Last updated on April 19, 2014 at 9:20 EDT

Outright.com Data Shows Small Businesses Leave Money on the Table

April 17, 2012

MOUNTAIN VIEW, Calif., April 17, 2012 /PRNewswire/ — Outright, a popular online accounting solution for small businesses, has found that, while 80% of small businesses run by sole proprietors have already pulled together their tax information, many of them are underreporting some key expenses that would help them to reduce their taxes. Aggregated data from a sampling of small businesses using Outright’s software showed that the top expenses reported by small businesses varied between those who sold online versus those who were purely offline businesses.

The top expense categories reported by online sellers were:

  1. Cost of Goods Sold, which accounted for 47% of total expenses reported.
  2. Marketplace Fees, 26%
  3. Shipping Costs, 13%
  4. Office Supplies, 2%
  5. Utilities, 1%

Offline businesses had their highest reported expenses in taxes / licenses, office supplies, meals, cost of goods sold, and travel. Surprisingly, neither group had mileage expenses included in their top reported expense categories. Because many sole proprietors take many trips to source product, visit clients, or go to the post office, it appears that this expense is being underreported. At the current .55 1/2 cents per mile rate, most small businesses could likely show over $1,000 in mileage expenses that would reduce their taxes. Additionally, neither group had significant advertising expenses reported. This suggests that some small businesses may be able to reduce their taxes next year by reporting more of their mileage and advertising expenses.

“The top expense categories were about what we would have expected given the nature of these businesses. We were surprised to see that both mileage and advertising expenses were being underreported,” said Laura Messerschmitt, Vice President of Marketing at Outright. “We are thrilled to help these businesses account for their expenses and prepare for taxes in a highly efficient way with Outright taking care of the seamless integration and categorization of their data. We feel great that we have saved these businesses both time and money.”

Outright also found that a large portion of small businesses started working seriously on their taxes in mid-February, soon after receiving their 1099-K and 1099-MISC tax forms. Few small businesses worked on their taxes in March. Almost 20% put off their taxes until April and are currently working on finishing them.

The aggregated data is from a random sample of Outright’s 200,000 small business customers who are sole proprietors from all sectors of the economy – everything from designers to dog walkers to consultants. Online sellers were defined as sole proprietors who primarily sell on eBay, Etsy, or Amazon.

About Outright

Outright’s easy-to-use online accounting solution automatically brings all sales & expenses together in one place so the sole proprietor always knows what’s going on with their business. No math, no manual entry, no paperwork. Outright integrates Amazon, Etsy, eBay & PayPal, bank, and credit card accounts so users can stay up-to-date effortlessly — and instead focus on doing what they love to do. To learn more or sign up, please visit http://outright.com

SOURCE Outright.com

Source: PR Newswire