Can you believe 2014 is half over already?
I hate to be the bearer of bad news or bring up ugly subjects, but someone has to – in a word: taxes.
If you are typically a procrastinator each and every year when it comes to bookkeeping, make this year the year of change. Make 2014 the year you will be organized or at least have less of a mess to contend with before you file your 2014 income taxes.
Do you have a pile of 2014 receipts that need some sort of action? Whether you file your income taxes as a sole proprietor using a Schedule C or you’re an S-Corp or some other designation, income and expenses need to be tracked.
I’ve been audited by the IRS three (3) times for my Scentsy business since 2006. I come out okay but it is a royal pain and highly invasive. I keep meticulous records, but it is time consuming to do so. I do not have a fancy system, it is pretty basic; I don’t use any Quickbooks or other accounting software.
My Simplistic System
Here’s what I do, take what you like and discard the rest. I do have an accountant who I use and who pays my monthly taxes and payroll (I’m an S-Corp now) but the basic bookkeeping no matter what your business designation remains fairly similar.
- I use Microsoft Excel which has various worksheets in the one file. I have separate sheets for Biz Expenses, Biz Income, Medical & Misc.
- Inside the Biz Expenses worksheet I have four column headers: Date, What, Amt, Category. For example, from left to right the row would read: 6/29/2014 | Amazon – Party Plan Superstar book | $10.32 | Training
- Some of the other business categories I use frequently are: Advertising, Postage, Travel, Supplies, Equipment, Dues, Fees, Gifts
- Ideally, as expenses are incurred, I should enter the amount in the Biz Income sheet, and then file the receipt in my “2014 taxes” envelope. Truthfully, this year the receipts have been going into a pile on top of my file cabinet, so that I will record them weekly, then file them away in the envelope. They stay out of the envelope until it is recorded on the spreadsheet. Honestly sometimes more than a week goes by and I don’t always stay on top of bookkeeping.
- Once the receipt goes into the envelope, I have no reason to handle them again, unless asked to reference something during an audit.
Any System Will Do
There are a number of methods you could use to do your business bookkeeping. Some may look at my archaic system and cringe. It works for me and it works for my accountant. The main take away from this is that you have to keep track using some method.
Each year in January and February I hear of consultants lamenting what I mess they have. We know the tax filing deadline, and it’s the same every year. We’re already half way through the year. If you have receipts and expenses to track from January – June 2014, take advantage of your slower season and just get it done.
Get Sound Advice
One final word about income taxes: you’re a business owner now. If you are not sure how to file a business income tax return or what you can claim or not claim, consultant a professional tax preparer. Do not take tax advice from fellow direct sales consultants, unless they are also an accountant or CPA. If you have an accountant who is not familiar with filing an income tax return for a direct sales consultant, you may want to shop around for another who does.
Each time I received a love note from the IRS that I was being audited, I absolutely was not happy, but felt confident that I had the right accountant and accurate records, so there was no need to panic or scramble. Let me be a lesson to you.
See you at the top!
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About the Author: Laurie Ayers is a Michigan work from home mom and a Superstar Director with Scentsy Wickless Candles. She enjoys helping men and women start and maintain a home based business in the US, Canada, Mexico, Australia, New Zealand, Puerto Rico, Germany, Ireland, UK, France, Austria and Spain. To download a FREE Start Up Guide which provides more details about how to start a home business as well as to learn about our compensation plan go to www.thrivingcandlebusiness.com/how-to-start-a-candle-business/
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Ivy Baker says
I liked that you pointed out that getting a CPA or an accountant to help you with this. I wouldn’t want to mess up this with by me doing the bookkeeping. So having a professional would totally help make do taxes correctly.
Thanks for the information, we’ll put it to good use.
That’s interesting reading about mid-year tax tips! Just a quick note to tell you that I have a passion for the topic at hand. I appreciate the reading. Thanks and keep up the good work!