Bookkeeping - Vyde

How to Figure Out & File Sales Tax for Your Small Business

There is a lot to manage when you’re running a small business, but one of the most important things to take care of is managing the books. In addition to understanding what money is coming in and out of the business on a day to day basis, you’ve also got to be sure you’ve got things set up correctly for collecting and paying taxes.

Sales tax is probably one of the most confusing transactions that occurs, mainly because there’s a lot of gray area for those that run small businesses or sell online.

Sales Tax Defined

Sales tax is money collected at a retail’s point-of-purchase and is imposed by both state and local governments. It’s paid by the individual that is making the purchase, but that means as a small business owner you’re responsible for the following:

Figuring out the amount of sales tax that should be paid

Collecting the sales tax from the person purchasing from you

Turning over sales tax to the appropriate authority by the deadline outlined

Sales tax rates vary from state to state, which can lead to some confusion if you sell in more than one state or if you sell online.

Do You Need a Permit?

It depends on what your state requires. The best way to answer this question and many more for your specific state is to access state tax resources.

Not sure where to find your state requirements. You can look them up here.

How To Collect & When to Pay

You’ll need to check with your specific state for all the details but the general process of collecting and paying sales tax is as follows:

You’ll record and report all sales, whether they are taxable or exempt, and the amount of tax due.
You’ll submit a special tax return for sales taxes – usually states require small businesses and online shops to pay sales taxes quarterly and sometimes even monthly.
Not paying on time means that you’ll be subject to late fees. Checking out the requirements for your specific state and/or consulting with a tax specialist or CPA is the best bet for making sure your system for collecting sales tax is in compliance with government requirements.

Sales that are Tax Exempt

You may have noticed that we mentioned in section above exempt sales and you may be wondering what all that involves. Although there may be exceptions, the general rules for tax exempt sales is as follows:

Resold items – retailers don’t typically have to pay sales tax on wholesale purchases since it’s assumed that the end consumer will pay sales tax on them at the end point-of-purchase. That said, many states require that you have a wholesale license, so you’ll need to check into the requirements and how to apply for one for your specific state.

Non-profits – sales made to non-profit organizations are also exempt

Raw materials – if you selling goods that will be made into other goods, they’re most likely considered raw materials and are typically tax exempt as well.

Selling Online & In More Than One State

This is where things can get a little tricky. If you sell online, your customers can live virtually anywhere and what state exactly is the sale made in? And what state’s rules do you’re follow – your state, or the state that you’re buyer lives in?

The first thing you need to determine is where your business has a physical presence. Wherever your store, office, warehouse, employees, etc. are you most likely have physical presence, also known as nexus.

You MUST collect sales tax for your nexus.

If you do not have a presence in a state then you are not required to collect sales taxes. To make sure you’re applying the rules for nexus correctly, make sure you check the requirements for the states that you have physical presence in.

Sales Tax Rates for Selling Online or Out-Of-State

Once you know that you need to charge sales tax, it’s time to determine what rate you should charge. It sounds a little overwhelming to manage due to the thousands of sales tax jurisdictions in the United States.

Our best advice for those that sell online or have a large volume of out-of-state sales is to invest in online shopping cart and sale transaction software because many automatically calculate sales tax rates for you.

Now that you’ve got the details on sales tax, what questions do you have for us? We’d love to hear them in the comments.

How to Make Smart Business Decisions

Have you ever sat down to make a business decision and wondered if what you were leaning toward was a wise choice? You’re not alone. Some might say that smart business decisions are made by those that are business savvy – that answer makes it sound as if being a smart decision maker requires an advanced degree or some type of natural-born talent. Although both of those might be helpful, they’re not required to make smart business decisions. In fact, we believe that smart business decisions are made when those doing the decision making consult the right sources (and we’re not talking about a magic 8 ball).

The answer is simple – financial reports.

How do we create a financial statement?

