How,Turn,Your,Bookkeeping,Nigh finance, share, loan How To Turn Your Bookkeeping Nightmare Into A Money-Maker

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For most self-employed people, bookkeeping is about as muchfun as a root canal. But like it or not, it must be done,otherwise you'll end up overpaying your taxes big time.Perhaps this article will help you see this tedious taskin a new light. Follow along with me and I can turnyour bookkeeping nightmare into the best paying part-timejob you ever had.How much money do you make right now -- per hour -- at your"regular" daytime job or in your business? Is it $15 per hour? $25 per hour? $50 per hour? Make a mental note of that amount, ok?Now, let's say by "keeping the books" this month, you are able to find $1,000 worth of deductible expenses.Let's also assume you are in the 35% tax bracket (15%federal income tax plus 15% self-employment tax plus5% state tax).So, for every $1,000 of deductions, you save yourself about$350 in taxes ($1,000 x 35% tax rate).One more assumption: it takes you about 2 hours to properlyrecord and document that $1,000 of deductions.Hmmm. You spend 2 hours and save $350 bucks.How much money did you just make for yourself -- per hour? $175 per hour! Whoa -- now, compare that to how much youmake per hour working in your business or at anemployee job. Which "job" paid you more?Even if it takes you 4 hours -- it's like having a job thatpays you $87.50 per hour. Still a pretty good hourly wage,don't you think?How does that make you feel about bookkeeping? Not such abad deal after all, is it?With the end of the year just around the holiday corner,here's a simple six-step bookkeeping system that will putthousands of dollars of tax savings in your pocket and keepthe IRS out of your life.1. Maintain a separate bank account for your business.Never use your personal bank account for business expenses. Having a separate bank account automatically creates the"shell" for the perfect documentation system. If you don't have a separate business bank account, nowis the time to get one.2. Maintain a separate credit card account for yourbusiness. Same deal as the bank account -- pick one creditcard that you use exclusively for business expenses. 3. These 2 accounts (one bank account and one credit cardaccount) should only be used for business! Never "co-mingle"business and personal financial information.The only income that goes into your business bank accountis business income. The only expenses that are paid fromthe business bank account and business credit card accountare business expenses.4. For each major income and expense category, create asimple filing system each calendar year -- one file folderfor each major category. Every time you write acheck or use the credit card for a business expense,you assign that expense to the appropriate expense categoryand file the supporting documentation (receipt, invoice,cancelled check, or whatever) into the corresponding filefolder.5. Keep a separate file folder for all monthly bank accountstatements and credit card statements. 6. Use a simple bookkeeping software program likeInternetTaxHelper to record all deposits, checks, and creditcard charges. Once a week or once a month,input all transactions into InternetTaxHelper and assigneach transaction to the appropriate income or expensecategory. The importance of this "categorization" process cannotbe stressed enough -- it's the key to the whole system!There are any number of software programs out therefor this purpose. I've used them all: Quicken, Quickbooks,Money, etc. Spreadsheet programs like Excel can also be usedto automate business record-keeping.But my favorite bookkeeping program for the Small BusinessOwner or Self-Employed Person is InternetTaxHelper -- it isby far the easiest to learn and simplest to use. If yourbusiness grows, you can always invest in a moresophisticated program later. For any small business owner,especially if you're just starting out, this is the bestprogram I've ever seen.Using a software program like InternetTaxHelper is atremendous time-saver. Once you've input all yourindividual income and expense transactions, and assumingyou've assigned each transaction to the appropriate categoryand filed the paperwork, you've already completed allthe work necessary to audit-proof your income tax return! For more information on InternetTaxHelper, go to:http://www.internettaxhelper.com/g.o/wmdctpOne final comment: If you aren't "computer-savvy", that'sOK. You can still use good ole pencil and paper tocategorize your business expenses. I have clients who use nothing more sophisticated than aspiral notebook. Each year they buy a new notebook andlabel each page with a particular income or expensecategory.Every transaction gets written down in the notebook onthe appropriate page. At the end of the year, they addup the totals for each page, and presto, they give me anannual recap of all major income and expense categories.Get the picture? It doesn't have to be fancy. It just hasto be in writing, accurate, and supported by actualpaper documents.Whether you use your computer or not, the end result is the same: Every single transaction has been assigned to theappropriate category, and every transaction has thecorresponding "paper trail" -- every receipt, invoice,cancelled check and credit card charge has beenfiled into the appropriate file folder. Should theIRS question any income or expense amount on your return,you'll be ready! Article Tags: Bookkeeping Nightmare Into, Bookkeeping Nightmare, Nightmare Into, Bank Account, Business Expenses, Business Bank, Credit Card