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

In The News:

A Tax-Cut Idea for Trump  The Wall Street Journal
Resources Available to Help You Survive Tax Season  Fairfax County Government NewsCenter

How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share

How Home-Based Businesses Can Avoid Giving Uncle Sam... Read More

Organizing Your Taxes

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

SFR Substitute for Returns: IRS Action on Non-Filers

In the latest Star Wars episode, the evil empire executes... Read More

Home Business Tax Tips

If you have recently started an Internet or home business,... Read More

Small Business Tax Credit - Americans with Disabilities Act

Many small businesses complain when confronted with the expense of... Read More

Your IRS Tax Appeal Rights

Are you in the middle of a disagreement with the... Read More

Corporations Failing To Claim AMT Exemption Overpay Taxes By $11,000

Does your incorporated business pay alternative minimum tax ["AMT]? If... Read More

Slash Tax when Buying a Business

When buying a business, how the "purchase price" is made... Read More

Fraudulent Tax Shelters ? KMPG Goes Down Hard

In the largest criminal tax case ever filed, KMPG has... Read More

Tips and Simple Guidelines on How to Calculate Payroll Taxes

Managing a business small, medium or big requires you to... Read More

Small Business Tax Issues for Self-Employed Individuals

The United States is a nation of entrepreneurs. There are... Read More

Car Donation: An Easy Way to Support Your Favorite Charity and Get a Tax Deduction

Most people look forward to getting their tax return, but... Read More

Seven Key Tax Deductions for the Self Employed

As a sole proprietor, it's wise to familiarize yourself with... Read More

Business Tax Loophole: Leasing Assets To Your Corporation

While there are many equally valid reasons to incorporate, saving... Read More

Back To School ? Educators Deduct School Expenses

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

Reducing Taxes Through Dividend-Salary Mix Calculations

Should I take wages or dividends from my privately owned... Read More

Know A Tax Cheat? Get Paid To Tell The IRS

According to the IRS, taxpayers underpay their taxes by some... Read More

Small Business Tax Deduction - Write-Off Bad Debts

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

10 Tax Tips to Reduce Costs and Increase Income

No one likes paying tax. Everyone understands that tax is... Read More

Section 179 ? Tax Relief From Depreciation Rules

"Depreciation." For business owners, this word is the one most... Read More

Tax Strategy - Let Washington Pay for Your Corvette, Porsche, or Air Plane

Deducting Your Auto ExpensesAuto deductions are a very complex topic.... Read More

Military Reservists, Enlistees May Get Deferral of Back Taxes

Reservists called to active duty and enlistees in the armed... Read More

Surprising Truths About Tax Preparers

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

Employment Taxes ? Depositing With The IRS

If your business has employees, you must pay employment taxes.... Read More

Rental Property Tax Deductions

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