A side point, OP and all the comments here saying CPAs are "ripping off" people is unfair. It's not easy to become a CPA, these people need to pay for school, run a business, and pay their bills and support their family like everyone else. Their time is valuable, they charge for that value. That isn't ripping you off, it's providing a service that you are buying. As a consultant you wouldn't appreciate people saying you were ripping them off just because you sold them your services.
did my own taxes one year and the next year had my CPA review them, he found thousands of dollars I left on the table, so in the end it ended up costing me thousands more to do my own taxes.
For quarterly taxes, I use my own spreadsheets, including one that implements the annualized income installment method from Publication 505. (I can't fathom how some freelancers can have income so consistent and/or a crystal ball revealing their total year income that use of simpler methods is possible.)
The dark patterns have been getting worse, though, so look up what should and should not be free for filing.
I was a contractor/consultant for a while. CPA was worth every penny (and very similarly priced). I never had to think about my taxes because my CPA knew told me everything he needed me to do.
My taxes were simple, so I could have done my CPA did, but it would have taken much longer and I would have likely missed things.
In previous years, I did payroll manually (by hand), but moving forward, I have decided to use Square to pay my W2 since they properly track and file all state/fed tax forms. Less headache and stress at the end of each quarter. Worth the $40/mo in my opinion.
The only gotcha to my approach (CPA + freetaxusa) is you need to be your own tax "champion". That is, you must research and understand what tax deductible options are available for your business. For example, since I have an S-Corp, I can deduct health insurance, SEP-IRA (25% of W2 income), mileage, and any business-related expenses (hardware/software/office/etc). There are some other interesting deductions that push the limit of what the IRS will consider (eg: use your house as a business meeting place for less than 14 days/yr, use a second home to keep/store data off-site, etc), but I tend to shy away from those since they don't provide any real savings but raise flags during tax reviews.
Finally, get smart on the W2-vs-distribution method of pass-thru income. W2 income requires you to pay fed, state, and self-employment taxes, while the distribution method does not pay self-employment taxes. In general, you can pay yourself 50% W2 income + 50% distribution income and not raise an eyebrow at the IRS.
When I search google or yelp results, it's hard for me to judge who is going to be competent and also reasonabily priced.
How did people find their accountant?
The last few years (no longer a consultant) I've just done my tax returns manually. The IRS offers editable PDF forms, and working through the instructions isn't that much harder than going through tax software's prompts.
(The home office deduction, for example, is simply a matter of understanding the rules, and using a measuring tape, and tax software can't automate much of that for you. And, as much as you have to do a little extra work for Solo 401k contributions when you do it manually, if you're using tax software, you still have to make sure you didn't miss or misunderstand the prompts that account for the pre-tax contributions, since that could be a very expensive mistake.)
For 2022, though, I'll probably wimp out, and go back to airgapped tax software, or find an accountant (who won't inadvertently hand my data to Intuit or others). The reason is that my particular state's forms are much more work than federal and they don't offer conveniently editable PDFs. Last time, I decided I would've gladly paid $1k not to have some forms feel like they were shortening my life by years.
If your taxes are more complex than you can handle on your own, put in the effort to find a good CPA. Get several recommendations!
Here is a cautionary tale when it comes to paying people to do your taxes: https://blog.nawaz.org/posts/2022/Nov/do-you-trust-your-tax-...
Per https://openai.com/api/ "Helps freelancers automatically find tax-deductible expenses by using GPT-3 to interpret data from their bank statements into usable transaction information."
CPAs as a result of that marketing may tend to charge higher for their service. It doesn't mean that they do a better job.
Given the degree of complexity stated by the OP (not very high, since there are no employees or business assets to speak of)[0] it should be easy to find someone with five or more years experience at a local H&R Block office who can do just as good a job for half the price, along with various guarantees on the work.
[0] of course we don't know what else was involved - is it a MFJ return, are there dependents with various credits, fancy investment income, itemized deductions, etc? Those items also add to complexity beyond just the consulting business.
They specialize in consultants and helped structure the LLC taxed as an S-corp to save a ton of money on payroll taxes.
They prepared a statement for justification on the portion of funds I take as salary.
They balance my bank accounts as part of the book keeping.
When applying for loans having several years of CPA stamped financials makes applications a breeze.
They have stopped me from doing a few borderline things which may have been technically legal, saved me a minuscule amount of money, but would have almost guaranteed an audit in their opinion.
When I had some very complex ideas for some things I wanted to do, the CPA scheduled an hour call to discuss and give me details on how to make it work.
I used to do my own taxes. And still do for my personal taxes. But I find having a firm keep my books totally worth it.
Searching for book keepers that specialize in independent contractors should bring them and some competitors up.
My guess is you haven't ever received a letter from the IRS saying you owe money, because $1800/year might sound like a bargain to avoid the stress such a letter creates.
For example, I once had a client switch their billing service. Each service sent a 1099 to the IRS for the same work for the same client for the same tax year.
The IRS is a blunt instrument.
I got a bill (for taxes, interest, and penalties) because I had only paid taxes on the money I was paid.
Yes it all got resolved properly.
But I opened a letter with five figures of taxes owed.
And had to figure out what had happened while completely freaked out and in a domain where I was operating for the first time. Would have been nice to have just called my accountant.
Of course your mileage may vary, and so to your luck.
You can usually deduct what you pay a CPA or tax preparer if you need to continue getting professional tax help.
To answer your question though, Xero and it's pretty great once setup correctly
What’s worth paying for is: 1) bookkeeping, and 2) advice on how to structure things for maximum tax benefit, but it’s very hard to find an ethical CPA who will have any advice for an operator of your size that you can’t figure out yourself with a few hours of research.
Got every cent in tax I could get: capital cost allowance on business use of personal car, and such.
Used the output of the software to successfully fight tax-related misreporting from a company I was contracting for. Canada Revenue Agency sided with me, agreeing with my interpretation of how accounting should be done.
If you have lots of free time and many freelancers have down time, then maybe it's cost effective to do it yourself regardless of the time taken.
There are various freelancer SSAS which will help you do it too. A kind of halfway.
You can classify all of your income and expenses throughout the year, including your home office, deductions and any other deductions that you qualify for and then it automatically transfers it over to TurboTax.
It also calculates your quarterly filings and helps facilitate paying those.