It all starts with a bank statement. We take a look at your your expenses and income and then categorize them into a variety of categories like:

Supplies
Food & Entertainment
Marketing Costs
Business Equipment
Auto Expenses
Owner distributions
Loan Payments

Here’s where we put our accounting degree to work and create your Profit & Loss Statement and Balance Sheet.

Where to Look When You’re Making Business Decisions

You’ll want to have access to all of these reports for a variety of reasons, but to really make smart business decisions you’ll want to look directly at your P&L. Many business owners look to their cash balance (you can find this on the Balance Sheet) when they’re deciding on purchasing new machinery or hiring an additional employee. That makes sense, no use in thinking about purchasing or hiring if you don’t have the cash to support it. But the Balance Sheet only tells us where we stand at a certain point in time (the end of the month). Your P&L gives you a better picture of how you’re business is fairing overall. If you see a net loss, you might decide holding off on those decisions and see how things go over the next several weeks.

Want read more about the differences in financial statements? You can catch it all in more detail here. Looking to hear it from a certified CPA and one of our co-founders, Ben Sutton – watch the webinar here.

FAQs: Making Smart Business Decisions

1. What are the key reports to consult when making business decisions?

To make smart business decisions, consult your Profit & Loss (P&L) Statement and Balance Sheet. The P&L gives a comprehensive view of your business’s overall performance, while the Balance Sheet shows your financial position at a specific point in time.

2. How does a Profit & Loss (P&L) Statement help in decision-making?

A P&L Statement helps by showing your business’s revenue, costs, and expenses over a specific period. It indicates whether you’re making a profit or loss, guiding decisions such as purchasing new equipment or hiring staff.

3. Why is a Balance Sheet important for business decisions?

A Balance Sheet provides a snapshot of your business’s financial health at a specific point in time, showing assets, liabilities, and equity. It helps you understand your cash position and overall financial stability before making significant investments.

4. How do I create a financial statement for my business?

Creating a financial statement begins with your bank statement. Categorize your expenses and income into categories such as supplies, marketing costs, and auto expenses. From there, generate your Profit & Loss Statement and Balance Sheet to summarize your financial data.

5. Should I rely solely on my cash balance for business decisions?

No, relying solely on your cash balance is not recommended. While it’s essential to know your cash position, the P&L Statement provides a better overall picture of your business’s financial health. It helps you make more informed decisions by showing profitability and expense trends over time.

5 Bookkeeping Tips & Strategies for Freelancers and Small Business Owners

Whether you have a steady nine to five or you’re a full-time entrepreneur managing your finances requires a lot of diligence. As a freelancer or small business owner you often are wearing many hats as you work on marketing, production, managing inventory, scheduling appointments and so on. Keeping the books may be on your ever-growing to do list, but it’s easy to push it to tomorrow, especially when you’re busy running the day to day stuff.

But putting your finances first can create a lot of freedom, not to mention help you grow your small business quickly. Who doesn’t want more time to network with clients, work to accomplish goals, or have enough extra cash to expand? We’re sure you’re nodding your head in agreement. So how do you as a freelancer, make your money work for you, instead of the other way around?

We’ve got a few strategies that might help you work bookkeeping into your normal routine. Plus we’ve proven that even just one or two will help grow your bottom-line and make your small business flourish.

Bookkeeping Strategies

Make a Plan – A dream is going to stay a dream, unless you make a plan. Taking even a few minutes to jot down a few goals and plan out your fiscal year can make all the difference when it comes to managing your money. It doesn’t really matter how you divide up your goals, but keep in mind that no one can do anything at once. As accountants and small business owners ourselves, we like breaking the year in to quarters. Sit down with a calendar and assign goals and tasks to each business quarter. You’ll want to dream big enough to make you stretch a bit, but plan well enough that executing the particulars is doable.

Tip: When you’re setting financial goals, play it smart. Ask yourself 2 questions.

