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Tax season can be stressful, especially if you're not prepared. Maybe you've been procrastinating all year. Or you've been keeping up with your books, but tax time snuck up on you. Now you’re in a panic, searching for the best way to file your taxes. If you’re a small business owner, you might be wondering whether to file your taxes with TurboTax or a certified public accountant (CPA). This decision carries particular weight in corporate tax accounting, as it can significantly impact your business's finances and tax obligations going forward. In this article, we’ll explore the differences between TurboTax and a CPA to help you decide which tax filing method is ideal for your corporate tax accounting situation.
If you’re still feeling overwhelmed, Haven can help. Our accounting services for small businesses can help ease your tax season anxiety, allowing you to file your taxes with confidence.
Table of Contents
Why Use TurboTax for Your Taxes?
TurboTax has been around since the mid-1980s. Part of its popularity stems from the fact that Intuit owns it. Intuit also makes software called QuickBooks, which millions of companies use to manage their accounting. But TurboTax is also popular because it offers a user-friendly design and straightforward step-by-step guidance.
TurboTax Free vs Paid: What's Included
TurboTax has a free filing option that allows you to file your federal return and one state return at no cost. The free option only supports simple returns with Form 1040. If you want to itemize your deductions with Schedule A or if you need to use any other forms, you will need to upgrade to a paid plan.
TurboTax offers a high-quality user interface with three online plans designed for DIY filers, all of which can be upgraded to include one-on-one guidance from a tax professional. A separate service is available for those who want to hire someone to do their taxes quickly.
Who Is TurboTax Best For?
TurboTax is best suited for individuals with complex tax situations who require expert assistance and premium features. Self-employed workers who use QuickBooks for their accounting may have a seamless filing experience with TurboTax, as both services are provided by the same company and are integrated.
You can work on your taxes on the TurboTax mobile app or desktop site, or switch back and forth. TurboTax excels at product integration. You can import tax forms directly from payroll providers, banks, and investment companies into the TurboTax system to auto-fill many of the prompts you'll encounter when preparing your return.
TurboTax Tools for Easy Filing
You can also upload your tax return from last year from your computer or phone. Within the mobile app, you can take a photo of your income documents and upload supported forms. There's also seamless integration for self-employed filers who use QuickBooks to track expenses and make tax payments.
TurboTax Pros and Cons
Pros:
The Free Edition is available to about 37% of filers
Can be suitable for complex tax situations that may require help navigating deductions and forms
Ability to upgrade for instant access to an expert
Cons:
Free Edition excludes unemployment income and education tax credits
The most expensive option for many tax situations
Pricing is obscure for online plans
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Why Use a CPA for Your Taxes?
Certified public accountants are accounting professionals who have passed both the privately issued CPA exam and public licensing requirements. If you need someone to look at your money, they’re the cream of the crop. Here’s what you need to know about the CPA.
Ways a CPA Can Help Beyond Taxes
You’ve probably heard people talking about working with a CPA, especially at tax time. Still, many people are unaware of all the other ways a certified public accountant (CPA) can assist them with their finances and help them achieve their financial goals. Here are just a few ways:
Helping you proactively plan for your life goals
Tax planning (beyond just filing your return, a CPA can help you proactively save money on taxes and make sure you’re not missing any planning opportunities)
Setting up a business, including your side hustle
Financial statements to help you get a mortgage or other financing
Retirement account distribution planning
Financial projections for all your savings goals
The list goes on; if it affects your finances, a CPA can provide valuable assistance.
Why Work with a CPA Financial Planner
CPAs have hands-on experience working with individuals like you, facing a variety of financial challenges and opportunities. They will listen to your concerns to offer solutions that best fit your needs.
In particular, CPA Financial Planners are uniquely qualified to help you weave your tax planning into your life planning through year-round conversations and personal financial planning expertise.
Pros of Hiring a CPA
CPAs are accounting professionals. It’s their job to stay informed and up-to-date on all laws, rules, and regulations related to accounting and taxation. Their knowledge helps ensure your company won’t fall victim to critical accounting mistakes that could come back to haunt you.
CPAs May Be Able to Save You Money
CPAs can help minimize your tax bill by taking advantage of all potential deductions and credits you can claim and advising you on tax planning and strategic financial decisions.
CPAs Can Save You Time
According to the IRS, it takes approximately eight to 13 hours to complete an individual tax return, while business returns can take an average of 24 hours. Freeing up this time (and removing the accompanying frustration) by relying on a CPA to complete your returns allows business owners to focus on their core business competencies instead.
CPAs Are Adept At Dealing With The IRS
If you’re audited or owe back taxes to the IRS, your CPA can help resolve the issue in your favor. Their knowledge and participation can minimize penalties, lower assessed taxes, and give you more time to pay what you owe.
Cons of hiring a CPA
CPAs have more education than regular accountants and undergo a rigorous certification process, so they cost more than a standard tax preparer or bookkeeper.
You Must Still Handle Day-to-Day Accounting
CPAs are the “big guns” of the accounting industry and usually don’t handle daily accounting tasks. You’ll likely still need to hire a bookkeeper for standard accounting tasks (though some CPAs also offer bookkeeping as an add-on service).
Haven: Full-Stack Finance for Startups
Let your business take flight while Haven manages your financial runway. Built by founders for founders, we handle everything from daily bookkeeping to complex tax filings and R&D credits that put cash back in your pocket, as well as fractional CFO services.
Join 400+ startups who've saved millions in tax credits, countless hours of administrative work, and never missed a filing deadline - all while accessing 24/7 Slack support from CPAs who understand the unique challenges of growing businesses.
Book a call today to learn how our dedicated team can help you focus on building rather than bookkeeping.
TurboTax vs CPA: Which One is Best for Your Taxes?
When it comes to choosing between TurboTax and a Certified Public Accountant for tax filing, the best option often depends on the complexity of your financial situation and the demands of your business. TurboTax is a strong choice for individuals with relatively straightforward tax needs.
TurboTax for Simple Tax Situations
If your income comes solely from employment, you don't have dependents or significant deductions, and you're not juggling investment income or rental properties. An online filing platform like TurboTax offers a fast and cost-effective way to complete your return.
It’s designed for simplicity, guiding users step by step through basic tax forms. They can be an efficient tool for those who feel comfortable managing their taxes without professional guidance.
Why Complex Finances Need a CPA
For business owners, self-employed professionals, or anyone with a more complex financial picture, a CPA offers a deeper level of support that software can’t fully replicate.
Running a business, whether as a sole proprietor or a larger company, introduces numerous tax obligations, including estimating quarterly payments, managing payroll taxes, and handling depreciation, expenses, and industry-specific deductions.
CPA Support for Life Changes and Tax Law
A CPA not only ensures that these are correctly accounted for but also helps interpret changes in tax law and how they apply to your business.
If you've experienced a significant life event, such as getting married, having a child, buying property, or relocating to another state, these changes can complicate your tax return. A CPA brings expertise to navigate these transitions and helps reduce the risk of costly errors or audits.
Matching the Right Fit to Your Needs
TurboTax is well-suited for low-complexity, low-risk tax scenarios where time and cost savings are the primary objectives. But when your finances or operations extend beyond the basics, a CPA becomes a strategic partner, not just for filing taxes, but for managing your overall tax exposure, planning, and making confident decisions as your business grows.
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10 Best Tips for Planning Your Taxes
1. Make Your Tax Preparer’s Life Easier
At tax time, your tax preparer is your best friend. He or she is going to take a year’s worth of income statements, expense reports, deduction lists, receipts, and so much more, and make sense of it all, and then file it accurately so your business complies with all the necessary IRS requirements.
The more you can do to make your tax preparer’s life easier, the better job they’ll be able to do for you and your business. And, if you’re paying your tax preparer by the hour, bringing them an organized set of documents to file will bring my costs down, too.
2. Organize Your Paper Records
Even if you use cloud-based accounting software and keep most of your business records digitally, it’s hard to go completely paperless, especially for original copies of important documents like signed contracts and other agreements.
Start by keeping the number of hard copies you store to a minimum, and organize paper documents in a portable file box. This will help you keep only what you need. Bring these paper documents to your accountant’s office when you meet at tax time.
3. Issue W-2 and 1099 Forms by the Deadline
The deadline to deliver tax forms to your employees and independent contractors is January 31. Complete year-end information isn’t available until the first of the year, but you can begin gathering the information needed to complete each form beforehand. Towards the end of the year, you’ll want to verify basic, key information with each member of your staff.
