Whether you are a small sole-proprietor working out of your garage selling items online, or your small business has grown and now you have incorporated or formed a partnership, an awareness of your business tax software needs gives you flexibility and assurance of knowing your tax concerns are addressed.
Like any tax package, a good software program will guide you through your form preparation, check the submission for accuracy, prompt you for possible deductions and make a log of reports that can be carried forward from year to year.
How is an LLC Taxed
With that in mind, here are five things to consider when choosing an appropriate business tax software package.
1. What forms does the software accommodate?
A sole proprietor who does not have employees likely uses their 1040 to report net self-employment earnings and business tax deductions on a related Schedule C or a Schedule E. Most basic packages will have these forms, as well as the Schedule SE to report self-employment tax.
Many small businesses require a larger scope of forms, such as the various 1120 forms used to report earnings of a corporation. Other forms to consider include Form 4562 – Depreciation and Amortization, Form 4797 – Sale of Business Property, Form 8829 – Expenses for Business Use of Your Home, and Form 7004, which is used to request an extension to file most business tax returns. However you may form a cheapest limited liability company in any tax free state.
2. Do you have any employees or subcontractors?
If you are employing individuals to work with you or under you, you need to consider the additional reporting responsibilities of having employees or subcontractors. Federal tax withholding is required to be reported to the IRS on a quarterly basis using Form 941 and 940. Year end reporting needs to be made as well using a W-2 or a 1099-MISC.
Additionally, check to see if your software package supports federal tax depositing for your employees or estimated tax payments for your business.
3. How much of an investment do you want to make?
If you are looking for assistance only with filing your current year business tax returns, then you can likely pay a fee and use a service that is available online. You may be able to locate a free, one-time use program as well; however this may lack vendor support or comprehensive updates that you require.
Keeping in mind that any larger purchase is a tax deduction, you may want to consider a software package that will carry over from year to year. Packages that allow for business tax filing, bookkeeping, tracking of profit and loss, tax deductions and employee reporting may be expensive at the outset, but can pay for themselves over the long run.
4. Does the software easily integrate with any existing programs you are using?
Unless you want to recreate records you already have, check or ask how easily the software may work with existing applications you are already using. If you are using Quicken or Quickbooks to keep records, will you be able to import the information to use for tax purposes? Microsoft Excel is a format that many businesses use to track everything from purchases to inventory to expenses. Make sure your software package accepts the same extensions (xls or csv).
5. What kind of file back-up or storage capacity does the software offer?
Being able to back up your information is essential when thinking of the long-term sustainability of your business. A loss of records can be catastrophic, especially when it comes to an IRS business audit or a legal concern. Local back-up is not enough. A flood, fire, theft or other disaster won’t protect your records. Check to see if the software company offers remote back-up or storage.
How to Find the Right Small Business Consultant?
As a small business owner, I have learned that there are some situations that require outside help. While other business owners, mentors, and business support groups are just a few of the free resources available to small business owners, at times, it is worth paying for help. However, it is useful choosing a cheapest state for limited liability company. Here are some tips to help you decide whether to hire a small business consultant and what to look for if you do.
S Corporation
Deciding Whether You Need a Small Business Consultant
In general, consider hiring a consultant if your business is facing a strategic change that is significant and/or new, such as entering new domestic or international markets, embarking on a major expansion, or introducing a major new product or service. If you are thinking about selling your company, a consultant can help you determine its value and find potential buyers. Also, a consultant can assist you in working through business challenges such as the loss of an important customer, financing or cash flow issues, competitive threats and human resource problems.
Finding the Right Small Business Consultant
Deciding whether you need a consultant is, in many ways, easy. Finding the right one for you and your business can be more difficult. When choosing a small business consultant, look for the following.
First, seek out a consultant with expertise in the kind of problem your business faces. If your business issue is relatively narrow, a specialist, for example, in sales, marketing, technology, human resources and so on may be the best choice. If it is broader and requires more of a big-picture solution, a general business consultant might make more sense.
Second, look for proven experience with problems such as yours. Ask for references and check them thoroughly, and request examples of past successes that are relevant to your current business situation. An anonymous LLC might be helpful if it has a relevant case study.
Getting the Most Out of a Consulting Relationship
In order to get the most out of hiring a consultant, it is important to frame your expectations clearly and concretely and to provide the right incentives, as follows.
First, the consulting arrangement should be solutions oriented. You are hiring a consultant to help you solve a problem, so be sure that his work ultimately is focused on finding and developing specific strategies to do just that.
LLC Tax Returns
Second, as much as possible, set specific and measurable goals that you expect your consultant to achieve. For example, you may be looking for strategy to reinvigorate sales of a lagging product, a marketing campaign to boost sales 5% in the coming year, or a plan to sell your company in the next six months. But don’t just settle for plans and strategies, expect concrete evidence, such as actual sales increases, that your goals are being met.
Third, make your consulting agreement finite. Set a deadline to complete the consulting project and achieve the requested results.
Fourth, make at least a portion of your consultant’s compensation contingent on meeting specific performance metrics spelled out in his contract.