How to Do Bookkeeping for Work at Home Business

Keeping books for a work at home business is all about getting started. Once a bookkeeping system is developed, maintenance is easy. You do not need bookkeeping knowledge to keep accurate records.

With a little attention on the front end, your online or work at home business will be legitimate, with figures for tax returns and totals for profit and loss statements easy to find.

Instructions

1. Step 1

   Keep records of income.
   
   Itemize all of your income streams, and develop a way to keep accurate records. If you sell items on the internet, use a simple spreadsheet program like Excel or Open Office, with fields for date, description, price, tax, postage charged, postage paid, and payment method.
   
   An easy way to keep records of tangible sales for items shipped is to make an extra copy of the mailing addresses and mark the name of the item and price to the side. Work from this for data entry into your Excel or similar spreadsheet.
   
   If you have income from other sources, keep a monthly total of this income to create a total at the end of the year. This is the most important record you can keep, since the IRS does not like tax evasion. They do not tell you how to keep records, but you are obligated to maintain records for a business.

2. Step 2

   Keep records of expenses.
   
   Maintain a file with receipts for expenses incurred each month. If these are numerous, you may want to break down the files into topics on the Schedule C for taxes. The information you need on the Schedule C begins with Advertising. Most small businesses do not have sufficient expenses to have many files--maybe advertising, utilities, office expense. Review the list on the Schedule C Federal Income Tax form to see if you need additional files.
   
   Keep records for your automobile use, too, since this can be a significant tax deduction. These files will develop into your business tax deductions, and will lower your income taxes.

3. Step 3

   Calculate a monthly total for income.
   
   Keep a monthly total for income from all income streams. This will simplify calculating the figures for the year, since there will only be twelve entries to tally.

4. Step 4

   Compile an end of the year income report.
   
   Use the entries for monthly totals to compile a report for the end of the year. Include total income from all sources from the monthly report. Determine any State sales tax you have collected and may owe on in-state sales, if you do not file a quarterly report.

5. Step 5

   Calculate expenses after the end of the year.
   
   Use the files created for expenses and get totals for each category for deductions for a Schedule C. There should be a total for advertising expenses, utilities, internet services, and office expense, to name a few. These are best kept in a file until the end of the year, since you only need a TOTAL, and not a monthly report.
   
   These easy procedures will make filing a sales tax report and income taxes much easier, with everything in once place and many calculations already completed.