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HOW TO SET UP A TAX-SAVING BOOKKEEPING SYSTEMOne 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 computer users. If you have a home computer that you will be using for your business, try out some of the shareware or public domain programs that can be used by small businesses free of charge or for a small fee. If you do not have a computer, don't worry. This report will show you how to set up a bookkeeping system that is simple and easy to use. 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. Monday - January 1, 1993 $ 14 Book #1405 Liston 91108 $100 Dealership Fee Barton 39204 $ 10 Book #261 Marks 06978 TOTAL INCOME $124 EXPENSES $0 That's all there is to it. It simply boils down to recording what you receive and what you spend. Any expenses you incur can be placed in the same column or in a second column just to the right of the column for incoming amounts. The next entry, immediately under that first day's entry, might look like this: Tuesday - January 2, 1993 $100 Dealership Fee Johnson 92100 $ 20 Printing Expenses Don's Copy Shop $ 10 Book #4321 Simms 32323 TOTAL INCOME $110 EXPENSES $20 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 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 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! |
