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| HOW TO SET UP A TAX-SAVING BOOKKEEPING SYSTEM
|Business >
HOW TO SET UP A TAX-SAVING
BOOKKEEPING SYSTEM
One of
the most important, but least understood or appreciated aspects of any business
is its bookkeeping or accounting system. And, because very few people know much
about the reasons for a bookkeeping system, most people are frightened by the
thought of the work involved in setting up such a system, and the drudgery of
daily maintenance.
There's really nothing complicated to bookkeeping - it's as simple as keeping a
daily diary and/or maintaining your personal checkbook. At the bottom line, it's
simply a matter of recording your deposits - your incoming monies - and keeping
a record of the
money you spend.
So, the first thing you need to do is open a business account for your extra-in
come business or endeavors. Generally, this is simply a matter of asking the new
accounts teller at a local bank for a business account registration card. Fill
this card in, and with the small registration fee, send it in to the appropriate
commissioner, and from there, open you new business account - complete with
imprinted checks.
Drop by a local stationery store and pick up a loose-leaf notebook, and a supply
of paper. We've always picked up a supply of index tabs at the same time -
either to separate the months or the accountability sections for each item we
sell.
Assuming that you want to make it as simple as possible, while at the same time
keeping it as efficient as is necessary - here's what you do and how you do it:
On the first page in your notebook, write on the top line and in the middle of
the page: Monday, January 1st, 1983 or whatever day you officially start your
business... Then, as your orders come in - if by mail, as you open your mail -
jot down starting from the left side of the page, the amount you received - dash
- for what - from whom, and their address. The page might look like this:
Monday - January 1, 1983
$
14 Tapes 372/3/4/5 R.W. (Liston 91108)
100 S.W. Fee - Barton (39204)
10 Hong Kong Dir #261 (Retail) Marks (06978)
10 " " #261 (Retail) Summers (91106)
3 Whsle Prt Dir #49 (Retail) Lee (31107)
70 Hot Line Lst - Morgan (82205)
TOTAL INCOME $207 - EXPENSE 0
That's all there is to it, and boiling it all down, it amounts to recording what
you receive and what you spend.
The next entry, immediately under that first day's entry, might look like this:
Tuesday - January 2, 1983
$
207 Deposit
11 Printer - for copies
10 Sec & Riches thru R. Est #302 - Rogers (75010)
3 Simplified Annual M.O. Bkkp Sys - Lewis (21104)
10 Money Magnetism - Kline (80033)
36 R.W. Fee - Magnuson (10067)
6 Manual on Bookselling - #291 - Magnuson (10067)
15 Display Ad - Smith (48089)
22 Ideal Ofc Supplies - printer paper
TOTAL INCOME $80 - EXPENSE $33 - DEPOSIT $207
And then, carry on with this recording of the money you deposit, receive and
spend each day with similar entries for each day of the week - every day Monday
thru Saturday for each week. It's simple, uncomplicated, and a positive record
of your business
activity.
Then at the end of each month, transfer this daily diary in formation to one of
the low cost bookkeeping registers that your tax consultant or accountant can
work from. These people won't work from your daily diary, and will not transfer
the information you record in it to a formal bookkeeping register without
charging you a small fortune. It's not that big of a job, and if you do it after
the close of business on the last day of each month, it will take at the most a
very few minutes. Then, of course, when you're ready to do your taxes, you
simply give your bookkeeping register to whoever is going to do your taxes, and
you're home free.
The bookkeeping register you'll need can be any simple columnar notebook - we
use an "Ekonomik Register, Form RL-17" available in a number of different styles
and sizes from Ekonomik Systems - PO Box 11413 - Tacoma, WA 98411. All you
really need is some sort of notebook with a number of columns marked off, a
title written at the top of each column, and a record of the money received for
each day relative to the product or service each column represents. Then at the
end of each month, you can simply add the totals from each column and you'll
instantly know how much money you took in from each of your offers.
Beyond the date column, will be your record of expenses or money spent. Again,
you should title each of the columns you'll be entering figures into, and then
record your expenditures for items falling into those categories. Then at the
end of each month, it's a simple matter to add the totals from each column and
know exactly where you stand relative to profit or loss - how much you took in
compared to how much you spent.
Bookkeeping and/or accounting is very simple and should not scare you. Just keep
it simple, and up-to-date.
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