Should You Prepare Your Own Small Business Tax Return?
If your small business is like most, you’re light on budget and staff – specifically, in the accounting department. In fact, it’s very likely at this point in the tax season that you’re considering doing your small business tax return on your own.
You’ve built a business, which means you likely have the intelligence and tenacity required to get this kind of job done. But whether you should is another thing altogether.
So let us help you weigh some of the pros and cons of grinding out your own small business tax return.
The Pros
You have the technology. The internet is teeming with tax and accounting software that’s making it increasingly easier for people to take their tax responsibilities into their own hands. Almost all of it is cloud-based, which means that rather than driving to Best Buy to pick up a CD, you just head to a website, purchase the software, and use it from your computer – and in many cases, even smartphone and tablet apps.
That technology is getting better. You won’t be left completely to your own devices when you dive in to doing your own taxes. Many tax programs provide basic guidance on things such as how to input data and whether certain entries are tax-deductible. Also, depending on which product you buy, and at what level, you’ll have varying amounts of technical support should you run into a wall.
It’s cheaper. This is pretty much the case no matter what your situation: individual, small business, large business – if you can manage to tackle your taxes on your own, it will cost you less in out-of-pocket money than it will to hire a professional. It won’t be free, of course. TurboTax Business, for instance, costs $159.99, which includes free federal e-filing (state filing is additional); eFile, which can be useful for very small businesses, is $34.95. But the pure dollar cost will be less than hiring a pro.
The Cons
It’s time-consuming. While the upfront costs of DIY taxes might be cheaper, time is money, too. And that’s very much the case when you’re doing taxes for your small business. Something to consider before you try to navigate small business tax returns yourself is what your time is actually worth. You might need to spend a few workdays learning the software, navigating the ins and outs of tax code and actually punching in the numbers to save a few hundred dollars. Ask yourself: Would you have generated more return on your time if you had spent it working on your business instead of your taxes?
There’s less confidence in the results. Tax software is intelligent enough to know when you haven’t filled in a particular field, so it can get out in front of a few problems. But it doesn’t know how to check for everything, and it doesn’t have the same intuition as a seasoned tax professional, who might be able to tell if certain data is missing. Also, while some tax software might come with personal support, it exists to help you out with problems as they arise – it’s not going to anticipate problems you might not even be aware of. When your tax returns are in a pro’s hands, all that knowledge is constantly being applied to every aspect of your taxes, which means you can have more confidence in the final result, and worry less about getting a visit from the IRS.
This year’s taxes aren’t the only ones that matter. One of the most valuable advantages you get from hiring the right tax professional has absolutely nothing to do with this year’s small business tax returns. It has to do with next year, and the year after that, and so on. When you file your tax returns yourself, they’re done, and yes, you can use them as a guide for filing again a year from now. But a dedicated tax expert who knows you and your business can help your company position itself to enjoy certain tax breaks that are difficult to achieve without a dedicated full-year plan. The financial significance of those breaks alone might be enough to outweigh the upfront costs. And down the road, tax professionals can help you adjust as your company grows, and as tax laws evolve.
Make no mistake: We’re biased. Here at McManamon & Co., we’ve been providing tax services (and numerous other types of assistance) to small and midsize businesses for decades. We see firsthand the value we can offer our clients, and it’s plain to see that entrepreneurs have far better things to spend their time on than crunching numbers into tax software for a few days every spring.
Still weighing the pros and cons of filing your small business tax return? Give us a call at 440.892.9088 or contact us online today, and we can offer you more information about what we can do for you at tax time.
Tags: McManamon, small business, small business taxes | Posted in accounting, McManamon & Co., small business, small business taxes