How much money does will it take to run a sustainable business? (This means that you’ll need to take into consideration the cost of running your business, as well as what amount you’ll need to live on and meet your other financial obligations.)
How much money would I like to make? (This is the question where you put your dreams in the mix – make sure that you’re picking number that makes you stretch but that is still realistic.)

Then you’ll want to take those numbers and break them down. How much would you need to make each month? Each week? Each day? to reach your answers to questions 1 & 2. From here you’ll start looking at how to earn those amounts and go from there.

Make it a Date – We’ve found that we’re more consistent in sitting down with the books when we make it a date. Make it a point to sit down with your books regularly. Schedule it in your phone, in your work calendar, or even take a day off where you spend just a few of the hours working on your books with no interruptions. If you already do that, sit down and make a short list of financial matters you don’t seem to get around to – then plan to knock one out at the end of your bookkeeping sessions until you’ve completed the list.

Tip: Not everyone thinks working with numbers is fun. So take the idea of “date” literally. Make the hours you spend working on books fun by eating your favorite food, listening to music, or even meeting up with a business partner or another entrepreneur and working on the books at the same time.

Keep it Simple – We see it happen all the time. Just like New Year’s Resolutions people start off hardcore and get burned out quickly because it’s too cumbersome, detailed or just not their thing. Don’t plan to implement a complicated bookkeeping software if you’re a bookkeeping newbie or are barely keeping track of things with paper and pencil. Simple spreadsheets can get the job done and often cost far less (or are free) than the best software out there.

Tip: Look for other ways to simplify. Consider consolidating accounts, or putting all your spreadsheets together but separated by tabs, use automated bill pay if you can, and separate business and personal finances to avoid the headache of having to sort it out every month.

Put Money Aside for Taxes – The idea “a little becomes a lot” holds true when it comes to taxes. Nothing is more painful than having to cut a large check not to mention how stressful it can be the you know taxes are coming but you have no idea how much they’ll be or if you’ll have enough to cover them come tax time. Decide right now that you’ll set aside money for taxes every time you do your books. That way you’ll be ready and have at least a good chunk of cash ready when it comes time to pay.

Tip:

Quarterly taxes are something you can expect to happen 4 times a year. Include the dates. Because you’re a freelancer you’ll need to withhold your own taxes rather than rely on a W-2.

Pay yourself first – it seems like you should put the money where the need is and then pay yourself out of whatever’s left. But when you run your own business, it’s even more important to pay yourself first so you ca put money aside for savings. Any easy way to make sure this happens first thing is to set up an automatic transfer – you’ll hardly notice it and little by little it grow.

Tip: Sometimes as a freelancer income varies quite a bit month to month, so the idea of setting up an automatic transfer for a set amount can be iffy. If that’s the case, decide right now on a percentage that you can pull out of every paycheck that you’ll set aside for your own wages.

Now which strategy will you implement first in your bookkeeping approach? Have additional questions, we’d love to talk with you. Contact us here.

The Important Documents You’ll Want to Save to Prepare Your Taxes

Are you hoping that the shoebox of receipts, bank statements and other random papers in your closet is enough documentation for your taxes? There is always a lot of confusion around what important documents need to be kept for taxes. We’re here to help you keep what you need and throw away the rest. Our quick guide will help you determine what’s important for your personal and business taxes. We even have a few storage method suggestions because heaven help you if anything happens to that shoebox!

Important Documents for Personal Taxes

There are quite a few documents you’ll want to save for your personal taxes. The top of the list is going to include statements that you get on a regular basis.

Bank Statements
Credit Card Statements
Mortgage Statements
Investment Statements

You’ll get most of these on a monthly or quarterly basis – don’t throw these out! Keep them because you’ll want them when it comes time to prepare your taxes. Most of these can be obtained electronically. This is a great option if you’re prone to losing random pieces of paper, which, let’s be honest, who isn’t. Download those statements and save them in a file on your computer and then you will know where they are come tax season.

