How To Set Up A 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.

Why bookkeeping is important for your business?

First of all, you can track where the money are from, ane where the money goes to. Find out which ones are the most valuable resources or advertising methods.

Secondly, it is for your Tax purpose. When tax season is coming, if you have a bookkeeping, you need not spend 5 days to dig out all the receipts and sales reports.

There's really nothing complicated to bookkeeping it's as simple as keeping a daily dairy 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 income business or endeavors. Generally, this is simply a matter of asking the new accounts teller at a local bank for a business account registration fee, send it in to the appropriate commissioner, and from there, open you a 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 to do it.

On the first page in your notebook, write on the top line and in the middle of the page: Monday, January 1st, 2004 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 2004

$ 14 Tapes 100 S.W Fee-Barton 10 Hong Kong Dir #261 10 " " #261 3 Whsle Prt Dir #49 70 Hot Line Lst--Morgan

TOTAL INCOME $207 EXPENSES 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:

$207 Deposit 11 Printer-for copies 10 Sec & riches thru R Est #302-Rogers( 75010) 3 Simplified annual M.O bkkp Sys (21104) 10 Money Magnetism-Kline (88033) 36 R.W Fee-Magnuson (10067 6 Manual on Bookselling-#291-Magnuson (10067 15 display Ad- Smith 948089) 22 Ideal Ofc Supplies-printer paper

TOTAL INCOME $80 Expense $33 Deposit $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 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 dairy, ad 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, ad if you do it after te close of the business on the last day of the 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 te 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 te 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 total 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 a very simple and should not scare you. Just keep it simple, ad up-to-date.

If you want to use advanced software to do the job, you can either use Quicken (www.quicken.com) or Microsoft Money. You can buy them online or from local book store. By using these software, you can even download bankstatements and credit cards statement. Then you can specify which catagories are belong to business expense. It will save you a lot of time.

---------------------------------------------------------
Julia Tang publishes Smart Online Business Tips, a fresh
and informative newsletter dedicated to supporting people
like you! To find out the best online business opportunities,
and to discover hundreds more proven and practical internet
marketing secrets, plus FREE internet marketing products
worth over $200, visit: http://www.best-internet-businesses.com
------ ----------------------------------------------------

Note: Feel free to publish it with the resource box and content unchanged

---

Tax Tips - Which Tax Form Is Right For Me?

IRS Tax forms can be confusing.Am I a 1099 or... Read More

IRS Certifies 2006 Toyota Hybrid for Clean Fuel Deduction

The Internal Revenue Service has certified the 2006 Toyota Highlander... Read More

Gambling Income and Expenses - Tax Requirements

Hit a big one? With more and more gambling establishments,... Read More

Are You An Innocent Victim of These Popular Myths?

Misconceptions, misinterpretations and just plain "untruths" are floating about income... Read More

Tax Tips for Home-Based Business Owners

As tax time approaches, many home-based business owners begin completing... Read More

Surprising Truths About Tax Preparers

Choosing the right tax preparer for your business is a... Read More

Tax Deductions - Mr. C.P.A. Can I Deduct a Pizza? You Too Can Deduct Your Fun By Using Tax Tips

Recently, I stumbled across a concept that could change your... Read More

Estate Taxes - It Pays to Plan Ahead

Estate taxes. It's not enough to simply know they exist,... Read More

Small Business Tax Deduction - Write-Off Bad Debts

Practically every small business has receivables that it cannot obtain... Read More

The Internet Tax Man Cometh

Q: I was contacted by the city tax collector to... Read More

Euro Tax Haven Threat

Media reporting of a new EU savings tax directive has... Read More

Complaince of Tax Return in Electronic Commerce Taxation

Emerging Legal issues of Tax compliance of e-business Self-assessment system... Read More

I Havent Filed a Tax Return with IRS in Years, What Do I Do?

In elementary school, kids come up with creative excuses why... Read More

Rearrange Your Affairs For Maximum Tax Savings

One way to maximize your business profits is by reducing... Read More

Small Business Tax Deductions for Year End 2004

As a small business owner, it's wise to familiarize yourself... Read More

Alas! In E-Commerce Taxland

In trying to comply with tax laws for your e-business,... Read More

Deducting Points On Home Refinances

Deduction of Refinance PointsAny points that you pay in the... Read More

10 Thoughts on Tax Offer in Compromise

Beware of advertisements that claim to settle tax debts for... Read More

Rental Property Tax Deductions

Own residential rental properties? This article discusses how income from... Read More

Organizing Your Taxes

Does this scene sound familiar? It's April 7. You haven't... Read More

What the Tax Software Companies Dont Want You to Know

Haven't done your taxes yet? No problem. Now there is... Read More

Marriage or Divorce ? Check Your Social Security Number

Newlyweds and the recently divorced should make sure that names... Read More

Get Uncle Sam To Pay $36,000 For Your Childs Education!

Let's assume that you would like to begin saving for... Read More

State Tax Information

All states also have their own tax system. Typically there... Read More

How Likely Are You To Be Audited?

Statistics for IndividualsUnfortunately, the IRS increased its rate of auditing... Read More

Back To School ? Educators Deduct School Expenses

As teachers and students head back to school following a... Read More

How To Set Up A Tax-Saving Bookkeeping System

One of the most important, but least understood or appreciated... Read More

Render Unto Caesar

Once a year Canadian taxpayers are required, by law, to... Read More

Access to E-records by Taxing Authorities: A Case for Pakistan (Part I)

Background issues of access to recordsTo assess the records at... Read More

Tax Investigation - What You Need To Do

The knock on the door from a Tax Inspector is... Read More

IRS Statute of Limitations: Do Taxes Ever Expire?

Many Americans believe that an IRS debt is a debt... Read More

Electronic Commerce Taxation and Pakistan

Assume a buyer in Pakistan downloads software from the Internet... Read More

Getting A Second Extension to File 2004 Taxes

Millions of people file tax return extensions every year. The... Read More