Pros And Cons Of Using Outright For Small Business Accounting

Free, easy to use and with low-cost filing features, Outright accounting software can provide small businesses with a quick way to map out sales, expenses and potential tax …

Free, easy to use and with low-cost filing features, Outright accounting software can provide small businesses with a quick way to map out sales, expenses and potential tax exposure. At the same time, the program’s limited functionality prohibits it from being useful for larger businesses and those looking for more detailed analysis of their accounting. See the following article from The Street for more on this.

Heads up, QuickBooks lovers, there’s a cool new way for small businesses to count beans. It’s called Outright and it competes step for step with Intuit’s(INTU) accounting darling.

Yes, I realize tax day is months away. But Q3 2010 prepayments are due Sept. 15. And considering all the newbies the Great Recession has tossed up on the independent-contractor beach, one can’t start soon enough on taxes.

To wit, I have been testing a hot new Web 2.0 accounting program aimed mostly at independent contractors and small businesses. Mountain View, Calif.-based Outright, which a company representative said tracks roughly $3 billion in small-business sales and expenses since launch in 2008, gives away a high-quality ledger and tax tool as a means to build a community and seeks to make money by up-selling such services as filing complex IRS forms.

So does this “fremium” model have small-business play? Let’s find out.

WHAT YOU GET Outright is a powerful tool that helps you track your sales, expenses and estimated taxes. And it’s free.

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I’ll be blunt: Outright is impressive. Simply surf over to outright.com, sign up for a free account and start entering sales and expense data. Very quickly — like in 15 minutes — you will get a solid, if back-of-the-envelope, feel for your gross sales, bottom-line profit and federal tax exposure.

A truly accurate, to-the-penny read on your business’s finances, complete with state and local returns, takes much more effort and probably an actual accountant. But Outright makes it relatively painless to enter even very accurate fiscal information: There is an automatic expense-importing feature for more than 4,000 banks, credit cards and Paypal info via the Web. Profit and loss, expense and quarterly reports were excellent and exported smoothly to Excel(MSFT).

I was particularly impressed with their upsell, the Independent Contractor 1099 form filing feature. For just $5 for each form filed, they fulfill your IRS obligation here. Not bad.

In all, Outright is a powerful and feature-rich bean counting experience that is on par with pricey online tools — even those from Intuit.

WHAT YOU DON’T GET This is a work-in-progress accounting tool that does not work for larger businesses.

This might be the numbers guy in me, but there is some bad accounting mojo running around here: Expenses and sales  are defined as “Payments Made” and “Payments Received.” Say what? Did I receive the payments? Did my vendors? And Outright only knows transactions that have cleared. What about checks that have not been cashed? Or credit card usage that has not been paid? Not only are there are no accruals — this is a cash-only tool that does know your cash position. Not good.

And there are things Outright does not do yet: Cost of goods sold, the spending you rebill to your clients, are treated as expenses, just like mileage or meals. But what about meals that are reimbursable? And Outright only supports federal returns; state and local taxes are not included. The company says it is developing solutions here, but again, that’s not good.

BOTTOM LINE If you are facing the end of your first year here on freelancer beach, do yourself a favor and at least rough in your 2010 sales and expenses in Outright. Then sit down with your accountant and plan your tax exposure. And do it now while there is time to save money or change what you spend.

Remember, come April 15, you will owe all of last year’s taxes, plus next quarter’s 2011 estimate — and you will owe it all at once. That really can kill you.

I, for one, would hate to lose you.

This article has been republished from The Street. You can also view this article at
The Street, an investment news and analysis site.

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