Kinda embarrassing (keeping files)

[Robert gree]

Im just now starting my business and up until this point i have never kept receipts kept files anything like that all. typical teenager unorganized.

Now that ive turned 20 and am starting my business. i want to keep detailed records of everything, But have no idea where to start. What to keep and file what to just through in the trash.

Seeing that i just got a loan for my business im keeping all the receipts from the tool purchases. What about some stuff bought off craigslist? Just make up a piece of paper with what i payed on what date? i dont have the peoples name.

I will be keeping paper files (file cabinet) as well as i have quickbooks on the computer for the business. money in out etc etc

Im open to all advice.

[Brian Kent]

Anything you buy online, print anything you can from the transaction; the page with the asking price, a copy of the check or the credit card billing. The more paper proof the better.

IRS knows business so keep receipts on your income too. All of it.

When I was a Chart House chef and waiter, I reported all my tips. My co-workers got really mad at me, but the auditors know what the restaurant charges and what percentage people in that part of the country pay in tips.

Get a good tax guy and pay the fee, at least in your first couple of rounds. You might pay $200 and the tax consultant will find a lot more legitimate deductions than the amount you paid.

Good luck to you and good planning.

Brian

[Randal Stevenson]

I would ad that CL purchases, you should print out a copy of the ad, and put their name/info on it. This will also help out if something turns out to be stolen. (besides tax implications)

[Robert gree]

Thanks for the help so far, i have a few purchases already. and just have the receipts stored in a envelope. I dont even know if i can find the ads for the stuff i bought on Craigslist should i just exclude it? so far just a 2hp delta dust collector and a couple small hand planes.

My largest purchase so far has been from grizzly my new SAW it arrived Yesterday. http://www.grizzly.com/products/12-Extreme-Tablesaw-1-Phase-5HP/G0605X1

[Scott T Smith]

Thanks for the help so far, i have a few purchases already. and just have the receipts stored in a envelope. I dont even know if i can find the ads for the stuff i bought on Craigslist should i just exclude it? so far just a 2hp delta dust collector and a couple small hand planes.

My largest purchase so far has been from grizzly my new SAW it arrived Yesterday. http://www.grizzly.com/products/12-Extreme-Tablesaw-1-Phase-5HP/G0605X1


I would not exclude your former purchases, but simply document everything that you recall right now and put it in your files. Not having a receipt does not change the fact that your expenditure was a legitimate business expense. Clearly, doing better documentation going forward is wise.

Whenever I make a deposit, I make a photocopy of the checks and write notes on the copy indicating what they were for, and file this in my records. Not all money deposited is income, so this system provides an audit trail for the future.

[Chuck Wintle]

maybe buy a basic small business accounting program to help keep track of all your purchases and sales.

[Craig Summers]

For a business, you actually need to know at least a few different things:
1) what you paid for it,
2) what its worth.
3) tracking information

Your accountant will help you with tool depreciation, a method of reducing the 'paper' value of your tools, and thereby reducing the business taxes you might owe. He/she would need to know what you paid for it. Depreciation follows a schedule, each year of the schedule you deduct a percentage of the value of machinery from your income.

When you get business insurance, your insurance guy will want to know what the tools are actually worth, i.e. what it would cost to replace it. He/she would need a list of stuff, with make/model year etc, or an appraisal for rare things, (rare wood planes etc). If you got a deal on Craigslist, then the reciept doesnt show the real value, or the cost to replace.

Tracking information is serial number etc that identifies it as yours. A set of pictures with make/model might help if something is stolen.

[Robert gree]

For a business, you actually need to know at least a few different things:
1) what you paid for it,
2) what its worth.
3) tracking information

Your accountant will help you with tool depreciation, a method of reducing the 'paper' value of your tools, and thereby reducing the business taxes you might owe. He/she would need to know what you paid for it. Depreciation follows a schedule, each year of the schedule you deduct a percentage of the value of machinery from your income.

When you get business insurance, your insurance guy will want to know what the tools are actually worth, i.e. what it would cost to replace it. He/she would need a list of stuff, with make/model year etc, or an appraisal for rare things, (rare wood planes etc). If you got a deal on Craigslist, then the reciept doesnt show the real value, or the cost to replace.

Tracking information is serial number etc that identifies it as yours. A set of pictures with make/model might help if something is stolen.


thank you for the info. No business insurance here. just starting a LLC im a one man show doing speaker boxes and small wood projects

[Harry Hagan]

Check out the video.

http://www.neatco.com/products/neatreceipts

[Steve Rozmiarek]

Robert, bookeeping is easy in principal. Track every single penny that goes through your business. It's actually easier than it sounds in practice. Just be diligant in recording and understanding your QB software, and keep every piece of paper for a hard copy backup. You don't have to keep the paper forever. As you get into the next year, archive the previous year someplace safe. I think the IRS says 5 years, but I'm not positive on that. The IRS does audits regularly, and us small business guys are a favorite target.