Next, you’ll want to keep track of how you spent money that could be tax deductible.

Charitable Donations
IRA Contributions
Health Care Costs
Life Insurance Payments

You should keep receipts or statements regarding these expenses to help your accountant find the most deductions for you.

Finally, you’ll want to hold onto any important documents that show you had a major life event.

Marriage Certificate
Divorce Papers
Birth Certificate for children
Home Purchase Documents

All of these are significant life events that can change your tax bill. Make sure you let your accountant know about them so they can file your taxes correctly.

Important Documents for Business Taxes

Business taxes also require documentation for any tax deductions you wish to take. You’ll need to save basic documents, just like you did for your personal taxes.

Bank Statements
Credit Card Statements
Bills

These are all important for your tax returns, so save them in a safe place in your office.

Next, you’ll want to make sure you save receipts for things you plan to take a deduction on.

Travel Expenses
Business Meals
Gifts
Giveaway Purchases
Transportations Costs
Petty Cash Receipts
Advertising Costs
Office Supplies

All of these are tax-deductible, but you need to be able to prove that you used them for business. It’s really helpful to make a note of what the receipt was for. For instance, if you took a client out to lunch, then you could make a note of the client’s name and what you discussed. A great way to do this is to tape the receipt to a piece of paper and write what you did on the paper. Then scan the paper into your computer and file it away so you have it when it’s time to do your taxes.

Finally, you’ll want to keep track of these expenses that are specific to businesses.

Payroll Records
Asset Records
Property Costs (Rent or Mortgage)

These are all very important for business taxes because they can help keep your tax bill lower. The assets can roll over from year to year, so make sure you keep your records up to date.

How Long Do I Need to Keep Important Documents For?

We recommend keeping your important records for a minimum of three years. The IRS requires that you keep records for at least three years after the due date of the tax return or the date you filed the tax return, whichever is later. The period of limitations to file an amendment is three years; however, the IRS can audit you up to six years later.

You can either bookmark (or pin) this post, The Important Documents You’ll Want to Save to Prepare Your Taxes, so you know what you’ll need when it comes time to prepare your taxes.

Salon Accounting: Top 5 Accounting Tips for Hair Stylists & Salon Owners

As a stylist, you’re the expert when it comes to knowing what tools to use when and whether or not bangs works for your client. However, when it comes to salon accounting and taxes - like for hair stylists, barber shops and salons - we’ve got the expert status covered.

To make things simple, we’ve pulled together some of our best advice for keeping things organized and keeping your accounting on point.

Top 5 Tips for Setting up the Record-keeping Side of Your Biz:

Get your books set up before you open up shop. There’s no need to worry if you’ve already booked a slew of clients or have a thriving business – just start now if you haven’t already. You can always take care of past tracking at a later point, but for now, just start. Our best advice is to keep it simple, and have it be something that’s fairly easy to complete on a routine basis.

Create a ledger. It doesn’t have to be expensive accounting software, or even a fancy spreadsheet. It could be as simple as a small notebook where you jot down all the financial stuff for your business. Pick whatever works best for you. Just remember that some kind of record keeping is better than none at all.

Keep track of receipts. Especially when you pay cash! Purchase a expandable file folder, grab an envelope or go digital (some clients scan receipts, or snap pictures of them with their phone and store them in a digital folder). If you have a credit card/bank account for your business (you should!) you can even annotate the monthly bank statements and keep them in the same place as your receipts. Just make sure to keep that paper trail!

Keep your business & personal accounts separate. We mentioned this briefly in #3, but it goes without saying that keeping things separate, keeps things simple. By having your personal and business assets (and expenditures) in different places you make paying taxes, paying yourself, and putting money back into the business so much easier.

Set a plan and stick to it. There’s a reason that we’ve mentioned making things simple from the start. That’s because running the business-side of any business takes consistent effort and when it’s confusing or technical, it’s all the less appealing to sit down and stay on top of it. We suggest keeping track of things monthly or even bi-monthly if your client base is fairly large. When things are kept up to date, it takes a lot less time to manage the money.

