Not many people enjoy having to do the books. But, if set up properly, and with the right knowledge, they are not as cumbersome.
For anyone who runs a business, they know that one of the tasks that must be accomplished is the accounting. For some, this is a job which they hate as much as toilet cleaning, but it is one that has to be done. Even if you use an accountant do to the final year end papers, if you do a good job with the day to day books, their job will be easier. Here are some ideas to help with tracking the expenses so that it will not be as much of a hassle.
- Have a separate bank account for your business expenses
- Put as many of your expenses on credit cards as possible
- Create a place where you put all your receipts for when you sit down to do the books
- Depending on how much paper you have, put everything for each month in one envelope
- Have a filing cabinet so that if you have a lot of paper you can organize things in categories
Know Your Expenses
If you categorize your expenses correctly, it will end up helping you in the long run when it comes to tax time. This list assumes that you are running a business outside of your home, as there are other deductions that you are entitled to with a home based business.
- Advertising – business cards, web site marketing
- Insurance – Business insurance – does not include health insurance premiums
- Interest – Any interest you pay on accounts such as credit cards or loans
- Legal and/or professional services – Accountant or lawyer fees that you pay
- Office Expenses – Anything beyond supplies for your office
- Rent or lease – Premises or equipment
- Supplies – Paper, toner, notepads or anything else routine
- Travel – Cost of travelling to conventions or meetings
- Meals/Entertainment – Amount paid for meals or entertaining clients. This has a special tax ramification which is why it should be separate
- Utilities – Gas, electricity, telephone, Internet
- Dues – Subscriptions to magazines or trade groups your business is a member of
- Other – Any items that you are not sure where they belong can be put here
Make sure you keep the receipts that go with all of these expenses, as you will need them to show your accountant and possibly the IRS. But if you can get your expenses itemized through the year, it will make it easier for your accountant and you will spend less money.