Posts Tagged ‘Tax Purposes’
May 5th, 2012 | 
Author: 
“I Can Keep It in My Head”
No you can’t! No matter what size your new business is or will be, you’ll need to set up a system to keep track of your financial status. This must be done to prove your income to the government for tax purposes at the end of the year, to prove your status to the bank when applying for a business loan and to show you your own profitability and where you might make improvements to it. As you grow and perhaps incorporate, it will become the law for you to keep good accounting records and have them regularly audited by certified accountants.
For now you don’t need that, but you might as well start out right.
The Very Least You Can Get Away With
In some situations, you don’t need to get a fancy accounting system. You can create a perfectly adequate system for accounting for your business with just a spreadsheet program, or even columned pad of paper and a pencil!
Now mind you, these situations are very rare. They include such times as:
o You sell your own craftwork part time
o You’re just testing a new opportunity
o Any other money-making venture that has yet to achieve even minimal potential and has no debt
It’s always a great idea for even these small businesses to have their own checking accounts. In other words, have a bank account set up only for your business. You can put money into it from your personal bank account (capital), but no money ever leaves it that is not related to business expenses. Therefore, you have a pretty good record of your business accounting just from your bank statements!
You may want to organize this information into lists, using your spreadsheet software or paper pad, including, but not limited to:
o Revenue Log – Every time someone pays you for your service or product, record it in this log. Almost every time your business checking account shows money coming in, one or more entries should go in your “Revenue Log”. The only time incoming cash shouldn’t go in your Revenue Log is when you have contributed cash to the business. You did not buy anything.
Your Revenue Log should include columns for:
customer name date item # and/or description quantity purchased price subtotal sales tax collected total
o Expense Log – Every time you spend money on behalf of your business, so cash goes out of your business checking account, you need to keep track of the type of expense it was. If for nothing else, this is to properly deduct them from income for tax purposes. You’ll create a list that can classify expenses into these and maybe more, categories:
Inventory – what you pay for the product you sell, or the raw materials to make it Advertising or marketing expense – website expenses, traditional media ads, related graphics and copy expenses Training – any attended classes, seminars or conventions related to your industry or running your business; books or eBooks purchased for same, Sales expenses – display cases, show entry fees, eBay fees, Pay Pal or credit card vendor charges. Postage – stamps, packaging Office supplies – paper, pencils, software, other small-cost and/or expendable items. Office furniture – desk, computer, other large-cost, long-term assets.
You can then provide your outside accountant with this information along with all your monthly checking account statements at tax time and he/she should be able to create appropriate tax returns or financial statements for you or your business.
By: Michael Russell
About the Author:
Michael Russell
Your Independent guide to Accounting
Posted in Accounting | 
Tags: Accounting Records, Adequate System, Bank Statements, Business Checking Account, New Business, Paper Pad, Profitability, Tax Purposes | 
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Have you recently sold any of your rental property? Are the taxes on your capital gains are a burden for you? Are you looking for some way out to reduce these taxes and keep most of the profits you made from this transaction?
Then you need to know some intricacies of capital gains tax rules.
If you had purchased rental property at a lower price and now sold it with a respectable margin on it, this difference you could get is the capital gain and the same is taxable.
Remember, IRS gives preference to home owners. An average home owner will be charged leniently as compared to a property investor. So the capital gains tax varies as per different types on property owners.
One good thing about the capital gains tax is that it is lower than the income tax. It is convenient if you buy the property and wait for one year before you sell it. This way you will have to pay taxes at an average rate of 10 to 25 %. But if you plan to sell your rental property before one year, then your earning is considered as short term capital gains and you have to pay heavy taxes on it which may be same as the ordinary income tax.
If you have your rental property overseas, you need to check the capital gains taxes rules over there. As in some countries like United Kingdom to encourage foreign investors, they do not charge any tax from them for their capital gains.
Some useful tips for saving on this tax:
You can avail the benefits on tax savings by becoming a home owner than a property investor.