TIP: Wondering what all goes into that ledger we mentioned in #2? We thought you might ask, so here’s what we tell our clients:

Start with recording the current balance of your business account (make sure to add a date to this line and every line you insert into your ledger)
Keep track of the revenue ($$ coming in) – cash or card payments for services or products. Don’t forget tips, especially those paid in cash!
Make a list of expenses ($$ going out) – purchasing products for your clients, rental fees for your booth or building, tools of the trade, etc.
Put a star next to any expenses that are recurring – rent, utilities, insurance and product purchases. This way you’ll be able to keep tabs on the average you spend each month and get a better idea of what it takes to run your business.

Have more questions? Want the nitty gritty details from a professional? Looking to find a great accounting service that can take care of the bookkeeping side of your salon so you can get back to what you do best? Contact us at https://vyde.io/get-started/ We’d love to chat!

FAQs about Setting Up Accounting for Hair Stylists and Salons:

1. Do I need to set up accounting before opening my salon?

Yes, it’s essential to have your books set up before opening your salon. Start now if you haven’t already. Keeping it simple and consistent is key.

2. What’s the simplest way to keep track of finances for my salon?

Create a ledger. It can be a basic notebook or a digital folder. Any form of record-keeping is better than none at all.

3. How should I manage receipts for my salon expenses?

Keep track of receipts, especially cash purchases, using an expandable file folder, envelopes, or digitally. Annotate monthly bank statements for credit card transactions.

4. Why is it important to keep personal and business accounts separate?

Separating personal and business accounts simplifies tax filing, paying yourself, and reinvesting in your salon. It also helps maintain financial clarity.

5. How often should I update my salon’s financial records?

Aim to track finances monthly or bi-monthly, especially if your client base is large. Consistent updates make managing money much easier and less time-consuming.

Interested in Learning More?

Schedule a free consultation with our team!

An Accountant’s Secret to Making Your Business Credit Cards Work For You

Credit cards get a bad rap. They are intertwined with massive debt, but that doesn’t have to be the case. Learning how to use business credit cards can help you move your business forward.

We don’t recommend getting into credit card debt. That is not going to make your business credit card work for you. Instead, we recommend using business credit cards to make purchases that you know you can afford.

The only way to effectively use business credit cards is to pay them off, in full, each month. If you can’t do that, then you can’t make credit cards work in your favor and you’ll be a slave to the credit card company.

If you can pay off your credit cards each month, then you can take advantage of these benefits.

Build Credit with Your Business Credit Cards

The most important thing you can do with your credit cards is to build credit. A lot of people want to pay cash to avoid going into debt, but when you own a business that’s just not possible. Your business must have established credit.

One of the best reasons to build credit through business credit cards is so that you can make future purchases. Business who don’t have any credit have higher loan rates, if they can even qualify for a loan. However, if your business has a solid credit history you will be able to get loans to grow your business.

Earn Rewards from Your Cards

Who doesn’t love earning rewards? Earning rewards from your business credit cards is like getting free money (or travel, or whatever reward your card offers.)

The key to this “free money” is to pay those credit cards off in full! Like we discussed before, this is the only way to get the most out of your cards.

When you’re choosing business credit cards look at all the different rewards options and choose which will benefit you and your business the most. If you travel a lot, then choose a card with reward miles; then you can save money on flights, and maybe even get in-flight perks! If travel isn’t a big deal for you, cash back rewards are always great. You can use your rewards in countless ways.

Track Your Business Expenses

First and foremost, we want to emphasize that you need a business credit card. You shouldn’t be using a personal credit card for business purchases. This causes a lot of headache when it comes time to reconcile accounts. As bookkeepers, we beg you to separate your personal and business expenses!

