If accounting wasn’t your major in college, chances are, at one point or another, you have found yourself bogged down by all the financial paperwork involved with running your small business. And as your business grows, so do your bookkeeping requirements. Eventually, the growth of your company may cause you to start seeking the help of contractors – temporary employees who help you complete your contracts – without having to hire regular employees. But while contractors definitely require less paperwork than employees, you’ve still got to worry about filing 1099s in addition to your Schedule C or Schedule E. For many people, a broad lack of understanding of financial paperwork and associated legal requirements are reason enough not to enter into self-employment.
For the larger small businesses like multi-member LLCs, partnerships, and corporations an accountant is really the best avenue for tax preparation. Home businesses, however, like sole proprietors and single-member LLCs (SMLLCs) would prefer to avoid the extra costs. All one really needs is a place to track income & expenses, and file the occasional 1099 in addition to year-end taxes. But for those of us with small businesses, the myriad choices are staggering. Many of the options available seem like just what we need – until we actually install the software and try to figure it out. QuickBooks is a great example. Their marketing would have you believe that your small business can’t live without their software but nothing could be further from the truth if all you do is invoice and pay bills. For those of us who own truly small businesses, the functionality available in QuickBooks is something like using a jackhammer to pound a nail into your living room wall so you can mount that picture of your mother.
So, we’ve now begged the question: there must be a way to do this simple task yourself, right?
Enter, web-based applications – online tools designed specifically for small businesses who, until recently, had to deal with one-size-fits-all, installed base software like QuickBooks. If you’re reading this blog post, you’re probably already familiar with our product, Timesheets.com, so you’ll be happy to know there’s a similar application for small business bookkeeping called Outright.com.
Outright.com automates the input of expenses and income via other web applications such as PayPal, American Express, and Expensify. Adding icing to the cake, Outright.com is free and vastly simplifies the accounting experience. Outright.com can also eliminate some of the time you might have to spend with an accountant. QuickBooks can often be overkill for sole proprietors and hiring an accountant can be expensive. Outright.com gives sole proprietors and SMLLCs the ability to stay on top of the bookkeeping in the simplest possible terms.
Upon login to Outright.com, you really only have two options, not a massive menu bar of selections. You can either add expenses like payments, receipts, and mileage, or you can add income. Outright.com helps categorize expenses by IRS standards and then populates the data straight into a Schedule C. All of this helps freelancers and small business owners pay accurate quarterly and year end taxes on time. Plus, it does all the dirty work involved in filling 1099s.
Outright.com knows that sole proprietors become more vulnerable to IRS backlash when they start hiring contractors. The IRS will penalize you for many unsuspecting or innocent mistakes on your 1099 form. The penalty is $50 for each incorrect filing. If you hired out 10 people last year that’s potentially five hundred dollars (but don’t worry, if you’re a small business, they’ll cap your penalties at $100,000).
Sound complicated? And don’t forget that the IRS says this about classification of independent contractors: “If you incorrectly classify an employee as an independent contractor, you can be held liable for employment taxes for that worker, plus a penalty.” That’s why business owners, no matter the budget, feel they need to hand over control of their books. There are just too many ways to make mistakes. Thankfully, this is no longer requisite for a job well done. The whole 1099 process is easy and cheap with Outright.com who enables contractors to enter their own data into their employer’s account and alerts the employer of any incomplete W9s.
In sum, Outright.com and its integration with related online software is long overdue in home accounting. Outright.com not only performs some very important functions but it makes the process so simple that even sole proprietors should feel comfortable managing their own business finances.