How Much Will Filing Taxes Cost You in 2025?

Many business owners dread tax season, not just for the paperwork and deadlines, but how to do taxes for small business and what are the costs of hiring tax professionals or buying software. Whether you’re a sole proprietor running a side hustle or a growing company with employees, you might be asking, “How much does it cost to file taxes now, and how will it change in 2025?”

This guide examines the factors that drive tax preparation costs, the typical fees you can expect, and how small businesses can reduce expenses without risking penalties or missing out on key deductions.

Introduction: The Importance of Tax Prep Costs

Taxes can be a major headache for small business owners. You already have daily tasks—managing staff, dealing with suppliers, reaching new customers—so making time for “tax time” can feel like a burden. Yet, you also don’t want to overpay, either by using an expensive accountant for simple returns or by missing crucial deductions that a skilled professional might catch.

Understanding how much you’ll pay for tax preparation can help you plan. If you know the average cost for tax preparation in your segment, you can gauge whether you’re overspending. Or if you prefer do-it-yourself approaches, you’ll see the typical software or e-filing fees.

In 2025, rising inflation and potential changes in the tax code might affect the final bill. Some accountants could increase hourly rates if they face higher overhead or see more complex rules. But as new tech emerges, some might adopt advanced software or e-filing solutions that reduce manual time, possibly offsetting price hikes.

Why This Matters

• Cash Flow: If you don’t budget for professional fees or software subscriptions, you may feel last-minute stress.
• Compliance: Paying too little for incompetent help or skipping professional input can lead to missed deductions, bigger tax bills, or even penalties.
• Peace of Mind: The cost of an expert can be well worth the confidence that your forms are correct, especially if you’re claiming complex deductions or face multiple state obligations.

Factors Affecting Tax Preparation Costs

Not every return costs the same. While some business owners pay under $300 to prepare a straightforward return, others shell out thousands for more complex or specialized help. Let’s explore the key drivers:

1. Complexity of Your Business
   • Do you run a simple sole proprietorship with a single service line? That might be cheaper because you just have to track basic income and expenses.
   • If you manage a small corporation or have multiple revenue streams, dealing with payroll, contractors, multi-state taxes, and large sets of receipts, you may pay extra for the required detail.
2. Professional Qualifications
   • Enrolled Agents are typically cheaper than CPAs, but it depends on their experience. CPAs or tax attorneys can charge more for specialized knowledge or high-level advice.
   • Bookkeeping or “tax prep shops” might offer lower rates, but they might also skip more advanced planning or representation in an audit scenario.
3. Time of Year
   • Peak season (January through April) can raise prices because professionals handle heavy workloads. If you handle your taxes off-season or file an extension, you might negotiate a more flexible rate.
4. Location and Overhead
   • A well-established firm in a big city can cost more than a small-town accountant or a purely remote online service. Overheads like rent or living costs can push fees higher.
5. Special Services or Consulting
   • If you want year-round guidance, not just a once-a-year filing, you may pay a retainer. Some firms offer “unlimited questions” or “maximum refund guarantee” packages at a premium.
6. Software Subscription Levels
   • If you do it yourself using popular tax software, advanced features (like guided Schedules C, E, or multi-state filings) might push you into higher-tier plans. The difference can be tens or hundreds of dollars, plus potential add-ons for e-filing state returns.

Breakdown of Common Services and Fees

While exact figures vary regionally, here’s a rough sense of what small business owners pay for typical scenarios:
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• Basic Sole Proprietor Return: Ranges from $200 to $600. The cost might hinge on how well you’ve organized receipts and expenses, plus the complexity of your deductions.
• S Corporation or Partnership: Often starts at $600, climbing to $1,200 or more if you have multiple owners, big inventory, or special credits.
• C Corporation: Typically more detailed, especially if you handle multiple lines of business or cross-state revenue. Costs can jump from $800 to over $2,000, depending on complexity.
• Add-Ons (like Multi-State Filings): Each additional state return might cost $50–$300.
• Consulting or Audit Support: An accountant might charge hourly rates from $75 to $350, depending on their expertise.

Note: Some CPAs or enrolled agents bundle services—like monthly bookkeeping plus tax filing—into a flat monthly fee. This approach can smooth out your costs over the year instead of a lump sum each April.

Filing Options: DIY Software vs. Professional Preparers

It’s vital to weigh the pros and cons of different methods:

1. Do-It-Yourself with Software
   • Pros: Cheaper for simple returns, immediate e-filing, user-friendly wizards.
   • Cons: Risk of errors if you don’t fully understand small business rules, plus time spent inputting each line. Also, you might not get specialized advice if your situation is unusual.
2. Tax Prep Chains or Bookkeeping Services
   • Pros: Usually moderate cost. Good for standard small businesses with straightforward needs. Many offer quick turnarounds.
   • Cons: Staff turnover might mean you don’t build a long-term relationship. Some complicated returns might exceed their comfort zone.
3. CPAs or Tax Attorneys
   • Pros: Depth of knowledge, can handle complex scenarios or represent you if the IRS has questions. Potentially can find deductions you’d miss on your own.
   • Cons: Higher fees, from hundreds to thousands, especially if you require extended consultations or year-round services.
4. In-House Accountant
   • Pros: Full-time control. Great if you have large transaction volumes. Real-time advice.
   • Cons: Salary plus benefits is expensive. Overkill for smaller operations with limited transactions.