Second, credit card statements are a great way to keep track of your business’ expenses. The Internal Revenue Service (IRS) allows you to use credit card statements as proof of purchase, so if you lose a receipt but have a credit card statement, you can still prove that you made a business purchase. Most credit card companies keep records of purchases for years. If you have an online account, you can access those anytime.

Monitor Business Finances

As long as we’re talking about business expenses, we might as well mention monitoring your business’ finances.

Employers can hand out company cards to employees, which has a lot of benefits (like not having to run to the store to pick up a birthday cake yourself.) But, there’s always a risk involved with handing out a card. If you want to make sure your employees aren’t abusing the credit card, you can monitor all the purchases.

Another common scenario, as employees move up in the company they get company cards. Managers need to have access to company money and a credit card is a great way to get them that access. If this is the case in your company, look for business credit cards that allow you to give your employees their own cards free of charge. Some cards will even allow you to set spending limits for each card. This can help you monitor who is keeping to their budgets.

Don’t let your business credit cards get the best of you. Learn how to use them and make them work for you!

What Business Records You Should Keep for Tax Purposes

Keeping business records for tax purposes can be completely overwhelming, but it’s critical in order to keep your business safe if you’re ever audited. The most overwhelming part of keeping business records is knowing what records are important. We’ll go through the Internal Revenue Service’s (IRS) recommendations on what to keep and how long to keep it.

What Kind of Business Records Should You Keep?

First, we need to identify what business records are important to keep. You should keep records showing your income and expenses, as well as any proof of tax deductions you plan to take. The IRS has a few recommendations on what to keep.

Income Records

Proving income is pretty straightforward. You’ll want to keep records so that you can accurately pay your taxes.

Income records include:

Cash register tapes
Receipt books
Invoices
Deposit information (cash and credit sales)

Expense Records

Keeping records of your expenses is an important part of bookkeeping so that you can take deductions and lower your taxable income.

You’ll want to keep records (such as receipts or invoices) showing the following expenses:

Loss of income (cancelled checks, unpaid invoices)
Travel
Business meals
Transportation
Gifts

Asset Records

If you plan on deducting any of your assets you’ll also want to keep records on them. Business assets range from office furniture to equipment and even property. You’ll have to calculate the depreciation of each asset and the gains of any asset sold. In order to do that you’ll want to keep records on the following:

When and how you acquired the asset
Purchase price
Cost of any improvements
Deductions taken for depreciation
How you used the asset
When and how you disposed of an asset
Selling price of asset
Expenses associated with the sale of assets

How Long to Keep Business Records

In most cases the IRS recommends you keep your business records for a minimum of three years.

The IRS requires that you keep records for three years after the due date of the tax return or the date you filed the tax return, whichever is later. The period of limitations to file an amendment is three years; however the IRS can audit you up to six years later. After that you are no longer required to have your tax return or documentation.

Even if these tax deadline pass, make sure that your insurance company or creditors don’t require you to keep these records longer.

Download our FREE guide: What Business Records You Should Keep for Tax Purposes and keep it at your desk as a reminder.

Frequently Asked Questions

1. What types of business records should I keep for tax purposes?

You should keep records that show your income, expenses, and any proof of tax deductions you plan to take. Specifically, you should keep income records like cash register tapes, receipt books, invoices, and deposit information. For expenses, keep receipts or invoices related to loss of income, travel, business meals, transportation, and gifts. Additionally, maintain records for any business assets, including details on purchase price, depreciation, and the sale of assets.

2. How long do I need to keep my business records?

The IRS recommends keeping your business records for at least three years. Specifically, you should retain records for three years after the due date of the tax return or the date you filed the tax return, whichever is later. While the IRS can audit you up to six years after filing, it’s generally safe to discard records after this period, unless your insurance company or creditors require you to keep them longer.

3. Why is it important to keep records of my business assets?

Keeping records of your business assets is crucial if you plan to deduct their depreciation or if you sell them. You’ll need to document when and how you acquired the asset, the purchase price, any improvements made, deductions for depreciation, how the asset was used, and details about its sale. Accurate records ensure you can correctly calculate depreciation and report any gains from sales.

