Accounting and finance
Tax preparation
Should you prepare the business's taxes yourself, use software, or hire a professional?
Six short steps. No email or account.
- Who needs it
- Every business. Complexity rises sharply once you have employees, multiple states or an S-corp election.
- When it matters
- Before your first filing deadline as a business, and ideally before year end while planning still changes the outcome.
- Compare first
- Entity types handled
- Matters most when
- just started, established, growing, mature
Is this the right tool for you?
Business taxes bring new forms, estimated payments during the year and, depending on the business, payroll and sales taxes on top. Mistakes lead to penalties and missed deductions, and surprises at filing time strain cash. The right help depends on your structure, your states and how complex your year was.
Signs you need it now
- You owed a large, unexpected amount at filing time.
- You are not sure whether or how much to pay in estimated taxes.
- You changed business structure, hired, or started working in another state.
- You have received notices or penalties from a tax authority.
- You are unsure whether you should be collecting sales tax.
When another area fits better
- Your records are not in order yet, so preparing the return will mean sorting a year of transactions first. Read the bookkeeping help guide
Recognise two or more of these? Sort out tax preparation next.
Tell us how your business runs and get a plan that puts tax preparation in order with everything else: what to set up first, your must-haves and what to compare.
What matters at your size
Working alone
Software can work for a simple setup in one state. A professional is worth considering when structure, deductions or estimated payments are unclear.
A small team
Employees, multiple owners or a structure that files its own return usually point to a professional who can also advise during the year, not just at filing.
Several teams or locations
Several states, entities or significant assets make planning more valuable than preparation. Look for a firm that works with your bookkeeper throughout the year.
How the way you work changes the choice
- Trades and contractors
- Vehicles, tools and equipment raise questions about depreciation and mileage records. Using subcontractors brings year-end information reporting; ask what applies to you.
- Shops and retail
- Sales tax filings, which follow state and local rules, run alongside income tax. Inventory affects how profit is calculated.
- Professional firms
- Income is often uneven, so estimated payments and owner pay deserve planning. Ask about how your structure affects what you take out.
What to compare
Entity types handled
Sole proprietor, partnership, S-corp and C-corp returns are meaningfully different services.
Multi-state
Working across state lines adds returns. Confirm it is covered and priced.
Planning versus filing
Filing records history. Planning changes the bill. They are different engagements.
Audit support
Ask what happens if a return is questioned, and what it costs.
Cost and setup effort
- Professional fees generally follow complexity: number of forms, states, owners and the condition of your records. Clean books lower the bill.
- Ask whether the fee covers only filing or also planning, estimated payment calculations and responding to notices.
- Credentials and experience differ. Ask what qualifications the preparer holds, whether they can represent you if a tax authority contacts you, and how often they work with your industry.
Trade-offs to weigh
- Software or professional
- Software is cheaper and fine for a simple year. A professional costs more but catches issues and gives advice software cannot.
- Filing only or year-round advice
- Filing-only help is cheaper. Year-round advice reduces surprises and helps with decisions such as structure and equipment purchases.
- Local or remote
- A local preparer may know your state and city rules well. Remote firms can offer more specialization; ask about their experience with your states.
When to sort it out
Before your first filing deadline as a business, and ideally before year end while planning still changes the outcome.
Your next step
Answer six short questions about how your business runs. You get an operating plan: where tax preparation fits among your priorities, the must-haves to hold every option to, and what to compare when you choose.
Where this comes first
Trades and businesses that usually sort this out early.
Often decided alongside
Other parts of accounting and finance.