No. of Recommendations: 1
There are two elements to my plan:

1) I use Quicken to record purchases, expenses, sales and payments. That's my basic book keeping system.

2) I use hanging files to keep business reciepts and records organized. That means that all the deposit slips Quicken generates get two whole punched and put in a hanging file for deposits. Bills for insurance get paid and the bill gets two hole punched and filed in the folder for insurance. Every time, and right away! I make sure I always have the proper office supplies on hand so that I'm not tempted to procrastinate.

If you choose expense categories that are identical to those found on the IRS Schedule "C", that can make filing your taxes easier.

I totally agree with the last comment about making your categories match Schedule C. Then all you do at tax time is print the report, and transfer the numbers over.

But I wanted to expand a little on the 2 things SP does to make recordkeeping easy. For DH's business, we also have a separate, business-use-only credit card, and we have a separate checkbook. You don't have to do it this way, but I find it much easier to separate the charges at the time they are being made than trying to reconcile the charges against the receipts and separate out personal and business expenses when I'm reviewing the bill.

And the separate checking account serves the same purpose. I pay all DH's business expenses out of that checkbook, and I deposit all his receipts into it. That way, I know exactly what he has available for the business account, and we have a quick way to know how he's doing for the year.

I also give him a 'salary' by simply transferring a set amount out of his checking account into our personal account every 2 weeks when I get paid. So whatever is left in his checkbook is truly spendable money, and he knows if he has enough there to get whatever new tools he might want.

I suggest that when starting a business, it is just easier to start out with it set up separately and getting in the habit of keeping good records.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.