4. What should I do if I’ve lost a record that the IRS might require?

If you’ve lost a record, it’s essential to try to reconstruct it. Contact the source of the document (such as the vendor or bank) to obtain a duplicate. If that’s not possible, you should create a record of the event or transaction as accurately as possible, noting the date, amount, and purpose, and explain why the original record was lost.

5. Can the IRS audit me after the three-year record retention period?

Yes, while the IRS typically audits within three years, they can extend this period to six years if they identify a significant error in your tax return, such as underreporting income by more than 25%. Therefore, it’s advisable to keep records for at least six years to be fully prepared for any potential audit.

What is the Earned Income Credit?

The Earned Income Credit (EIC) is a tax credit for low to moderate income earners. In order to qualify for the Earned Income Credit, you must file a tax return, even if you are not required to file taxes. Those who file for an Earned Income Tax Credit may receive a tax refund if their taxable income is less than the credit.

Qualifications for the Earned Income Credit include:

Earned income by working for someone else, or by owning your own business
Meet the rules for a qualifying child
Meet certain income levels (You can find those levels on the IRS site.)
File as Married filing jointly, Head of household, Qualifying widow or widower, or Single. If you file as married filing separately, you do not qualify for the Earned Income Credit.

Earned Income Scenario

Jerry and Ellen Johnson are husband and wife; they have two children. Jerry works for an established company as a contractor and Ellen just started her own Etsy business. Together, Jerry and Ellen earn $50,000 a year.

The Johnsons file as married filling jointly on their personal taxes. This means that they file their total income on one tax return. Jerry and Ellen claim the Earned Income Credit because they earn less than the two child max of $50,198 a year.

By filing for the earned income credit they are able to lower their taxable income on their personal taxes. They may even be eligible for a tax refund after they count any other deductions or credits.

The Earned Income Credit only applies to Jerry and Ellen’s personal taxes. When Ellen files her business taxes for the business she owns she will not include the Earned Income Credit.

The Business of Blogging Part 5: Create and Maintain an Organized Bookkeeping System (AKA: Mazuma’s Secret Bookkeeping Formula)

An organized bookkeeping system is arguably the most critical component of monetizing a blog business. It doesn’t matter if you’re making boocoo bucks on your blog if you aren’t tracking money coming in and money going out. Here’s how we suggest you manage your time when you’re taking care of your own small business bookkeeping and accounting tasks.

Mazuma’s Secret Bookkeeping Formula

If you’re a blogger, you’re likely a list person. You like schedules, checklists, and organization. If you’re feeling overwhelmed with the bookkeeping part of your blog, here’s a simple formula that when followed closely, will limit time spent and increase profits for your business.

30 minutes / week

Schedule 30 minutes each week to do the following:

Gather all receipts spent on blog-related items that week and make note of what they were for.
Jot down miles driven for your blog business if you’re planning to use those an expense for taxes.
Review your ad revenue and make notes
Enter everything into a bookkeeping program–whether it’s an excel spreadsheet or something fancier, you must keep track.

1 hour / month

File all receipts from the month. To learn more about filing receipts digitally, visit this post.
Review all your entries for the month in your bookkeeping program.
Add up your income and expenses for the month to determine profit.
Compare to your anticipated budget and adjust where necessary.
Pay bills and send invoices.
Adjust for the next month.

1 hour / quarter

Review income and expenses for the quarter and enter into bookkeeping program.
Determine how much you owe and pay your estimated quarterly taxes.
Make changes to your budget and plan spending for the next 3 months.

2 hours / year

Review your yearly income and expenses.
Create a budget for the next year based on last year’s budget and anticipated growth.
Schedule time for weekly, monthly, quarterly, and yearly bookkeeping tasks.