Your equipment purchases are depreciable, which lets you keep more of your money.

It's in your best interest to know where every penny goes. Mistakes happen, and you will be suprised how often you catch someone overbilling. You will also be subject to that marvelous self employeed tax quagmire. It is in your best interest to track all of your personal money too, as it will effect the amount that you have to pay the clowns in Washington. There are a lot of little writeoffs that add up to saving you a bit of money.

It may be in your best interest to hire an accountant, just to audit what you have recorded, and make sure you don't miss something that will cost you money. For example, missing a tax payment. Your bank will also probably want to see accurate and professional looking balance sheets, cash flows, and profit and loss statements. QB will do those for you, if it has all the info inputed correctly. Good luck!

[Robert gree]

Check out the video.

http://www.neatco.com/products/neatreceipts

basically a mini scanner? I have a scanner

[Horton Brasses]

You will want to do a few things. One-you do want to record what you paid as best you can for existing equipment. If it's Craig's List purchases write up your own receipt. Get the seller to sign it if possible. If not, keep a record of your payment attached to the receipt-use a check or money order if possible. Two-you will want receipts for anything and everything you buy. You have two reasons-one you want to expense every purchase you can and two you will want to depreciate equipment for tax purposes (both local property taxes and income taxes). Items you already own should be put on the company books at their fair market value and then depreciated. If you have receipts, great, if not you will have to establish a value for the items as best you can-I believe you have a lot of leeway in the value-higher values are best in this case. Depreciating them will reduce your taxable income.

What records you keep and how long vary based on your method of accounting. At this stage you are probably working on the cash basis, even if you don't know it. This link might help:

http://www.smallbusinessnotes.com/fedgovernment/irs/583/accounting.html

Consulting with an accountant and/or book keeper now to get set up is probably a good idea. Even if you don't want to pay a book keeper all year long to keep track of everything, having one get all your accounts set up properly will be very helpful. Trying to sort it all out later is time consuming and expensive. If t goes really wrong you could end up paying penalties to the IRS. Once you are set up with the basics establish a schedule of what you keep and for how long. We have a little printed sheet that says keep x records for 7 years, x for 1, etc.

I hope this helps, and most importantly-Good Luck. I assume your business is woodworking related, but whatever it is I hope you find success.

[Horton Brasses]

One more thing: Our local community college offers two day courses in Quickbooks. They go over how to get set up and use it properly. We have been using it for years but I sent my office manager a couple years ago. It really helped. Check your local community colleges and adult ed programs and see what they offer. There should be something available.

[Harry Hagan]

basically a mini scanner? I have a scanner

Robert,

What's so "neat" about Neat Receipts is the software.
It allows you to easily scan, store, and quickly access receipts and other documents.The IRS allows digital copies as proof-of-purchase and my accountant tells me that many of her customers no longer store their paper receipts.

Another reason I like NR is when I need a receipt for warranty purposes or can't remember where I purchased something: e.g. "Where did we buy that left-handed Phillips head screwdriver with a red handle." Simply search the database for "red handle" and up pops the receipt. This works regardless of when the item was purchased as long as you have added a description of the purchase in one of several comment sections. Most receipts these days are virtually indecipherable and having a description you understand can save a lot of head scratching later on. NR allows you to split receipts for accounting purposes when items fall into different categories and also allows you to import that information into your accounting software. Having backup copies of receipts is a plus too.

You can probably use your scanner.

I've found NR very useful for business and personal use.

[Robert gree]

Robert,

What's so "neat" about Neat Receipts is the software.
It allows you to easily scan, store, and quickly access receipts and other documents.The IRS allows digital copies as proof-of-purchase and my accountant tells me that many of her customers no longer store their paper receipts.

Another reason I like NR is when I need a receipt for warranty purposes or can't remember where I purchased something: e.g. "Where did we buy that left-handed Phillips head screwdriver with a red handle." Simply search the database for "red handle" and up pops the receipt. This works regardless of when the item was purchased as long as you have added a description of the purchase in one of several comment sections. Most receipts these days are virtually indecipherable and having a description you understand can save a lot of head scratching later on. NR allows you to split receipts for accounting purposes when items fall into different categories and also allows you to import that information into your accounting software. Having backup copies of receipts is a plus too.

You can probably use your scanner.

I've found NR very useful for business and personal use.

Definitely something ill look into.