HOW TO SET UP A SIMPLE
TAX-SAVING 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 your 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 $ 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 $ 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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