-
Separate your business expenses from your personal expenses
- Have separate personal and business checking accounts, credit cards, and PayPal accounts
- Have separate personal and business Amazon accounts, or use a personal credit card to charge your personal purchases, and a business credit card to charge your business purchases using one Amazon account
- When personal purchases are mixed with business expenses in a checking account or on a credit card, assign the personal expenses as Owners Draw
- Have separate personal and business checking accounts, credit cards, and PayPal accounts
-
Use a bookkeeping software program such as QuickBooks or Quicken
- Quicken is okay for personal bookkeeping and also for a simple business
- Sometimes there are bank and credit card downloading issues, and the program is not good at creating rules
- It costs about $65 to purchase, and needs to be upgraded every year in order to continue downloading
- QuickBooks is excellent for personal and business bookkeeping
- It costs $35 a month to purchase the Simple Start online version, $65 a month for the online Essentials version, and $99 a month for the online Plus version
- It costs $35 a month to purchase the Simple Start online version, $65 a month for the online Essentials version, and $99 a month for the online Plus version
- To track profit and loss for multiple locations, sections, and grants, use classes in QuickBooks and tags in Quicken
- Quicken is okay for personal bookkeeping and also for a simple business
-
On a regular basis, download and categorize your expense and income transactions for your bank accounts and credit cards
- When you download and categorize often, it is easier to remember what you purchased, and it is not overwhelming
- Use rules to categorize transactions faster
- Download at least once a month, and reconcile these accounts monthly
- When you download and categorize often, it is easier to remember what you purchased, and it is not overwhelming
-
Enter business transactions into your bookkeeping software program that were paid by cash, checks or debits from a personal checking account, and charges that were made using personal credit cards
- Set up a Cash bank account, or use Owners Investment, or Owners Draw and Investment, to record expenses that were not paid from your business checking or business credit card accounts
- Set up a Cash bank account, or use Owners Investment, or Owners Draw and Investment, to record expenses that were not paid from your business checking or business credit card accounts
-
Keep paper or electronic receipts for all cash purchases and all check and credit card purchases over $75
- You can attach electronic receipts to the matching transactions in QuickBooks
- Paper receipts can be scanned and attached as well
- You can attach electronic receipts to the matching transactions in QuickBooks
-
If you file paper receipts, file them in date order for easy access
- There is no need to file receipts by vendor or by expense category
- If you need to find a filed receipt, which is rarely necessary, you will have a record of the purchase date in QuickBooks or Quicken, which makes it easy to find the receipt
- There is no need to file receipts by vendor or by expense category
-
Make sure you know the total interest you paid on all business loans
- You should receive a document from the company that you borrowed from, which shows how much interest you paid on your loan during the previous year
- You will need to make a journal entry in QuickBooks to record this interest, or just provide this document to your accountant
- You should receive a document from the company that you borrowed from, which shows how much interest you paid on your loan during the previous year
-
Keep track of your mileage for each business trip
- You need to track mileage for all business related travel, or track all automobile or truck expenses
- Tracking mileage usually gives you the biggest tax benefit, but some people are not organized enough to do this effectively
- You can enter the mileage and destination directly into QuickBooks
- There are phone apps available to track mileage, or just jot down the mileage in a small notebook
- You need to track mileage for all business related travel, or track all automobile or truck expenses
-
Keep track of all utility costs, rent, and home insurance if you have a home office
- Determine which room is your office, and what percentage of your home’s total square footage is your office square footage
- You can deduct this percentage of your rent, utility costs, and home insurance as office expenses on your tax return
- Determine which room is your office, and what percentage of your home’s total square footage is your office square footage
-
Keep bank and credit card statements in paper or electronic form
- You need to keep business records for four years
- Don’t count on your bank to have copies of bank and credit card statements because you may have changed bank accounts or replaced a credit card, and then the statements are no longer available online
- You need to keep business records for four years
-
Use a cloud backup service to protect your computer files
- A cloud backup service automatically stores your Quicken and QuickBooks backup files every day outside of your home
- Backing up to your computer or to an external hard drive or flash drive is not as safe or efficient compared to using a cloud backup service
- A cloud backup service automatically stores your Quicken and QuickBooks backup files every day outside of your home
