Outright.com Giving Away $2,000 to Wise Bread Readers
- Comment Winner: Comment 71 from Jacob
- Twitter Winner ShesAnAngel417
- Outright Facbook & Community contest: Kathy N Scott
I have emailed Jacob and DMed ShesAnAngel417. Please reply ASAP to claim your prize!
Outright.com, a free online bookkeeping service for the self-employed and small business owners, is giving away $2,000 to Wise Bread readers!
My favorite part of Outright.com is their community where you can get free expert advice from accountants and bookkepers. For example, their community members got answers on questions like:
- Are moving expenses incurred for a new job deductible?
- Do you need individual receipts to track gas expenses?
- Can I write off laptop purchase in the first year?
- Is it generally beter to itemize mileage or take standard deductions?
- Can I deduct mortgage for small business space?
- Are products purchased for product reviews deductible if you end up using it? (That's my question.)
Of course, you should always be careful about getting free advice online, and I would double check everything with your own accountant later. However, it is nice to have a quick tax resource that is 100% free.
In addition to the contest, Outright.com co-founder Kevin Reeth also shared some great tips on the most overlooked business deductions and most common tax mistakes later in this post (jump to interview).
But first, the contest!
Blog Comment Contest: $1,500
Prize: 1 winner of $1,500, randomly selected from the comments in this post.
How to Enter
Simply leave a comment below answering any one of these questions:
- For everybody: What is your most pressing tax question before April 15th? (By the way, you can get free expert advice from accountants, bookkeepers and other business owners at Outright's Community.)
- If you are self-employed or a business owner: What is the one expense that you wish the IRS would let you deduct for your business and why? (Need some ideas? Add your expenses to Outright.com and discover what is deductible.)
- If you don't have a business: What do you think businesses should or should not be able to deduct and why?
Don't forget to enter your email address while leaving a comment. We can't contact the winner if you don't leave an email address. One blog comment per person please.
Twitter Contest: $250
Prize: 1 winner of $250. Randomly selected.
How to Enter
Follow @WiseBread on Twitter (we can't notify you as the winner if you don't follow us). Then simply tweet one of these messages:
- RT this for chance to win $250 @WiseBread http://bit.ly/aLxcNZ
- Win $2500 at @WiseBread courtesy of @Outright http://bit.ly/aLxcNZ
Outright.com Facebook & Community Contest: $250
Two Ways to Enter
- Visit Outright.com's Community and add yourself as a new user; or
- Visit Outright.com's Facebook fan page and add yourself as a fan.
Yes, you can do both to increase your chances of winning.
Rules For All Three Contests
The Blog Comment, Twitter, and Facebook/Community contests all end at 11:59 pm EST on 4/2/10. Winners will be announced on this post on 4/6/10. You can enter all 3 contests, but you can only win once. US residents only, must be 18 or over, void where prohibited.
There are plenty of deductions out there for self-employed professionals that, thanks to the complicated tax code, are often overlooked.
We’ve found that the home office deduction tends to be the most commonly overlooked—and the one that causes the most confusion for those who are self-employed. This deduction allows an individual to write off any expenses incurred from running a business out of their home, for example, you may write off a percent of your rent or mortgage based on the proportion of your home that the office occupies. But we’ve found so many people are worried about an audit that they are scared to use this deduction, missing out on huge savings. Don’t be overly worried about the deduction—if you run your business out of your home and have a room or a portion of your home dedicated to your business, measure the square footage and write it off. Even though more than half of all small businesses are home-based, the majority don’t claim the home office deduction.
Mileage is another often overlooked deduction. Deducting transportation expenses is one of the most tedious and confusing components of tax prep for the self-employed, but again, it can reap huge rewards. For those who are on the road a lot, like contractors, plumbers or realtors--who average 20,000 miles per year on the road--writing off business-related transportation can save thousands of dollars a year. You can deduct $0.50/mile for each work-related mile traveled.
A good (but confusing) deduction for the self-employed is office equipment. Unless you buy a lot of equipment (in 2009, the limit was up to $250,000), you can write off the full purchase price for that equipment in the year in which it’s first used. However, if you aren’t making a lot of money, you might be wasting a possible deduction. You can instead choose to “depreciate” the item, which means writing off the cost over multiple years. Most office equipment gets depreciated over 5 years (computers, copiers, fax machines, etc.) Office furniture gets depreciated over 7 years. So, see how your overall profit and loss is looking for the year before deciding which way to go – it can make a difference down the road when you might be earning .
Again, the process for filing taxes can be super complicated and we see both first-time and seasoned filers making mistakes that can either lead to an audit or cause them to miss out on key deductions. One big mistake is not paying taxes because they don’t think it’s a lot of money or because they have other bills. Or they wait until the end of the year, instead of paying estimated taxes throughout the year. Another is to allow themselves to get disorganized, which causes them to miss important deductions or critical tax deadlines. Other mistakes include:
1. Forgetting to sign and date your return. This is so common, the IRS even posted a video on You Tube, with sign language, to remind people to sign and date their returns.
