A widely touted benefit of running a small business is access to tax write-offs that are generally unavailable to W-2 employees — like business dinners, business travel and rent if running your business from home.
But to really maximize these tax savings, business owners have to be organized. Having accurate numbers, maintaining receipts and keeping financial books in order will make tax time easier, reduce the likelihood of being audited for a mistake and save as much money as possible.
Here are organizational features to look out for in accounting software.
Set aside money for future use in a savings account designed for business
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Annual Percentage Yield (APY)
3.09% with a daily balance of $5,000,000 or below; 3.90% with a daily balance above $5,000,000
Integrations with payment platforms
Being able to sync your desired payment platforms to your accounting software can make a big difference when it comes to accuracy and saving time around tax season.
Look for integrations with the platforms you’re using to collect customer and client payments, whether it’s PayPal, Square or others. QuickBooks, for instance, lets you sync payments from Square, PayPal, Etsy, Shopify and more. It also syncs to your credit cards and bank accounts so you can track what’s going out, making it even easier to stay organized.
QuickBooks
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Cost
Costs may vary depending on the plan selected but take advantage of a limited time offer – 50% off for 3 months
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Standout features
Tracks your business expenses as they happen, as well as your income. Users can use app to do invoicing, accept payments, manage their cash flow, maximize tax deductions, track travel miles, run reports, send estimates, manage bills and 1099 contractors, plus pay employees
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Categorizes your expenses
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Links to accounts
Yes, bank and credit cards, plus third-party apps like PayPal and Square
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Availability
Accessible from any web browser and also offered in both the App Store (for iOS) and on Google Play (for Android)
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Security features
Verisign scanning, password-protected login, firewall protected servers and the same encryption technology (128 bit SSL) used by the world’s top banks. QuickBooks also offers multiple permission levels that you can set for additional users’ access
Pros
- Offers a 30-day free trial
- Syncs to your bank accounts, credit cards and third-party apps like PayPal and Square
- Offers real-time dashboards so you can stay updated on all financial transactions related to your business
- The most basic “Simple Start” plan tracks income, sales and expenses, organizes receipts, creates invoices, helps you prepare your taxes, categorizes your business and personal trips, offers a QuickBooks Cash account, runs reports like P&Ls and balance sheets and includes 1 user
- “Essentials” plan, in addition to the above, helps you pay your bills, clock employee time and billable hours and includes up to 3 users
- “Plus” plan, in addition to the above, lets you oversees projects, track inventory and includes up to 5 users
- “Advanced” plan, in addition to the above, provides business analytics and insights, speeds up transactions, gives users access to VIP service QuickBooks Priority Circle that includes a dedicated account team and free online QuickBooks training includes up to 25 users. QuickBooks offers a fourth “Self-Employed” plan for freelancers
- Security features include Verisign scanning, encryption technology (128 bit SSL) used by the world’s top banks and customized access for other users
Cons
- Some user reviews complain of glitches in app and a not so user-friendly interface
Integrations with your tax software
One of the easiest ways to stay organized is to let your software do the heavy lifting for you when it comes to uploading business transactions. These days, platforms like TurboTax for Business allow you to connect your QuickBooks account (or other accounting tools) to easily import data on your business income and transactions. This way, you don’t have to manually sit there going back and forth between a spreadsheet and your tax filings.
TurboTax for Businesses
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Price
Costs vary depending on plan
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Businesses supported
S Corp, C Corp, partnerships, sole proprietors
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Live support
Available for an additional charge
Pros
- Fully integrates with QuickBooks
- TurboTax Expert Assist provides on-demand advice from a tax expert
- Accuracy and maximum refund guarantees
Cons
- More costly than other software programs
- Expert assistance costs extra
*Click here for TurboTax offer details and disclosures
You can even go as far as to use a business checking account that integrates with accounting tools to save you from pouring over bank statements at the last minute. Mercury integrates with bookkeeping and accounting tools like QuickBooks, Xero and NetSuite.
Mercury
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Special offer
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Monthly maintenance fee
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Minimum deposit to open
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Minimum balance
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Annual Percentage Yield (APY)
Up to 4.43% APY for users of Mercury Treasury, the investment advising arm of Mercury
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Free ATM network
Mercury doesn’t charge ATM fees, however, the ATM operator may charge a fee
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ATM fee reimbursement
Yes, see here for more details
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Small business perks
Offers startup guides, users who sign up for the IO Credit Card can earn 1.5% cash back
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Overdraft fee
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Mobile check deposit
Pros
- No monthly fees, balance minimums or overdraft fees
- Offers a debit card
- Mobile check deposit available
- IO credit card offers 1.5% cash back on purchases
- Users can send domestic and international wire transfers in over 30 different currencies
- USD international wires are free to send
- Integrates with several bookkeeping and accounting tools
Cons
- No cash deposits allowed
- No APY earned for checking account balances
In any case, manually importing information can increase the chances of making a costly error.
On-demand advice
Working with a dedicated CPA is the best way to get tailored advice and discuss your personal tax strategy throughout the year — not just during tax time. CPAs can help you figure out how to record and manage your transactions throughout the year, how to pay and plan for certain expenses, how to keep track of the receipts for things you want to write off on your taxes and administering tax documents to freelancers or employees you hire throughout the year.
However, not everyone can afford consistent, ongoing expert help like this. In this case, sometimes the next best option is to see if there are any similar services offered by the platforms you’re using.
Sometimes this service may be an add-on you pay extra for, but it can still be less expensive than the annual fee you’d have to pay a dedicated accountant.
This is usually a feature offered by tax platforms like TaxAct and H&R Block since they’re more focused on taxes. TaxAct provides one-on-one support from tax experts and H&R Block offers on-demand support with their Online Assist plans. This may not be designated ongoing support throughout the year, but getting some professional help for a complex business situation is still better than none at all.
TaxAct
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Free version
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Guarantee
Guarantees 100% accuracy and maximum refund
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Live support
Xpert Assist is available with any plan for a flat fee
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Tax refund advance loan
Pros
- More affordable than other paid software programs
- Accuracy guarantee covers legal fees up to $100,000
- All plans come with live support from tax experts
- Free tier can process both federal and state returns
Cons
- Returns with freelance or investment income don’t qualify for free plan
- Doesn’t offer tax refund advance loan
H&R Block
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Price
Price varies depending on plan
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Businesses supported
S Corp, C Corp, sole proprietorships, partnerships, self-employed
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Live support
Available with some plans
Pros
- Unlimited on-demand chat or video support with Online Assist plans
- Over 11,000 branches nationwide
- 100% accuracy and maximum refund guarantees
Cons
- One of the more expensive options
- Speaking with a tax expert costs more for federal returns
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.