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 software - keep track by using different categories and balance to the bank account each month - print profit and loss statement and balance sheet. Excel, QuickBooks and also www.mint.com are some helpful programs
- 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, i.e. loans from you - otherwise they could mistakenly be classified as income.
- You must keep track of your income via copies of invoices or recording it in some way by listing customer and amount received.
- 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 business loans.
- Phone: cannot deduct basic service charge unless separate from personal and in business name, highlight business 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, cell phones, equipment, repairs and maintenance, commissions, professional development (education) laundry (i.e. uniforms), license, and bank service charges
- Also see bring to your appointment link with business spreadsheet