QuickBooks is like the big brother of accounting. It has been there (as a desktop version) when I started my own business and has grown with me. The desktop version has been fairly complex to me – especially in the beginning and I dropped it in favor of a simple Excel spreadsheet. At a certain point Excel was holding me back and so I switched back to QuickBooks, but this time their QuickBooks Online service. I liked the fact that I could use it no matter where I was – it is completely web-based. It comes with approx. 80% of the features that the desktop version has to offer, but that was plenty for me. I did not like it too much when it came to tax season. While I was able to setup expense and income categories I think the product let you alone and when transferring the data into your schedule C I still had to do it all manually + my expense categories did not match anything the IRS was looking for. I spent hours in manually transferring my data … that kinda sucked. However, the reporting in QuickBooks Online was pretty good to give me business reports. I also did not like how QBOnline did not work well with PayPal which was a major drawback for me.

Now comes Outright which uses a completely different approach to business accounting. It is not as complex and versatile as QuickBooks Online, but that is actually a good thing. Outright does not want to be copy of QuickBooks online. It is less about syncing accounts, but more about categorizing income and expenses and to concentrate on the cash-flow items accordingly. The bank account setup and the PayPal import setup are easy and work very reliable. The interface is very different from QBO, but after playing with everything for about 30 minutes the tool really becomes intuitive and you can see yourself saving a lot of time already. Cumbersome was the import of old data – it had to be done via CSV file. I would love to see a straight copy from QuickBooks or QuickBooks Online actually. Overall getting my old data into Outright was not too complicated and then it was more to setup categories and to match accounting items accordingly.

Now, which online accounting version is better? If you run a more complex business QuickBooks Online might be the better choice. It provides more features and has a larger set of reports. Outright is lacking in reporting, but on the other side keeps things simple – very simple. What I love about Outright is the no-frills approach. It’s accounting, dummy. Outright can handle sales tax and other stuff, but is not good with inventory tracking or invoicing. That’s where QBO shines. QuickBooks also has the option to do Payroll and Contractor payments more easily. Outright has none of these. It keeps track of W-9 contractors, but not in a very intuitive way.

Outright is the cheaper solution that simply works. It is easy to use, and no big learning curve would be in your way. QuickBooks Online is more complex and can provide features that might be important to your personal situation. I will run the 2 in parallel for a little bit to see the differences in more detail.

Legal Disclosure: Please note that I am linking to 2 external websites here from this article. Please ready my disclosure policy regarding external links. You can find the link at the bottom of this page where you can also find the privacy policy.

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Starting a business can be an exciting prospect….or a frustrating, confusing task that seems impossible to conquer.

Which one will apply to your situation will depend on how well you plan, how much you educate yourself, and how disciplined you are in following through.

Many people start out with a great idea, but don’t know how to translate that idea into a viable business.

==Where Do I Start?

Your first step should be your business plan. Many would-be entrepreneurs will skip this step, choosing the fly-by-the-seat-of-your-pants method instead, but starting a business without a business plan is like embarking on a long journey to an unfamiliar place without a map.

A business plan serves to define your goals, map out your plan of how to achieve them, and will provide you with a sense of purpose and accomplishment along the way.

Your business plan should include the following elements:
1) the description of the business
2) the marketing plan
3) the financial management plan
4) the management plan

The Small Business Administration offers an online tutorial on how to write a business plan.

http://www.sba.gov/starting/indexbusplans.html

One of the first decisions your will have to make is what form your business should take. The most common forms are:

-Sole Proprietorships
-Partnerships
-Corporations

Which form you choose will depend on many factors, including:

-Legal restrictions
-Liabilities assumed
-Type of business operation
-Earnings distribution
-Capital needs
-Number of employees
-Tax advantages or disadvantages
-Length of business operation

Some of the advantages and disadvantages of each type is outlined below:

Sole Proprietorship

This is the easiest and least costly way of starting a business. A sole proprietorship can be formed by finding a location and opening the door for business. There are likely to be fees to obtain business name registration, a fictitious name certificate and other necessary licenses. Operating a Sole Proprietorship is easiest as the owner has absolute authority over all business decisions.

Partnership

There are several types of partnerships. The two most common types are general and limited partnerships. A general partnership can be formed simply by an oral agreement between two or more persons, but a legal partnership agreement drawn up by an attorney is highly recommended. Legal fees for drawing up a partnership agreement are higher than those for a sole proprietorship, but may be lower than incorporating. A partnership agreement could be helpful in solving any disputes. However, partners are responsible for the other partner’s business actions, as well as their own.

Corporation

A business may incorporate without an attorney, but legal advice is highly recommended. The corporate structure is usually the most complex and more costly to organize than the other two business formations. Control depends on stock ownership. Persons with the largest stock ownership, not the total number of shareholders, control the corporation. With control of stock shares or 51 percent of stock, a person or group is able to make policy decisions. Control is exercised through regular board of directors’ meetings and annual stockholders’ meetings. Records must be kept to document decisions made by the board of directors. Small, closely held corporations can operate more informally, but record-keeping cannot be eliminated entirely. Officers of a corporation can be liable to stockholders for improper actions. Liability is generally limited to stock ownership, except where fraud is involved. You may want to incorporate as a “C” or “S” corporation.

==What About Taxes?

It is very important to understand the tax laws that apply to the type of business you have chosen.

