Managing Your Business Finances
Posted by KS on October 27, 2008
After my first nightmare experience of doing my small business’s taxes, I have ever since tried to be as organized about my business finances as possible. I don’t know how much my recordkeeping methods resemble traditional bookkeeping, but the system works for me — quite well, actually.
I basically have two spreadsheets — one for income, and one for expenses. The income spreadsheet has a separate page, or worksheet, for every client; each page automatically totals at the top, and that total is pulled into a summary page, the first worksheet in the spreadsheet. Then I total all the individual client totals. That way I can see what I have been paid from each client, and what I have been paid total for the year.
My expense spreadsheet is similar: a worksheet for every expense category on Form 1040 Schedule C, and a summary page that provides a grand total. This makes filling in my tax forms really easy — I just go down the list and fill in the total in each expense category.
Business property expenses may be a little more tricky for you. If you have paid for cost seg engineering (which is an expense in itself, by the way), you may have reclassified some of your business property to depreciate faster, allowing you to take a greater deduction every year — and catch up on past deductions you have missed out on. Cost segregation services, also known as cost segmentation services, can therefore save you money, though they do complicate your tax filing a little!
The point is that if you are as organized as possible, doing your business taxes doesn’t have to be as complicated or as difficult as many people find it. A little effort spent throughout the year saves you a lot of time on Tax Day!