Should You Use Online Tax Preparation Software in Your Business?

Discover the pros and cons of using online tax preparation for your business.

Online Tax PreparationMany individuals are turning to online tax preparation software – but should your business? Tax preparation software is increasingly popular for individual use, with many people attracted to the convenience and simplicity of doing taxes in their pajamas. Even if they’re leaving money on the table, many people either don’t know or write it off as a convenience tax. But is that right for your business?

Consider the Risks of Online Tax Prep

The stakes are high for your business at tax time. Not only do you have to worry about making sure you claim all of your deductions and expenses and that you get all of the tax credits you’re entitled to, but you also have to make sure all of your paperwork is in order to protect yourself if the IRS happens to take an interest in your tax case!

Small businesses are a big target for the IRS since large companies have tax lawyers and compliance departments to ensure their paperwork is impeccable. Busy business people may not have the time in today’s fast-paced environment to keep up all their records and familiarize themselves with the latest twists and turns of the legal code.

Your business could face three years of tax liabilities plus penalties, and you could even face a lifestyle audit if the IRS decides you’re not reporting enough income for your lifestyle – it could get very expensive very fast.

Does Online Tax Preparation Software Help You Prepare?

Letting a program deal with it is hardly the best solution to shield your assets, maximize your deductions, and make sure you take home what you deserve at tax time. Software is inflexible, mechanistic, and one size fits all. Unlike a trained professional, software can’t advise you on strategy or point out possibilities, credits, or deductions you may otherwise overlook, and that can cost you.

Tax software is also inherently limited; all it can do is help you fill out your forms once tax season comes around. However, for many businesses what happens before you file your taxes is just as important as what is on those forms.

The way you categorize your assets and organize your operations has a significant impact on your business’ tax liabilities and potential audit risks. Are you in accordance with Department of Labor requirements regarding employee classifications and payroll? Are your business assets appropriately segregated from your personal assets? Tax preparation software is incapable of answering these questions for you at all, let alone advising you as to the best ways to re-label or shift assets to minimize your tax burdens.

If you’re looking for opportunities, solutions, and asset protection, tax preparation software will not help you. If you are interested in taking advantage of the tax code before, during, and after tax season, then you need the services of a licensed tax professional rather than relying on DIY online tax preparation software.

At Incompass Tax & Accounting, a certified business tax expert will help you structure your business and operations in such a way as to shield your personal assets, minimize your tax liabilities, and protect you from hostile and invariably expensive audits. Contact our tax team today!

 

Categories: BUSINESS TAX STRATEGIES.