Sole proprietors may be an efficient bunch. They jumped on filing their taxes almost as soon as tax season began, according to one accounting.
But they may not be as knowledgeable about their businesses as they could be. And that means money left on the table at tax time.
That's according to data compiled from online accounting solution Outright.com, which found that business owners are neglecting to report mileage and advertising expenses on their tax returns, which are due April 17 this year.
“I think what’s happening is that people are not tracking it,” said Steven Aldrich, CEO of Outright.com. “It’s not that they don’t realize they can’t take the deduction. But when it comes time to put that number on the tax form, they don’t have the back-up information to take it.”
Tracking trips to the post office, trade shows and meetings with clients are all fair game, he said. And, at 55.5 cents per mile, that’s a lot of deduction-potential lost, Aldrich told CNBC.com. Assuming four 10-mile round-trips each week, that would equal a $1,000 mileage deduction on taxes. “It’s worth taking the time to track it,” he advised, and noted, there are several smartphone apps to help with the task.
Outright looked at data from sole proprietors from all industry sectors and from businesses as varied as designers, dog walkers and consultants.
The company found that 80 percent of small business owners in its database have filed their tax returns and a majority started working on their taxes in mid-February, soon after receiving 1099-K and 1099-MISC forms. But a good 20 percent are currently working on finishing them.
Which means, most likely, another trip to the post office. And hopefully, this time they are keeping track of mileage.