Follow this bookkeeping schedule and you’re sure to stay on top of your blogging finances. When you’re blog business becomes too large to manage, you might consider outsourcing those services to save yourself time and money.

Love this post in our Business of Blogging Series? You might also enjoy:

Separating the Blogging Myths from the Blogging Truths

Deciding on a Business Entity for your Blog

Obtaining a Tax ID Number and Proper Licenses to Run Your Blog Business

Start Making Money on Your Blog

Tracking Blog Expenses the Right Way

How to Create a Budget for Your Blog

Making Smart Investments in Your Blog Business

Paying Estimated Quarterly Taxes for Your Blog Business

Hiring an Expert to Manage Your Blog Finances

Conquer the Paper Pile-Up: Top 3 Ways to Track Receipts this year

Tracking receipts can be a huge headache for small business owners. Creating an organized system to store all of those receipts (and finding them when it’s time to file taxes!) can be an even bigger headache.

Here are the top 3 ways to track receipts for your small business this year:

Take a photo and manually track receipts. Yes, it’s that easy! The IRS accepts digital copies of receipts as proof and they take a lot less room (and hassle) than hard copies. However, there are two rules that go along with this. First, make sure that the photo is identical to the original receipt. That means you need a good quality photo that is completely readable. Second, store the scanned copy of the photo of the receipt somewhere very secure and make sure regular backups are taken. Create a system for tracking receipts on your computer by having a folder for each year, and then inside those folders, make new folders for each month. You can even break it down further within each month’s folder for the type of receipt, but that’s not necessary if you don’t have the time. (Ex. 2016>January>Travel Expenses.)

Use a Smartphone or Tablet App. There are a lot of handy apps for tracking receipts as a small business owner. A few of them include:
- Shoeboxed: $9.95/month; for iPhone, iPad, Android, and desktop, this app allows you to snap photos of receipts and then categorize them. It also allows you to track miles driven for work.
- Mint.com: free; for all mobile devices and allows you to track business expenses through your bank accounts. This is especially helpful if you have a separate bank account for your business.
- Onereceipt.com: free; for all mobile devices, allows you to store your receipts in the cloud, automatically pulls receipts from your emails, and organizes your spending into categories.

The Old School Method. There’s nothing wrong with a good old paper and pen method of tracking receipts, and it works great for many business owners. Here are a few recommendations for tracking paper receipts:
- Have a folder for each month. Put all your receipts into that folder and then spend an hour or two each month entering the receipts into a spreadsheet.
- Use a spiral bound notebook and pen. Tape your receipts into the notebook, one per page, and then jot down what the expense was for on the side of the page.
- Copy your receipts with a copy machine so that you get a clean, unwrinkled 8.5×11” sheet, and then stick it in a filing cabinet with appropriate labels.

Do you have any awesome tips for tracking receipts? We would love to hear them so we can help others even more with their small business bookkeeping!

FAQs for Tracking Receipts in Small Business Bookkeeping

1. How can I track receipts efficiently for tax purposes? Utilize digital methods like photographing receipts, organizing folders on your computer by year and month, or leverage smartphone apps designed for receipt tracking and expense categorization.

2. Are there specific apps or tools recommended for receipt tracking? Yes, consider apps like Shoeboxed for photo-categorization, Mint.com for bank-integrated expense tracking, or Onereceipt.com for cloud-based storage and email receipt import.

3. Is there a traditional way to track paper receipts effectively? Absolutely! Organize paper receipts by month in folders, maintain a spiral-bound notebook for entries, or create clean copies via a copier and file them neatly for easy access.

4. What’s the importance of maintaining an organized system for receipts? Organizing receipts streamlines tax filing, expense tracking, and financial record-keeping, ensuring easy retrieval and accuracy in small business bookkeeping.

5. Do you have additional tips for efficient receipt tracking? Share your expert tips in the comments to enhance small business bookkeeping and help others navigate receipt tracking effectively!

Resources

Category: Bookkeeping