How to Decide

Think about your comfort level with rules, the complexity of your revenue streams, and how many write-offs or credits you might claim. If you rely heavily on tax breaks or have multi-entity structures, investing in professional help might pay for itself. If you have a simple side gig, a mid-level software solution might suffice.

Strategies to Cut Small Business Tax Filing Costs

No one wants to pay more than necessary. While skipping expert help altogether might not be wise, there are ways to minimize fees:

1. Stay Organized Year-Round
   • Track income and expenses in real-time with a bookkeeping app or spreadsheet. This means fewer billable hours for your preparer to decipher your data.
   • Keep receipts digitally, labeling each to a category. That speed helps them breeze through your documents come tax time.
2. Combine Bookkeeping and Tax Prep
   • Some accountants or online providers bundle monthly bookkeeping with annual tax filing at a set rate. By paying a monthly fee, you ensure your records are in shape, leading to fewer surprises in April.
3. Handle Minor Filings Yourself
   • If you have a main business plus a trivial side hustle, do the simpler side hustle portion on your own. Let your pro handle the main complexities.
4. File Early or Off-Peak
   • Some accountants might discount returns if you come in early (like January–February) instead of late March or April. Or if you request an extension, they might have more time and potentially lower stress fees.
5. Leverage Free or Low-Cost Resources
   • The IRS offers some guidance and free e-filing for specific thresholds. If your business is small enough, consider these free options, although that’s best for relatively straightforward returns.
6. Ask for a Detailed Estimate
   • If you suspect your return might be complex, get a quote or cost range from prospective preparers. They might clarify, “If your records are tidy, we can do it for $1,000; if we have to sort them, it might be $1,500.”

The Outlook for 2025: Potential Price Changes

Tax prep fees often reflect changes in tax law, inflation, and the complexity of new or updated regulations. Looking ahead to 2025:

1. Possible Adjustments to Tax Code
   • If new credits or deductions appear, pros might spend extra hours on continuing education or software updates, passing costs along.
   • If the code simplifies in certain areas, some routine tasks might become easier.
2. Inflation and Labour Costs
   • As the cost of living rises, CPAs or enrolled agents may raise hourly rates. Even software developers might increase prices for advanced plans.
3. Technological Advancements
   • AI tools or improved e-filing portals might reduce manual data entry. This could bring down certain fees if you adopt them.
   • However, some advanced software might come with premium subscription models.
4. Increased Online Competition
   • More virtual CPA firms or specialized online platforms can create competitive pricing. If you prefer remote help, you can shop around for cost-effective solutions from different regions.

Overall, plan on a slight increase in average cost for tax preparation if nothing major changes, perhaps 2–5% more than you’d pay in 2024. Larger shifts might come if major tax legislation emerges. Keeping up with the news or your accountant can help you adapt in time.

Frequently Asked Questions:

1. What is the average cost for tax preparation for small businesses?

It typically ranges from $200–$600 for a simple sole proprietorship, going higher for partnerships or corporations. Complexity, location, and whether you need multi-state or specialized forms can push costs up to $1,000–$2,000 or more.

2. Are there additional costs for small business tax filing in 2025?

Possibly. Changes in tax laws or inflation could increase professional rates or software subscription fees. Also, more advanced features—like multi-state e-filing—can add to your total.

3. How can I reduce tax preparation costs for my small business?

Stay organized year-round with good bookkeeping. Provide your accountant or software with clear, categorized expenses. File early, if possible, and consider off-season or monthly packages that spread out the cost.

4. What services are included in small business tax filing costs?

Usually it covers preparing and filing the necessary federal forms, plus any needed state returns. Some packages add year-round consultation, monthly bookkeeping, or representation in case of IRS queries. Always ask what’s included before choosing a provider.

Conclusion and Next Steps

Tax season doesn’t have to be a stressful or overly expensive ordeal. By recognizing how different factors—like complexity, your location, or changes in the tax code—shape your tax preparation costs, you’ll be better able to plan. If you’re running a simple sole proprietorship, you might do well with software or an affordable tax chain. For complex setups, a higher-end CPA might cost more but potentially save you in missed deductions or future issues.

Immediate Actions

• Assess Your Situation: Are you a single-owner business with minimal overhead or a multi-entity structure? Complexity dictates your price range.
• Budget for 2025: Expect modest increases in line with inflation, plus any potential legislative changes that complicate your return.
• Keep Clean Books: Use a reliable bookkeeping method to minimize the hours your pro invests. Tidy records can cut hundreds off your final bill.
• Weigh Options: If you’re a confident do-it-yourself type with a straightforward scenario, a middle-tier software could be enough. But if you anticipate expansions or multi-state complexity, consider a professional’s help.

By staying proactive—organizing your financial docs, clarifying your business structure, and picking the right approach to tax filing—you’ll approach 2025’s tax season with less stress and fewer surprises on the cost front. The money you save can go back into growing your business, not plugging holes in a confusing or poorly planned tax strategy.

Key References:

1. Investopedia – Tax Preparation Fees Overview
2. QuickBooks – Understanding Tax Prep Costs
3. US Chamber – How to Create a Profit and Loss Statement
4. IRS – Basic Information for Small Businesses