or contractors. Simple freelance income with a handful of clients requires less sophisticated software than a multi-service agency with complex operations and multiple revenue streams.
2. Determine your entity and filing requirements
Match your entity type to software capabilities. Verify the software produces the specific forms you require before purchasing—discovering a mismatch during tax season creates unnecessary stress and potentially wasted money.
3. Evaluate your budget versus risk tolerance
Cheaper software may lack support when questions arise. Consider whether the savings justify potential confusion or errors on more complex returns. Sometimes paying more upfront prevents costly mistakes later.
4. Consider your growth trajectory
If you plan to scale significantly, factor in when you’ll outgrow DIY software. Buying premium software now may delay the need for professional guidance, but it won’t eliminate that need entirely as your business grows more complex.
Why tax planning beats tax filing software alone
Filing software is reactive—it calculates taxes owed based on transactions that already happened. Tax planning is proactive—it structures decisions throughout the year to minimize future liability before those transactions occur.
- Software cannot advise: It follows rules but cannot recommend entity restructuring, compensation optimization, or retirement contribution timing based on your specific goals
- Real savings come from strategy: The goal isn’t just accurate filing but keeping more cash in the business to fuel growth
- Planning compounds over time: Strategic decisions made today affect tax liability for years to come
Growth-focused business owners eventually reach a point where they benefit from a financial partner who understands their goals—not just software that processes their numbers. For business owners ready to move beyond compliance to strategic financial guidance, talk to an expert.
FAQs about tax software for small business owners
Can I use personal tax software for my small business?
You can use personal tax software if you’re a sole proprietor or single-member LLC filing Schedule C, since that form attaches to your personal Form 1040. However, partnerships, S-corps, and C-corps require dedicated business tax software that produces the appropriate entity forms like Form 1065 or Form 1120-S.
How much does small business tax software typically cost?
Business tax software ranges from free for basic Schedule C filings to several hundred dollars for full-featured programs supporting complex entities. State filings usually cost extra—often between $40 and $60 per state depending on the software.
What happens if I make a mistake filing with tax software?
Most reputable tax software offers accuracy guarantees covering penalty and interest costs from calculation errors made by the software itself. However, you remain responsible for the accuracy of information you enter into the system—the guarantee doesn’t cover mistakes in your inputs.
Can tax software handle multiple state filings?
Most business tax programs support multi-state filings, though each state return typically requires an additional fee beyond the base software price. If you operate in multiple states, verify multi-state capabilities and costs before purchasing.
Should I use tax software if my business has employees?
Tax software handles annual business income tax returns, but it doesn’t replace payroll services. If you have employees, you’ll still require separate payroll software or services for withholding, payroll taxes, and quarterly filings throughout the year.
