Take a look at every business, and you’ll see something different: their name, their mission statement, and their tailored product. Your business is no different: you offer something unique and extraordinary, yet highly needed in your market. It should be no surprise then that your tax needs will be just as unique as your business.
Let’s take the guesswork out of tax services, and figure out the best one for you.
First, Does Your Business Even Need a Tax Service?
You don’t necessarily need a tax service if you have a business. If you’re confident in your ability to file, you can do it completely on your own. Consider some of these elements in your business when deciding if you need a tax service:
The size of your business: if you just started your business then the name of the game is keeping expenses low so you can maximize your income as much as possible. Investing too much upfront might set you back, but it’s also important to ensure your business is reporting all your expenses legally. If your business is still small, investing in a tax service is an additional expense, but could save you money that you would owe if you did your taxes incorrectly.
Your availability during tax seasons: if your business is booming, you might not have time to file tax returns even if you wanted to. If you have the funds to invest in outsourcing, it’s a worthwhile investment, especially if it’ll help you get ahead in your business operations.
Your capacity to self-educate: if you spent hours on Youtube researching how to start your business, then your brain might be itching to know the ins and outs of manually filing— even if you don’t want to do it forever.
Advantages of Having a Tax Service as a New Business Owner
Here at doola, we’re all about starting and running your business the right way. While not everyone uses a tax service, we know that most small business owners aren’t also living a double life as a certified public accountant (CPA), and don’t want to spend time trying to figure out a pretty confusing process. Consider a few of the reasons why having a tax service helps you:
You can focus on growing your business: every new opportunity matters in your business, and there’s no worse way to experience a lost customer than knowing that you could have just been quicker on your feet. Getting so wrapped up in the painstaking nuisance of filling out your own tax documents that it reflects on your business won’t propel you forward like you want it to. Outsourcing this workout will make it easier on yourself, you won’t have to clog a month with tax prep.
It’ll help you plan for the future: you might be surprised to know that you can write off half of your self-employment tax and that new laptop you just bought if it’s related to your business. Knowing the proper write-offs, whether from software or a tax pro, will enlighten you when considering the upcoming year’s expenditures.
You won’t have to worry about making mistakes. Let’s face it— it’s easy to make mistakes in all those forms. Tax services make it simple.
How to Find the Best Tax Service (For You!)
So you’ve decided you want to invest in a tax service to help you track your business’s financials— great! Let’s review the different types of tax services, how to find one that fits your needs, and how to work it into your regular everyday business needs.
1. Research Different Tax Service Companies
There are two basic types of tax service companies: tax software and tax professionals.
Tax Service Software
For an affordable, simple option to filing your tax forms and if you don’t feel up to your neck in income and expenses, tax software like TurboTax, H&R Block, and TaxAct saves time looking for a tax professional and saves money hiring someone by the hour or project. Many will walk you through the process using layman’s terms as opposed to government jargon, so as long as you’ve prepped your business finances, you’ll go through a relatively simple process.
One thing about tax software is it’s just that— software. You can’t ask it for personal tax advice like, “wait, is gas an expense if I drove it to drop off a return?” In software, you almost always have a simple yes/no option.
Tax Service Professional
You’d think that as the founder of a capital management firm, Grant Bledsoe would be partial to small business owners hiring out a tax expert. But even he says, “I’m a big fan of most tax preparation software. Taxes are a cost in and of themselves. Any way to automate the prep and filing process in a compliant and inexpensive way is A-OK in my book.”
He goes on to mention, though, that there are two angles to look at doing your taxes: tax compliance, which is reflecting on your taxes from the previous year and making sure you’re properly reporting them, and tax planning, which is prepping for the upcoming year’s transactions and being thoughtful with your money.
While both software and a professional can help with tax compliance, only a professional can help plan your expenditures for the upcoming year.
2. Ask What Others in Your Field Have to Say Through Targeted Research
You’ll always have one business owner who loves one service and another who doesn’t. The difference? Their experience.
While a new Airbnb owner might prefer working with tax software since their expenses are minimal and simple to manage, you might feel like your taxes are more complex, writing off things like gas, shipping, various materials, and social media ads. Asking every business owner what they think of a service is impossible, so narrow it down like you narrowed down your business niche for, say, your clothing business.
Find a Facebook group of fellow Etsy clothing business owners and pose a question asking them what tax service they prefer. Better yet, specify the details, so you can get even more targeted responses. Here’s an example:
“Hey, fellow Etsy shop owners! For those of you who are managing your business full-time, have no contractors, have write-offs that include gas, materials, and a few ad outlets, as well as ship clothing internationally, do you use a tax service software or do you hire a professional, and why?”
You can also scroll through Youtube videos, typing in phrases like “tax services for Etsy shop owners,” or “best tax services for freelance photographers.” Play around a little bit with the keywords, and find real business owners talking about their experience (ideally, ones that aren’t sponsoring a specific program). Videos from the business itself can be useful as well, as long as you know they’ll always come with a bias.
3. Determine the Time Commitment You’re Able to Give to Your Taxes
Now, think about how much time you’ll actually be able to dedicate to prepping your taxes. As a business owner, you should have a plan for regularly managing your finances, but while some will have days or weeks to prep their finances, others might only have a few hours.
For new business owners with only a few clients or projects, consider conducting some more extensive research on the tax process. While the learning curve is big at first, upfront research can pay back dividends in the long run.
For seasoned and busy business owners, break down the time you have to dedicate to doing your taxes. Of course, tax season shouldn’t be overlooked, but if a local tax specialist is asking you to meet at their office during your work day, you might need to find someone who can better streamline your process.
Make Tax Season Fly By
Whether it’s your first time filing business taxes or whether you’re ready to pass on some of the work, doola’s team of bookkeepers are ready to help you manage your finances with ease. Take on taxes with confidence by welcoming a team of experts to help you. The cost for tax specialists could make up for the cost of paying back additional fees and forgetting to report write-offs, so invest now to save later!
What is the best tax service for small businesses?
TurboTax and H&R Block are highly rated and popular taxes services. You can also check the local financial services near you if you’d prefer a human to do your taxes.
How much does a tax service cost?
Many tax software services are charged in tiers, with free filing or a basic plan ranging from around $40 to over $100 for more complex business structures.
Is a tax service worth it?
If you’re not great with taxes, it’s certainly worth it to invest in a tax service like doola to make sure you’re legally reporting and filing correctly. Otherwise, fees and unnecessary tax debits could be more than the price of what you’re paying for the service!