There are four basic taxes that you should be aware of:
-Income Tax
-Self-Employment Tax
-Employment Taxes
-Excise Tax

Income Tax
You have to file an Income Tax return if your earnings were more than $400 for the tax year. Even if your earnings were less than $400 from your business, you may still have to file a 1040 if you meet any of the criteria listing in the 1040 instruction booklet.

If you expect to owe more than $1,000 in Income Tax, you may have to pay Estimated Taxes. There are four ways to pay estimated taxes:

1. By crediting an overpayment on your 1999 return to your 2000 estimated tax.
2. By sending in your payment with a payment-voucher from Form 1040-ES.
3. By paying electronically using the Electronic Federal Tax Payment System (EFTPS). For EFTPS information, call 1-800-945-8400 or 1-800-555-4477.
4. By credit card, using a pay-by-phone system.

For more information on Estimated Taxes, see the IRS website at
http://www.irs.ustreas.gov/forms_pubs/pubs/p505ch02.htm

Self-Employment Tax
Self-Employment Tax must also be paid if your net business earnings were more than $400. SE Tax is a Social Security and Medicare tax that provides retirement benefits, disability benefits, survivor benefits, and hospital insurance benefits to you under the Social Security system.

You can deduct 1/2 of your SE tax from your net earnings on your 1040.

For more information on SE taxes:
http://www.irs.ustreas.gov/forms_pubs/pubs/p3340103.htm

Employment Tax
If you employ others in your business, you will need to report Employment Taxes. For specifics and tips on Employment taxes:

http://www.irs.ustreas.gov/forms_pubs/pubs/p15toc.htm

Whether or not you need an EIN (Employment Identification Number) depends on your business structure. You only need an EIN if you:
-Pay wages to one or more employees
-Have a KEOGH plan
-operate as a corporation or partnership
-File any of these tax returns:
a. Employment
b. Excise
c. Alcohol, Tobacco or Firearms

To obtain an EIN, you must fill out an SS-4 which is available through the IRS.

Excise Tax
Excise Taxes apply to certain types of businesses and certain business activities. Some examples are:
Tractor or heavy machinery sales
Tobacco, alcohol or firearms manufacturing or sales
Business activities or products that have environmental impact

For a list of businesses that apply, see the IRS website:
http://www.irs.ustreas.gov/forms_pubs/pubs/p3340105.htm

A free Small Business Tax Kit is available from the IRS. Their Small Business Corner offers advice, publications and links to useful information. http://www.irs.gov/ They also offer a Tax Calendar which tells you when to file returns and make tax payments.

You should also be aware that the laws vary by state and by industry, so it is highly recommended that you consult a tax advisor in your area. You can get information on local zoning regulations from your city hall, county court, or state department of taxation and finance.

==For More Information…

The Small Business Administration is an excellent source of information and a great place to start. You can get a free Startup Kit, download a Business Plan Tutorial and find many free publications. http://www.sba.gov/

Other useful resources:

====STAWRS One Stop Guide
http://www.tax.gov/newbusiness.htm

====Business Plan Pro 4.0
http://www.amazon.com/exec/obidos/ASIN/B00003IE59/americashomebase

====The Legal Guide for Starting & Running a Small Business
http://www.amazon.com/exec/obidos/ASIN/0873373790/americashomebase

====J.K. Lasser’s Taxes Made Easy for Your Home-Based Business
http://www.amazon.com/exec/obidos/ASIN/0028627970/americashomebase

====The Complete Idiot’s Guide to Starting a Home-Based Business
http://www.amazon.com/exec/obidos/ASIN/0028615395/americashomebase

====Business Start-Up Guide: How to Create, Grow, and Manage Your Own Successful Enterprise
http://www.amazon.com/exec/obidos/ASIN/0965321207/americashomebase

———————-
Sharon Davis, Work-At-Home expert, author and consultant,
helps people to achieve their goal of working at home,
telecommuting or starting a home business.
http://www.2Work-At-Home.Com
List of other articles of interest:
http://www.2work-at-home.com/freecontent.shtml
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Starting a business is one thing. Getting recognition and understanding from others is something completely different. You’re business is up and running and you spend every minute of your day on business related items. At this stage in developing your business you might ask the question:

Why does nobody seems to understand me? Why does nobody understand how important this is to me?

You have accomplished quite a bit so far and are well on your way developing your new business. Fact probably is – it may have begun consuming your life.

The impression you make to your friends and family might be, that you are losing interest in things outside of your business.. Things that seemed to be important to you now seem to be less important. You can’t join your friends going camping over the weekend because you need to monitor your servers and answer helpdesk tickets.

But you might be in a place with just a few others. Welcome to the Entrepreneurial Zone! This is a place where a few brave souls who started their own business understand what you are going through. This is a place full of energy, ideas and a lot of frustration. You are no longer using energy of your surroundings – you are creating energy. You are now going after something you believe in, something that has become part of your soul. Every moment of your life seems to be filled with thoughts about your business and what needs to be done next.

Maybe you explored and discovered your true self – the real you. It takes time to get used to the fact that you are self-employed. You are the boss. Some people eventually have fear about that and because of that they see you with different eyes. Remember – you are creating energy and not everyone understands that you are going through a transition.

To survive in the Entrepreneurial Zone, accept where you are and who you are. Do not apologize for being daring and trying to risk something. You have a goal. You will create your own space around these goals. Some people will understand, others will not. Life is like a book. Chapters come to an end, new ones start. Not everyone or everything fits into every chapter of life.

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