Getting with the program - tax software programs - includes related article on prices and ordering information - Buyers Guide

Nation's Business, March, 1996 by Tim McCollum

Small-business owners can now find some tax-preparation software similar to products tailored for individual returns.

For about the past 10 years, an increasing number of taxpayers have turned to their computers to help them do their personal returns. But for small-business owners looking for a high-tech alternative to their accountant, such an option has come more recently and has been more limited.

Tax-preparation software programs have gained popularity among individuals since 1984 because they provide an easy way to fill out personal tax returns. The best of these programs walk you through your tax return, calculate the numbers, and suggest ways to lessen your tax bite while avoiding an audit by the Internal Revenue Service. Some even help you file your return electronically by modem or diskette for an additional fee.

Doing business taxes by computer is a more recent development. Many small-business owners have used personal-tax programs to file Schedule C (self-proprietor) or Schedule F (farm income) business forms with their Form 1040, but these programs don't meet most firms' needs.

Two years ago, in response to the demands of its small-business customers, Intuit released advanced business versions of its TurboTax for Windows and MacinTax for Macintosh tax programs to help small companies and partnerships that file corporate-tax forms.

Home builder Rik Ketschke of Ketschke Enterprises, in Brentwood, Tenn., has used the 1120S (S corporation) version of TurboTax for Business to do his business taxes on his computer for the past two years. He says the program is as easy to use as the personal edition of TurboTax and is not unlike visiting an accountant "and having him ask you questions and then going back a couple of weeks later to pick up your return. It's essentially the same thing, only it's done almost instantly."

So far, TurboTax and MacInTax are the only tax programs intended for use by small-business owners. The other programs described below are for filing personal returns.

TurboTax/MacInTax for Business

In addition to a program for S corporations such as Ketschke's, TurboTax and MacinTax for Business offer separate editions for sole proprietors (Form 1040), corporations (Form 1120), and partnerships (Form 1065). Each program allows users to bring in financial information from Intuit's QuickBooks small-business accounting software, while the 1040 business version also imports information from financial programs such as Quicken, Managing Your Money, and CheckFree.

On the other hand, the business programs can't import tax information from common small-business accounting packages such as Peachtree Accounting for Windows or DacEasy, leaving users like Ketschke to enter information by hand.

The recommended method for completing your return is the EasyStep interview, which walks you through various stages of the process, from entering information to reviewing and filing your completed return.

The Forms Method allows business owners to fill out forms directly, but this can be frustrating if your return is complicated or if you haven't done your own taxes before.

Regardless of how you fill out the return, the program's Review process flags potential problems and explains tax mistakes.

TurboTax and MacinTax for Business also include tax hints and information from tax attorney Fred Daily's guide-Tax Savvy for Small Business--and a built-in copy of Netscape Communications' Navigator software that links users to tax information at Intuit's TurboTax Internet home page (http://www.intuit.com/turbotax/).

Kiplinger TaxCut

Among the personal-tax-preparation programs, Kiplinger TaxCut from Block Financial Corp., the software-publishing division of H&R Block, may provide the easiest solution for people with complex personal and sole-proprietor business returns. The program plays the role of financial adviser throughout, explaining things line by line.

TaxCut's guided "Q&A" interview explains each section of your return before you begin work, then takes you through each line and worksheet, providing examples and often suggesting common responses. As you go, the program shows you where your responses are applied and periodically updates you on your current tax situation.

The program works with major financial-planning programs such as Microsoft Money, Managing Your Money, and Quicken as well as the 1994 editions of TaxCut and Turbo-Tax.

Reviewing your tax form can be a chore. It is hard to find your way around and difficult to track whether the information you entered on worksheets has been calculated and included on other forms.

TaxCut's biggest strength is the built-in help and advice provided by Kiplinger experts, which link you directly to the appropriate topic wherever you are on the form through a hypertext system.

Simply Tax

Simply Tax from 4Home Productions, the personal-software division of Computer Associates International Inc., gives you a choice of methods for filling out your return and includes handy tools for making sure everything is correct.