TurboTax has been winning tax software face-offs year after year for good reason: It's well designed, thorough, and just plain easy to use. But it's also expensive. TurboTax Home & Business costs $100, and includes up to five free federal e-files and one state software download. You must pay $20 to e-file a state return, however, and Intuit charges extra for some features (such as a session with a tax advisor) that archrival H&R Block at Home Premium includes for free.
When you launch the program, it immediately begins addressing your business tax issues by asking whether to start preparing your return right away, or if you'd rather prepare W-2s and 1099s for your employees (yes, a sole proprietorship can have employees).
One of the best reasons to use any tax software is the ability to import relevant data, which can be a huge time saver and is generally less likely to produce errors than manual data entry. TurboTax Home & Business really shines here: It can import 2009 return data from both of its principal competitors, H&R Block at Home (.t09 or PDF) and TaxAct (.ta9 or PDF) as well as, of course, TurboTax 2009 (.tax2009).
It can also import 2010 financial data directly from Quicken or Quickbooks 2009 or later (but you must have the software on the computer you're using for TurboTax), or from any finance software that supports .txf (Tax Exchange Format) files, including older editions of Quicken.
People who use older versions of Quickbooks, alas, must enter that data manually. This feature may not be as useful as it sounds, however; for it to truly help, you must have set up line-item associations within the finance software you use and, of course, you must be diligent in entering your data in expence categories as well.
TurboTax Home & Business lets you import tax data from more payroll providers and financial institutions than any other program, giving it a big edge over the competition for many investors.
The software itself may look a little intimidating at first, especially the Schedule C expence area, which is crammed with categories and examples. Intuit has chosen a design that minimises clicks by presenting longer pages. Navigation tools aren't as readily apparent as they could be: You must click a Topic List button next to the search box to get a detailed, clickable list.
Fortunately, federal and state (once you've downloaded state software) tax/refund tickers appear prominently at the top of the page, showing what you owe or will get back based on the information you've given so far. Buttons to show forms, print specific items, and access help are nearby.
A sidebar on the right provides additional shortcuts, it lets you flag a page you want to return to, access TurboTax's popular forums, and use its 'Ask a Tax Advisor' feature, which gets you a 20-minute phone session with a tax professional for $30 (as previously mentioned, H&R Block at Home Premium provides a session with a tax pro for free).
Intuit's category scheme is exceptionally user-friendly: Instead of simply repeating the list of allowable expense types from the IRS form, Intuit uses its own list that relates to how businesses work. For example, TurboTax Home & Business has a category called Communications that covers everything you might expect it to, including landline phone and Internet service. These items may end up in different places on Schedule C, but having them together when you go through the program avoids a lot of confusion, especially for newbies.
Intuit is very comprehensive in providing examples of allowable deductions in each expence category, as well. You get a short list to start with, and a button to summon additional examples. Intuit usually provides snippets of advice to address common questions, although in some cases these instructions could be a bit clearer.
For example, instead of simply saying it's not a good idea to deduct the full expense of a home landline (because you almost certainly don't use it 100 percent for business), TurboTax advises you that you can deduct 100 percent of a phone line if it's in a location separate from a home office. (The program also says you can completely deduct the cost of a second home phone line used for business.)
Intuit's audit defence service, provided by a third party called TaxResources, will add another $40 to your bill, but it will come in handy by providing a tax pro to prepare for and accompany you to an audit, should the need arise.
TurboTax Home & Business gets away with the extra fees and charges because it provides excellent and thorough assistance for people who have the patience and the need to use it (going through all the examples of expenses takes time). If your business is straightforward, you probably can get what you need for less from H&R Block at Home Premium (especially if the software supports downloads from your financial service providers). But TurboTax remains unchallenged in the breadth of its features and financial institution support.