For employees, verify:
Name
Address
Social Security Number
Paid Time Off
Number of Exemptions
Total Wages
Healthcare and Retirement Contributions
For independent contractors, verify:
Name
Address
Taxpayer Identification Number
Total Wages Paid
You’ll need this information to prepare each W-2 and 1099 form, so having it ready to go on January 1 will make it easy to meet the deadline at the end of the month.
4. Take All of the Deductions Your Business is Eligible For
If you’re not taking advantage of every deduction your business is eligible for, you’re likely leaving money on the table. Most business-related expenses, like office supplies, employee meals, mileage, and loan interest, are fair game when claiming deductions at the end of the year. Even many start-up expenses are deductible.
Understanding Deductible Business Expenses
The IRS considers a business expense deductible if the expense is both ‘ordinary and necessary’. In 2018, the IRS revised the Tax Cuts and Jobs Act, redefining which expenses qualify for a deduction.
This is an area where you need to do your homework and learn what you can and can’t claim. Determine what you can deduct and ensure you keep good records throughout the year so you can claim expenses and owe less come tax time.
5. Use a Business Credit Card for Expenses
Tax preparedness is about getting organized and automating as much of the process as possible. The less manual legwork, the more time you’ll have to spend generating revenue for your business. One of the best ways to organize your business expenses is to use a business credit card.
Using Business Credit Cards Wisely
Most business credit cards automatically categorize your purchases, making them easier to track. And, you have the added backup record of your credit card statement each month, should you need to provide the IRS with documentation of the expenses you’re claiming.
Paying business expenses with a credit card is also a smart way to build your business’s credit. Don’t let this resolution backfire, though. Always pay your balance off in full each month.
6. File by the Deadline
This is one of the big ones! Filing on or before the April tax deadline is critical, especially if you have estimated quarterly payments to submit. Missing deadlines and filing late will quickly attract the attention of the IRS and increase your chances of an audit.
The IRS website lists tax filing deadlines and sends reminders about upcoming due dates that apply to your business. Create deadlines for yourself so you can gather the necessary information needed to file by the due date. And, if you are going to file late, work with your accountant and file an extension on time.
7. Spend Time on Taxes Every Week
Just as you can’t expect to stay in shape if you only exercise once a year, you can’t expect to keep on top of your taxes if you only make them a priority during tax season. Start the new year off strong and schedule tax preparation time each week.
Taking just thirty minutes at the end of the week to reconcile your books, electronically file your receipts, plan for quarterly payments, and more will get you organized and ready for next year’s tax time.
8. Use tax software or a tax professional
If you are going to prepare your taxes online instead of hiring a tax professional, be sure to use reliable software. Using tax software is generally suitable if you have one or two incomes, plan to take the standard deduction, and don't have any complex investments.
If your financial situation is more complex, it's essential to seek the assistance of a qualified professional to ensure your taxes are filed correctly. Consider using a tax professional if you have multiple sources of income, complex investments, own rental properties, owe taxes in various states, or own a business.
9. File an extension if you need more time
Sometimes, people become busy with work, community, family, and other obligations, and need a little extra time to complete their taxes. If you're unable to meet the tax filing deadline, don't ignore it.
Determine your tax liability and submit the payment along with an extension request to the proper tax authority. Failure to file an extension or make a payment on time result in significant costs, including a late filing penalty, a late payment penalty, and interest.
10. Beware of tax scams
Tax scams are at an all-time high. Predatory fraudsters employ a range of convincing methods to entice individuals into disclosing their personal and financial information. If someone contacts you about your taxes, be cautious about what they request and what information you share with them.
The IRS typically mails notifications through the U.S. Postal Service, never via email, text, or social media, and won't threaten you or demand payment by any means other than cash or check payable to the U.S. Treasury.
Book a Call to Learn More About our Accounting Services (Trusted by 400+ Startups)
Haven is a financial management service created for startups, by startups. We help you get back to business by taking the onerous task of tax accounting off your plate. Our dedicated team manages all aspects of corporate tax accounting, from daily bookkeeping to complex tax filings that help you retain more of your hard-earned money.
We understand you face unique challenges as a growing business. That’s why we offer 24/7 support from CPAs who specialize in servicing startups. With our help, you can save time and money while focusing on building your business.
Book a call today and discover how our dedicated team can help you focus on building rather than bookkeeping.
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