Small businesses can have limited budgets, and tax preparation can be costly – that’s why some small business owners use big-name tax software.
Tax software is a great idea for some businesses, but for others, it’s a mistake. Not to mention the missed opportunities when an expert isn’t in the mix! Let’s talk about the risks that can occur when you DIY your business taxes.
At CSI Accounting & Payroll, we’ve provided year-round tax strategy to small businesses for nearly 60 years. That means we’ve spoken to thousands of prospective clients who have thought about using tax software, answering questions like:
- What is it like to do my own business taxes with software? What are the risks?
- What are the limitations of tax software?
- What professional options exist for taxes and guidance?
DIY-ing Business Taxes With Software (And Its Risks)
As I mentioned in the introduction, handling your business taxes with software can be a good option for many very new or very small businesses. This occurs hand-in-hand with doing your bookkeeping on the same software throughout the year. Let’s tackle:
- The pros of DIYing bookkeeping and taxes
- The cons of DIYing bookkeeping and taxes
Pros
With huge advancements in big-name tax software over the past decade, it’s easier than ever to handle business taxes without an accountant.
There’s some automation, plenty of internal guides, and even the option to call a tax support professional if you have a one-off question (for an additional fee, of course).
All of these things mean that the level of risk is low – but only if you know what you’re doing. If you’re just going through the motions, the risks can stack up.
Cons (Risks)
Your taxes use your bookkeeping numbers, so if your books are wrong, your taxes (and financial statements) will also be wrong.
Not even modern big-name software can tell you if your taxes are wrong, and inaccurate taxes can result in missed tax deductions/credits, penalties, fees, and even IRS audits. (Not to mention, you won’t get professional audit support!)
Limitations of Tax Software
Beyond the potential risks, you also need to consider the lack of benefits. You can save some money, but at what cost? (Pun intended.)
There are many missed opportunities when you do your own bookkeeping and taxes. They can include:
- A complete, year-round tax strategy to minimize what you owe in taxes.
- Suggestions for tax credits and deductions.
- Correct monthly financial statements to give you current insights, resulting in strategic decision-making.
- Monthly meetings for expert advice, unlimited one-off question support, and consulting projects.
Luckily, monthly accounting can provide these benefits! Let’s compare professional tax services in the next section.
Professional Tax Options
Not sure if you’re ready to outsource? If you’re struggling or want to level up your accounting investment, it’s time for a change – and if this formula holds true, doing your own accounting is no longer financially practical:
The value per hour of your time * The number of hours spent on accounting > The cost of an accounting service
Luckily, there are a few options for small businesses to handle their taxes. Take our ideal accounting solution quiz to find out which DIY, outsourced, or in-house solution is best for your business. If your result is monthly accounting, we’d love to chat!
Capture Every Opportunity With Monthly Accounting!
Now that you know about the risks and limitations of doing your taxes with software, plus which professional options you’ll have if you decide to outsource, are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about what it’s like to work with us by clicking the image below:
