For many entrepreneurs, the same go it alone spirit that prompted them to start their own company also informs their attitude toward filing their small business' taxes. Who better than me to do it? If you're one of those types willing to take on 1040s, 1065s or 1120s all by yourself, here's some things to consider to make things go a little bit smoother along the way.

Get the timing down
First, you're going to want to invest an ample amount of time into researching and planning out your tax filing, just as you would before any other situation that could significantly affect your small business' cash flow. In fact, the IRS estimates 85 percent of the total time required to prepare the average business tax return is typically devoted to record keeping and planning. (In 2007, this amounts to just over two full days of document gathering and organizing, since the IRS estimates the overall time needed to file now takes 56.9 hours.) In other words, you should have been thinking about and working on your taxes months before this year's filing deadline, if not all year long. And as for that deadline, it's important to remember that the final date to file without penalty depends upon the legal structure of your small business. C and S corporations that require a Form 1120 have an earlier deadline March 17, 2008 whereas unincorporated sole proprietorships as well as most general partnerships and limited liability companies have until April 15 to file 1040s and 1065s. For a handy way to track these deadlines and other milestones, such as quarterly payment dates and extension deadlines, check out the IRS's online month by month tax calendar at http://www.irs.gov/businesses/small/article/0id=176080,00.html.

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The No. 2 Pencil Method
Although computer assisted tax filing has grown by leaps and bounds recently between 1993 and 2003, the share of self prepared returns using tax prep software tripled, from 8 to 25 percent of the population not everyone is fond of staring at numbers on a monitor for hours on end. For those who prefer the old fashioned paper and pencil method, there are still plenty of resources out there to help you if you're going it alone.

Foremost is the IRS's Small Business Resource Center www.irs.gov/businesses/small/index.html. Yes, it's online and therefore demands some face time with a computer screen, but it's still a great place to go to get general questions answered and find out which forms you will need to fill out during your handwritten tax preparation. If you'd prefer a human voice or you have a specific question, however, try the IRS's free business tax help line at 1-800-829-4933, which is open 7 a.m. to 10 p.m. Monday through Friday and from 10 a.m. to 3 p.m. on Saturdays (all times local) through early April. Of course, as tax-deadline day approaches, you might experience long waits when calling the IRS so, as an alternative, you might try a local tax help line (often run by the local Chamber of Commerce or your state's Department of Taxation) or reaching out to a tax expert at SCORE to get some free advice. (To find one, search "tax" on the "Ask SCORE" web page: http://counseling.score.org/AvectraScore/Secure/SearchCounselor.aspx.)

Software Jump
As affordable tax prep software has achieved critical mass in the marketplace, more and more small business owners have become converts of its simple, "plug and chug" nature. And with affordable, online versions of these software products now compatible with many of the accounting platforms popular in the small business sector, many entrepreneurs are finding that they can easily tackle what might otherwise be a confounding tax situation without ever having to leave their workstation or fork over much more than $100. In fact, a September 2005 National Tax Journal article concluded, "use of software...is one way that taxpayers have taken advantage of technological change to adjust to an increasingly complex tax law." The two major players in the tax prep software game, however, have come to the market from different directions. For a general review of the various tax prep software products, go here: http://tax-software-review.toptenreviews.com/.

H&R Block, which has long been a market leader in the storefront tax preparation industry, leverages its selling position by integrating its Tax Cut software (http://www.taxcut.com/) with its more retail, people oriented roots. For example, as an added benefit of Tax Cut's "Premium" and "Home and Business" packages, even software only customers can get access to a live H&R Block tax expert in the event that they are audited. The company's new "Online Office" product blurs the line even further, letting customers send their tax documents to H&R Block and fill out a brief online questionnaire and then let one of the company's tax pros prepare your return for you all without ever having to leave your house. (It's worth noting here that while many tax prep software programs, like TaxACT, will not allow you to import financial data from the major accounting software platforms like Microsoft's Money or Intuit's Quicken, H&R Block's Tax Cut will allow it.)

On the other hand, Intuit's Turbo Tax software (http://turbotax.intuit.com/small-business-taxes/) builds upon the company's already strong position in the accounting software market as a result of Intuit's popular Quick Books products. Because of this more robust presence in the small business world, Intuit also offers more software options for the small business owner. For the sole proprietor or single owner LLC, there's a Turbo Tax "Home and Business" tier focused on entrepreneurs whose individual and business tax profiles are still inherently intermingled. For owners of C or S corporations as well as general partnerships and multiple partner LLCs, Turbo Tax provides a "Business" version aimed at those who file their personal and business returns separately.
The third major tax prep software platform, TaxACT (http://www.taxact.com/products/index_business.asp), has rolled out even more narrowly focused products, with six separate, low cost business versions now available.

While using tax prep software is becoming easier every year, comparing pricing among the different brands is anything but. All the major players now bundle their products, combining federal and state returns along with the ability to e-file into the various individual and business tiers. For a rough idea of what an apples to apples price breakdown of the last year's tax-prep software landscape looks like, go here: http://www.gettingfinancesdone.com/blog/archives/2007/02/taxpreparationsoftwarepricingcomparison/.

Still, there are a few general pricing principles to remember if you want to save money: First, printing out and mailing your return is more cost effective because most tax-prep software products charge anywhere from $5 to $20 extra to e-file your tax returns. (Even if they claim e-filing is "included for free," there's generally a hidden mark up. One way to keep your costs down is to use the online rather than the "disc in a box" version of the software as the downloadable editions can cost up to $25 less than software purchased in a store.) Second, state tax returns tend to be priced the highest, but not all states require your business to file. Finally, keep in mind that the paper filing method will mean that any refund you are due to receive could take up to twice as long to receive.

What if you have a change of heart?
Even the staunchest of independent spirits can occasionally run up against a problem that they can't solve alone. If you start down the road of filing your own taxes but then just a few days before the filing deadline, you realize that you just don't feel comfortable with the results, don't panic, there's a way out.

First, you should understand that it's not necessarily a bad thing to have a tax pro prepare your return. In fact, many consumer and business experts note that people with home businesses or complicated financial lives are probably better off going to an accountant or enrolled agent. "If you have a sophisticated tax situation, like you own rental property or you get a Schedule K-1 from a partnership or you have a second home, or if you go through any kind of major lifestyle change, such as starting a business, moving, having a child, or getting a divorce, any of these circumstances mean it will probably pay to have a tax professional handle it," advises Tom Ochsenschlager of the American Institute of Certified Professional Accountants (AICPA). "They're going to know what kind of questions to ask as well as what advice to give for the upcoming tax year that you're just not going to find with software."

Once you've made your decision to hand off your taxes, the next step should be to request a six month extension. Once somewhat difficult to obtain, extensions are automatically granted by IRS nowadays and the process is fairly easy. You can mail in the paper extension request form (4868 for individuals or sole proprietors, 7004 for corporations), call it in (1-888-796-1074), or e-file an extension. Even if you have a month to go before the deadline, getting an extension allows your paid tax preparer sufficient time to dig through your documents from the very beginning. Keep in mind, however, that an extension to file is NOT an extension on payment, so if you owe the IRS, you must at least work up an estimated amount due and pay that to avoid late fees and penalties.

To find a tax pro, the AICPA's Ochsenschlager recommends asking friends and relatives first. In addition you might try looking at a couple of online tax pro locator websites like http://www.naea.org/ or www.aicpa.org/states/info/index.htm. Once you've narrowed down your list of candidates to two or three, sit down with each of them for a brief explanation of your tax situation. "Most CPAs won't charge for this initial visit," Ochsenschlager says, "and from the discussion, you should get a good feel for whether or not you're comfortable with them."

Prior to relying on any legal, tax or financial advice or recommendations provided herein, you are advised to consult with your attorney, financial adviser and/or tax professional to verify the information provided and to determine the applicability of any federal, state or industry specific laws and/or regulations that may apply to you. Bank of America shall have no liability for legal, investment, finance and/or tax decisions based on the information provided.

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