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Keeping It Simple

Certainly all this information can seem overwhelming when just starting out on a new venture. Talk about taking the wind out of your sails. One key way to stay coherent while handling taxes is to keep a consistent, commonsense approach for record keeping. Here are a few pointers:

  • Keep track of your customers and orders by using prenumbered sales invoices. Without some kind of numerical system for your receipts, it is almost impossible to track sales.

  • A business should have its own bank account. Mixing business accounts with personal accounts opens the door for mistakes and may attract the IRS' attention. That's attention no one needs—believe us on that.

  • When a customer or client makes a payment, deposit it in full into your business bank account. At the end of the month you can determine your monthly income by comparing bank deposits with paid invoices.

  • Pay all business expenses from your business bank account. If you don't, your accountant will have to take additional time to sort out business from personal transactions, which will result in possible late filing fees and a higher accounting bill.

  • Money taken from your business that is not considered a salary is referred to as a draw. Keep track of this by maintaining a draw column in your ledger.

  • Use your business check register as a cash payments register.


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