Sanjeev K. Singh is the founder and CEO of Zenwork.
Every fall, millions of business owners face the same reality: tax filing deadlines that don’t wait. Whether or not you’ve turned a profit, the government expects your paperwork. For C-corps that filed timely extensions, October 15 looms as a hard stop.
The challenge isn’t just the deadlines—it’s the cost. According to the 2023 National Association of Tax Professionals fee study, small businesses spend, on average, $800 just to file basic business returns. That fee can easily double based on complexity and other compliance requirements, such as state annual reports filings. For startups running on little or no revenue, IRS compliance often becomes one of the most expensive line items on the books.
When I started my first company, I handled my own bookkeeping and taxes. It was frustrating, time-consuming and expensive. But it also gave me a firsthand look at how broken the system was for small businesses. Back then, I made incremental improvements. Today, AI is driving exponential ones. By automating repetitive tax tasks, AI makes compliance affordable, accurate and much less intimidating.
The Cost Of Falling Behind
Forming a business is the first step to earning revenue, but the moment you incorporate, the clock starts ticking on compliance. Federal and state agencies don’t care if you made $10 million, lost $10,000 or broke even—you still have to file.
Having worked for three decades in digital tax compliance and automation, I’ve seen this pattern play out time and again. Too many small businesses delay or skip compliance because of the cost, only to face penalties, interest and reputational damage later.
Too many founders assume they can wait until they’re profitable. Then comes the surprise: A client tries to onboard them, checks the Secretary of State’s database and finds the company out of compliance. Suddenly, the deal is delayed, penalties stack up and credibility takes a hit.
This is why the $800 average matters. It’s not just the annual tax filing fee—it’s the price of staying in business. And while state filing fees annual franchise fee can’t be avoided (Delaware might charge annual franchise fees ranging from $25 to $200, California charges $800), the bulk of compliance costs—the accountant’s/tax preparer’s time—can be compressed with automation.
How AI Is Changing Tax Work
AI has already reshaped how accountants operate. Think of it in three categories:
• Automation Of Repetitive Tasks: In the past, importing bank transactions into QuickBooks meant hours of manual mapping. Today, AI reads line items and categorizes them instantly. Upload a restaurant receipt, and the software knows where it belongs. Upload a Costco charge, and it flags whether it looks personal or business.
• Accuracy And Compliance: AI models trained on tax codes can now scan returns, detect inconsistencies and highlight missing deductions. They’re not perfect, but they dramatically reduce errors that would otherwise slip past rushed human review.
• Cost Compression: Instead of paying hourly for a CPA to reconcile books, AI-driven platforms can process the same data in minutes. That means more businesses can afford compliance, and accountants are freed to provide higher-value advisory services.
This shift doesn’t make accountants obsolete, but it redefines their role. AI handles form prep and pattern recognition; CPAs focus on planning, structuring and navigating gray areas where judgment and legal expertise matter. In my view, AI will augment—not replace—accountants.
The New DIY For Business Taxes
We’ve long had TurboTax and H&R Block for personal returns. Now small businesses finally have comparable DIY options. Several stand out:
• X.Tax: A newer, purpose-built platform for business tax filing. Upload your prior year’s return or trial balance, and within minutes, the system produces a ready-to-review filing and completes final e-filing with the IRS and all 50 states
• Botkeeper: An AI-first bookkeeping tool that layers on top of accounting platforms like QuickBooks, automating categorization and reconciliation at scale.
• Pilot: Combines AI automation with white-glove bookkeeping support. It’s not always the cheapest, but it’s effective for founders who want a hybrid approach.
• Instead.com: A planning and compliance tool built for CPAs but useful for businesses with complex deductions. While it doesn’t yet file returns, it can flag opportunities and risks before you engage a human advisor.
These tools won’t be right for everyone. But I estimate that roughly 60% of small businesses can use them to save significant time and money. For more complex cases—cross-border ownership, unusual investments or sensitive legal considerations—CPAs remain indispensable. The point is that founders now have options beyond paying four figures for a simple return.
What Small Businesses Should Do Now
When the tax deadline approaches, here are practical steps small business owners can take to avoid unnecessary costs:
1. Clean up your books. AI is powerful, but it can’t fix bad inputs. Make sure transactions are reconciled and financials are accurate before uploading to any tool. Garbage in, garbage out still applies.
2. Centralize your data. Whether you use QuickBooks, Xero or Botkeeper, ensure your income and expenses are in one place. That makes it easier to generate trial balances or export data into tax software.
3. Test an AI platform. Upload last year’s return into a tool like X.Tax and see how it handles the workflow. If the output looks right, you’ve saved hundreds. If not, you still have time to bring in a CPA.
4. Don’t wait until the deadline. AI tools can speed up filing, but they’re not magic. Give yourself time to troubleshoot data issues or contact support.
AI Levels The Playing Field
The truth is, compliance costs shouldn’t be the reason a small business fails. With AI automation, we finally have a way to reduce that burden. Accountants will still play a critical role—but as advisors and strategists, not as expensive form-fillers.
For the millions of entrepreneurs chasing their first customer or their first dollar of revenue, that shift could be the difference between closing their doors and pushing forward.
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