How To Setup a Tax Saving
One of the most important but least understood and appreciated aspects of any business is its bookkeeping or accounting system. Because very few people know much about the reasons for a bookkeeping system, many 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 about bookkeeping. It's
as simple as keeping a daily diary and maintaining your personal
checkbook. It is basically a matter of recording all of your
incoming money (deposits) and keeping a record of the money you
spend (expenses). There are numerous simple bookkeeping programs
available for small
First, open a business checking account for your extra-income business with the local bank where you usually do business. Generally, this is simply a matter of asking the new accounts teller for a business account registration card. The bank will have you fill out the registration and signature card, make an initial deposit, order your checks to be imprinted with your company name, and you're ready to go. Into this account you will deposit all your incoming monies, and from this account write checks to pay for your expenses.
At a local stationery store pick up a loose-leaf notebook and a supply of paper. You'll also want to pick up a supply of index tabs at the same time, either to separate the months or the accountability sections for each item sold. Assuming that you want to make your bookkeeping system as simple as possible, while at the same time keeping it as efficient as is necessary, here's a method that will meet all of your needs.
On the first page of your notebook, write on the top line and in the middle of the page: the day, month and year that you officially start your business. As your orders come in by mail and as you open each envelope, begin at the left hand side of the page and jot down the amount you received, what item was ordered, from whom, and their zip code. The page might look like this:
Monday - January 1, 1993
Tuesday - January 2, 1993
$100 Dealership Fee Johnson 92100
Carry on with this recording of the money you receive and spend each day with similar entries for each day of the week. Do this every day Monday through Saturday for each week. It's simple, uncomplicated, and a positive record of your business activity. It is essentially the same as what you do with your personal checkbook. It will be best to keep a separate ledger listing all of your bank deposits and withdrawals by check. This can then be compared with your daily business ledger to assure accuracy in both ledgers.
Then at the end of each month, transfer this daily diary information
to one of the low cost bookkeeping registers from which your
tax consultant or accountant can work. Your tax preparer won't
want to 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 only a very few minutes. Then,
of course, when you're ready to do your taxes, you simply give
your bookkeeping register to whoever
The bookkeeping register you'll need can be any simple columnar notebook. All you really need is a 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.
Your expenses are listed in your bookkeeping register in the same method as your income was, except in separate columns. You will title each of the columns with your regular expense categories such as Postage, printing, shipping containers, etc. Record your expenditures for items falling into those categories under the appropriate headings. 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 accounting is very easy and should not scare you. Just keep it simple and up-to-date. Complete records will help you follow the sales progress of each book in your inventory, and will allow you to increase your advertising to promote those books that need additional help and to feature those books that appeal to the greatest number of buyers. Good Luck and Best Wishes for Success!
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