In this article I am assuming that you, the reader are a solo entrepreneur who runs a home based business.
If we held a straw poll right now, I would bet that 9 out of 10 of those surveyed would rather have a root canal than keep track of the stock inventory, sales and accounts paper work in an organized manner so beloved by all accountants.
Yes, I know you can get software like MYOB to do most of this stuff, but really, wouldn’t you rather be out there connecting with your customers, shootin’ the breeze, wheeling and dealing. That’s what it is all about, isn’t it?
Every year you promise yourself that you will not turn up at your accountant’s office with a shoebox full of receipts and cocktail napkins scribbled with orders you took over the phone in your hurry to seal a deal.
I will also point out the obvious that the IRS takes a dim view of people relying on their fuzzy memories when making business expense claims.
Below are some suggestions that you may wish to use so as to avoid the same scenario next year.
If you hate technology and computers, invest in a stack of manila folders. Yep, it is that simple.
Colour code the folders according to:
i) income from clients, shares, property investments, managed funds, inheritance
ii) your utility bills,
iii) advertising costs,
iv) internet service provider, web hosting and domain name purchase costs
v) postage and stationery (as opposed to stationary as in standing still which where you don’t want your business to be)
vi) car repairs and running costs
vii) medical and dental care premiums
viii) car, home and contents insurance costs
ix) income protection insurance
x) supervised childcare fees
xi) accountant’s fees
xii) lawyer’s fees
This is by no means an exhaustive list but you get where I am going with this, yes?
If you secretly fancy yourself a techno geek then step up to the next level and use a Microsoft Excel spreadsheet to track your incoming and outgoings using the same categories as above.
My friend, in the eyes of your accountant your reputation will forever be redeemed because it reduces the amount of time he/she has to spend trawling through your paper trail.
Consequently the shorter billing time segments means that they charge less to prepare your tax statement.
If you are unsure about what expenses constitute a legitimate claim, do not be afraid to ask your accountant.
Remember tax laws are regularly reviewed and new rulings handed down so any CPA worth their salt should keep up to date with new developments.
Yours in health, wealth and happiness