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How to set up a simple tax- saving business bookkee
HOW TO SET UP A SIMPLE TAX-SAVING BUSINESS BOOKKEEPING SYSTEM
One of the most important, but least understood or appreciated
aspects of any business is its bookkeeping or accounting system.
And, because very few people know much about the reasons for a
bookkeeping system, most people are frightened by the thought of the
work involved in setting up such a system, and the drudgery of daily
maintenance.
There's really nothing complicated to bookkeeping - it's as simple
as keeping a daily diary and/or maintaining your personal checkbook.
At the bottom line, it's simply a matter of recording your deposits
- your incoming monies - and keeping a record of the money you
spend.
So, the first thing you need to do is open a business account for
your extra-in come business or endeavors. Generally, this is simply
a matter of asking the new accounts teller at a local bank for a
business account registration card. Fill this card in, and with the
small registration fee, send it in to the appropriate commissioner,
and from there, open you new business account - complete with
imprinted checks.
Drop by a local stationery store and pick up a loose-leaf notebook,
and a supply of paper. We've always picked up a supply of index
tabs at the same time - either to separate the months or the
accountability sections for each item we sell.
Assuming that you want to make it as simple as possible, while at
the same time keeping it as efficient as is necessary - here's what
you do and how you do it:
On the first page in your notebook, write on the top line and in the
middle of the page: Monday, January 1st, 1994 or whatever day you
officially start your business... Then, as your orders come in - if
by mail, as you open your mail - jot down starting from the left
side of the page, the amount you received - dash -for what - from
whom, and their address. The page might look like this:
Monday - January 1, 1994
$14 Tapes 372/3/4/5 R.W. Liston (91108)
100 S.W. Fee - Barton (39204)
10 Hong Kong Dir #261 (Retail) Marks (06978)
10 " " #261 (Retail) Summers (91106)
3 Whsle Prt Dir #49 (Retail) Lee (31107)
70 Hot Line Lst - Morgan (82205)
TOTALS: INCOME $207 - EXPENSES (0) - DEPOSITS 0
That's all there is to it, and boiling it all down, it amounts to
recording what you receive and what you spend.
The next entry, immediately under that first day's entry, might look
like this:
Tuesday - January 2, 1994
$207 Deposit
(11) Printer - for copies
10 Sec & Riches thru R. Est #302 - Rogers (75010)
3 Simplified Annual M.O. Bkkp Sys - Lewis (21104)
10 Money Magnetism - Kline (80033)
36 R.W. Fee - Magnuson (10067)
6 Manual on Bookselling - #291 - Magnuson (10067)
15 Display Ad - Smith (48089)
(22) Ideal Ofc Supplies - printer paper
TOTALS: INCOME $80 - EXPENSES ($33) - DEPOSITS $207
And then, carry on with this recording of the money you deposit,
receive and spend each day with similar entries for each day of the
week - every day Monday thru Saturday for each week. It's simple,
uncomplicated, and a positive record of your business activity.
Then at the end of each month, transfer this daily diary information
to one of the low cost bookkeeping registers that your tax
consultant or accountant can work from. These people won't work
from your daily diary, and will not transfer the information you
record in it to a formal bookkeeping register without charging you a
small fortune. It's not that big of a job, and if you do it after
the close of business on the last day of each month, it will take at
the most a very few minutes. Then, of course, when you're ready to
do your taxes, you simply give your bookkeeping register to whoever
is going to do your taxes, and you're home free.
The bookkeeping register you'll need can be any simple columnar
notebook. All you really need is some sort of notebook with a
number of columns marked off, a title written at the top of each
column, and a record of the money received for each day relative to
the product or service each column represents. Then at the end of
each month, you can simply add the totals from each column and
you'll instantly know how much money you took in from each of your
offers.
Beyond the date column, will be your record of expenses or money
spent. Again, you should title each of the columns you'll be
entering figures into, and then record your expenditures for items
falling into those categories. Then at the end of each month, it's
a simple matter to add the totals from each column and know exactly
where you stand relative to profit or loss - how much you took in
compared to how much you spent.
Bookkeeping and/or accounting is very simple and should not scare
you. Just keep it simple, and up-to-date.
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