When we talk money, as a business owner, we need to make sure that we keep tabs on income and expenses, keep a very through record of assets and liabilities, and generate adequate forms to fulfill the needs of our business.
You can track income and expenses using the register of your checkbook; or the old fashion way, using a ledger or notebook with columns. The main point here is that you should categorize your debits (income) into some sort of income category. Lets see, if you receive revenue form the selling of e-books as an Amazon.com affiliate, you can create a category called “Amazon income”, or if your income came from selling something on e-bay, “E-Bay”; while at the same time, you create categories for your liabilities (expenses). If you have a home office, you might deduct a portion of your utilities from your home, or a portion of your Internet bill. Do remember to consult our professional tax advisor for clarification of any doubts, and if nothing else, to ensure that you are familiar with the new laws. Our Tax Code grows by leaps and bounds every year.
Microsoft has it’s own accounting program that can help you with these items, and so does Quicken.
Using a checkbook program like Quicken assumes that you are using cash based system for your business, or in other words, you get paid in cash, you deposit the money, and you write a check for your expenses. If you have inventory, you should consult your Tax advisor, since you might get yourself in trouble with the Internal Revenue Service. Tracking cash advances, and services received in advance, can present its own variety of challenges to a cash based system.
Invoices, checks, credit memos, contracts, monthly statements, purchase orders, inventory forms, are just a few of the forms that you might need to standardize if you want to be effective accounting for your business traffic, inventories, sales, demand, liabilities, etc. Quick Books, Peachtree’s Complete Accounting, or Microsoft Business might help you out. I sometimes create mi own forms with Microsoft Office.
The computer you just bought for your business, your fax machine, your fancy teleconferencing phone, the scale you just bought to weight your packages before mailing them, your car if you use it for business, are some assets that you might need to keep track for tax purposes. Office supplies, alarm system, etc, are just but a few others. Again, check with your Tax Advisor.
There is no one formula to ensure that you will have an efficient accounting system if you insist on doing it yourself; just make sure that you keep the number of a professional CPA handy, in the event that you feel overwhelmed, and be weary of your buddy who tells you that you can take certain Tax deductions when he actually majored in “Partying and boozing” while in college.