Some tips for keeping track of your accounting:
- Keep a separate bank account and keep a summary of business expenses.
- Use a sheet of accounting paper with many columns, make a new column for each expense, never make a miscellaneous category even if you only have it once, always label it something.
- Notebook method - keep each page as a different expense or income category and record.
- Computer - keep track by using different categories and balance to the bank account each month - print profit and loss statement and balance sheet.
- If personal account is used, keep track of expenses by separating business from personal, you can use one column for all the personal expenses.
- Keep track of all moneys put into business account ie.loans from you otherwise they could mistakenly be classified as income
- Defer Income - hold back income till the next year.
- Accelerate deductions - keep check book "open" to get all expenses in from year, amounts charged on charge cards are put into year charged.
Income:
- You must keep track of your income by either copies of invoices or record it in some way by listing customer and amount received.
Expenses:
- Beginning equipment and office list - Recent cost (1 year) or Fair Market Value whichever is lower. Gifts are included in this.
- Car and Truck expenses - Keep mileage log with amount, time and place, date, client visited or reason, miles driven to and from. Using another person's car is deductible. If car/truck operation is expensive 100% business, keep track of gas in its own column, insurance, maintenance, registration and interest on payments can be combined. Using all the actual costs is the actual method, this is compared to the standard method (IRS rate X's business miles).
- Parking & Tolls from business car travel.
- Travel - away from home, train, bus, plane, taxi and hotel (must keep receipt).
- Office in home: Must use it 100% for business purposes, know square feet used vs. total square feet to determine business %, keep track of insurance, utilities, heat, repairs, and cost of building as separate from land.
- Interest: charge cards from business purchases, and other bus. loans.
- Phone: cannot deduct basic service charge unless separate from personal and in business name, highlight bus. calls when bill comes in and total them by month, multiply long distance by 11% for tax.
- Meals: Overnight, Long day, and with clients, staff meals (IRS only allows 50%) Staff parties are allowed at 100%.
- Other related expenses such as advertising, professional fees, supplies, liability insurance, dues and subscriptions, office supplies, answering machine for bus., equipment, repairs and maintenance, commissions, professional development, laundry (i.e. uniforms), license, and bank sc.