Does thinking about getting your business records ready for taxes give you a headache? It affects many people in this way. Do you procrastinate in preparing your documents? If so, then there is more than likely a better way. There's no reason you shouldn't start right now and develop a system to make it easier to manage. Getting your home business books ready for taxes doesn't have to be a reason to run for the hills. It is not that difficult an undertaking if you are prepared and know what you are doing. Of course follow-through is extremely important as well.
If your books are not yet computerized, and you are looking at a shoebox brimming with receipts, then the first thing you will need to do is sort out the documents into smaller piles according to the type of income and expense. Depending on your business , you may have several vendors and/or several types of expenses. Nevertheless, you will need to total up each pile, bundle them up accordingly, and store them in a pendaflex (or back in a shoebox.) to keep them safe for the long haul. Keep them for at least 5 years as you may need to refer back to these later.
Next, you will need to create a simple spreadsheet that includes the groups of information that you created. Dedicate the first column to description and the next to the amount. Record your income totals first followed by the expenses. At the bottom, you'll need to create a simple formula that subtracts the expenses from the income for the year. All these are the figures you will need for preparation of your taxes in combination with your other personal financial considerations. After those tasks are completed, and the past year is properly recorded, it's time to prepare for the upcoming year. Format your spreadsheet so that you can enter information daily or weekly and store your receipts in an organized fashion.
These tasks can be made more effective if you use software designed for that purpose. You could invest in business accounting software like QuickBooks or PeachTree. Free and low-cost programs are also available if you search for them. Setting up such a system can painless especially if you start it on a clean break such as the beginning of a new year. There are bookkeepers and accountants who can help you get your books automated. And if you feel you should require ongoing maintenance with these tasks, they are able to help you with that as well.
Don't let preparing your books intimidate you, you need to do it as much for you and your business as for your yearly obligations to the Internal Revenue Service. Developing a working system to maintain your home business books will save you time and money in the long run as well as alleviate some undue stress. So whether you adopt the old-fashioned envelope method or the new-fangled computer model, getting it together is the desired goal.
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