2. Math errors. The frequency of math errors has gone down recently as more people are using software or professional return preparers, but simple addition and subtraction errors are still an easy mistake you need to avoid. Double check any manual math before sending in your return.
3. Wrong social security numbers for you, your spouse or your dependents. A sure way to get a letter from the IRS is to put an incorrect social security number on your return. Their computers automatically match names and social security numbers for every return.
4. Not matching information returns to your personal tax return. You know all the information returns you get in January and February like W-2's, 1099's and 1098's, well the IRS gets a copy of those also and they match up your return with their copy. Sometimes you may have a legitimate reason why amounts on a 1099 will not agree with your return, but a W-2 should always match what you report. If you get an information return that is not correct, contact the person who sent it and have them send you a corrected copy.
5. Mixing up deductions and credits. Deductions are used to calculate how much of your income is taxed, whereas credits are dollar for dollar reductions in your tax liability. Use a bookkeeping application like Outright.com for your business to record everything accurately.
6. Putting the wrong bank account information on your return. If you are getting a refund, the IRS allows you to choose to have your money direct deposited into your checking or savings account. All those little electronic looking numbers at the bottom of your check are how the IRS knows where to send your money through the banking system. When you put those numbers at the bottom of your return, you can be off one number and that refund will not find its way into your account.
7. Failing to file electronically. Electronic filing was first introduced in 1990 and turns 20 this year. When you file a return manually, most of the information has to be scanned or manually keyed in by an IRS employee. In their own studies the IRS found that they themselves made mistakes on 20 percent of the returns that were processed manually compared to under 1% on electronically filed returns.
Are there any special new tax rules for 2009 the self-employed should watch out for?
Very few of the 2009 tax law changes had any positive or negative impact on small businesses, but with the constant media coverage of the changes to the individual tax laws, most self-employed workers are worried they can’t keep up.
There are two tax law changes that self-employed workers should keep in the back of their minds when filing taxes: the Making Work Pay tax credit and the ability to carry back operating losses.
Although the Making Work Pay tax credit is targeted towards employees, self-employed business owners can benefit too. This is not a deduction, but rather a credit, meaning you can write it straight off your tax liability. The credit is worth up to $400 for working individuals who earn between $75,000 and $95,000—significant sums for self-employed workers.
If your business hasn’t performed as well as expected, you can take advantage of the ability to carry back operating losses. This means small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in prior years.
Who uses Outright.com?
Anyone who works for themselves or has started a small business can use Outright.com. The majority of our users are sellers on sites like eBay, etsy and Amazon. Many of our users are freelance writers, web designers, realtors, and bookkeepers. We also have a large presence of people who are craftsmen and some more unusual professions, like a canine holistic therapist.
What are some of your favorite free apps for the self-employed besides Outright.com?
Right now, there are some really great resources out there for the self-employed.
We love social networks like LinkedIn because it makes it easy for self-employed workers to connect with potential clients without spending thousands of dollars on marketing and customer relationship software.
We recommend people get a web presence. Create a blog on Wordpress, Typepad or Blogger. We are also huge fans of Google apps—especially Gmail and Google Calendars. They’re free and incredibly helpful in making your business look even more professional. You can integrate all of these to your domain name and website through Google Apps for Your Domain.
Another great free tool for the self-employed is Craigslist both for buying cheap office equipment (that’s still in good condition) and reaching potential clients by promoting your services. Plus, if you grow and need to hire, Craigslist is a great way to find potential employees.
For free finance related tools, we love Shoeboxed and Xpenser. Shoeboxed lets you scan receipts and automatically turn them into categorized expenses. Xpenser is a mobile epense tracking service that lets you easily record expenditures while you’re out and about, by email, text message, or even Twitter. Both Shoeboxed and Xpenser hook up seamlessly with Outright.com, making tax time even simpler.
And then of course, once you do start making a little bit of money, then we strongly recommend people take a look at Outright.com.
Why is Outright free? How do you make money?
Let's just say that we don’t think people should have to pay a lot of money to do their financial record-keeping, especially in an era of great online tools. We provide Outright for free in order to help as many entrepreneurs as possible. We have begun offering additional paid services, such as a 1099 e-filing service, and will continue to do so. But Outright.com’s basic bookkeeping service will remain free.
"Outright.com is streamlining the work involved with owning a business, helping entrepreneurs pay the right taxes, record financial transactions, and keep their businesses on track and growing.
Outright.com was created after watching entrepreneurs struggle to capture all of their business deductions, often piecing together different solutions. Whether sticking every possible receipt in a file folder and shipping it off to a bookkeeper, tracking everything in a huge spreadsheet, or even using a couple of different web sites to track transactions and create invoices, the results were invariably the same: too much time and effort spent on the least enjoyable part of running one's own business. Our goal: to keep it as simple as possible; helping entrepreneurs track all of their income and expenses to get their taxes done accurately."
Don't forget to leave a comment below for a chance to win $1500!