To qualify to the criteria of home owner, you have to stay in your rental property for a minimum of 2 years. You may have rented it in past
Posted in Loans |
Tags: Capital Gain, Capital Gains On Rental Property, Married Couple, Pay Taxes, Property Taxes, Short Term Capital Gains, Tax Exemption, Tax Purposes |
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With tax time nearly upon us, many small businesses and first time entrepreneurs are scrambling to get their accounting information straightened out in order to file on time. When many small business owners think of accounting, they tend to associate it with income tax preparation and filing. The accounting for your small business should not be relegated to tax time. Accounting information can help business owners make better decisions, and improve the management of their business. It can also help them secure financing, and facilitate reporting to stakeholders (such as creditors, banks, and government agencies), and it can tip them off to any serious problems that might be brewing, such as dwindling cash resources, or debt burdens which may become overwhelming.
The accounting aspect of many small businesses is often the most neglected. Most small business owners don’t feel they have the time or expertise to devote to keeping their books. Let’s face it, most small business owners didn’t start a business because they were eager to deal with the finance and accounting aspects of it. The accounting is a function done at the end of the year for tax purposes. This attitude is unfortunate, because the accounting results of a business can represent a wealth of information, and can help business owners make better decisions. The fact is that accounting information really serves as an indicator of how healthy your business is. Think of your accounting information as a reading on a thermometer.
If you only see the value in accounting at tax time, you are missing out on an opportunity to get a true picture (and not just a “gut feeling) of how your business is performing financially. It is not likely that the individual who prepared your information is going to give you any tips or guidance with respect to the management of your business (unless your accountant or bookkeeper is also a relative or associate). Remember, in this instance you’ve paid them to prepare information for tax filing purposes, not provide consulting services on how to improve the performance of your business.
If you’ve already paid someone to prepare financial information for you, then the information is all there, waiting to be used. Business owners need not be the ones who prepare financial information, but they’d better be ready to be the ones who pay attention, and interpret, that financial information (or have a trusted associate who is willing to do this for them – although most accountants don’t come cheap). A responsible small business owner makes it a point to understand how to read financial statements, and draw conclusions from the information contained therein.
Unfortunately, you can’t really purchase accounting advice tailored to your small business over the internet. The good news is that you don’t need to be a financial genius to understand your balance sheet. There are many resources available on the web which can guide you through the process of understanding your financial statements. You may be just starting out, and looking for potential solutions. Or, you may be a seasoned business owner looking for some tips. There is a wide variety of solutions available, and these range from tutorials and e-books, to accounting and bookkeeping software. Learn more about these here: Accounting Tips for Small Businesses
With tax time nearly upon us, many small businesses and first time entrepreneurs are scrambling to get their accounting information straightened out in order to file on time. When many small business owners think of accounting, they tend to associate it with income tax preparation and filing. The accounting for your small business should not be relegated to tax time. Accounting information can help business owners make better decisions, and improve the management of their business. It can also help them secure financing, and facilitate reporting to stakeholders (such as creditors, banks, and government agencies), and it can tip them off to any serious problems that might be brewing, such as dwindling cash resources, or debt burdens which may become overwhelming.
The accounting aspect of many small businesses is often the most neglected. Most small business owners don’t feel they have the time or expertise to devote to keeping their books. Let’s face it, most small business owners didn’t start a business because they were eager to deal with the finance and accounting aspects of it. The accounting is a function done at the end of the year for tax purposes. This attitude is unfortunate, because the accounting results of a business can represent a wealth of information, and can help business owners make better decisions. The fact is that accounting information really serves as an indicator of how healthy your business is. Think of your accounting information as a reading on a thermometer.
If you only see the value in accounting at tax time, you are missing out on an opportunity to get a true picture (and not just a “gut feeling) of how your business is performing financially. It is not likely that the individual who prepared your information is going to give you any tips or guidance with respect to the management of your business (unless your accountant or bookkeeper is also a relative or associate). Remember, in this instance you’ve paid them to prepare information for tax filing purposes, not provide consulting services on how to improve the performance of your business.
If you’ve already paid someone to prepare financial information for you, then the information is all there, waiting to be used. Business owners need not be the ones who prepare financial information, but they’d better be ready to be the ones who pay attention, and interpret, that financial information (or have a trusted associate who is willing to do this for them – although most accountants don’t come cheap). A responsible small business owner makes it a point to understand how to read financial statements, and draw conclusions from the information contained therein.
Unfortunately, you can’t really purchase accounting advice tailored to your small business over the internet. The good news is that you don’t need to be a financial genius to understand your balance sheet. There are many resources available on the web which can guide you through the process of understanding your financial statements. You may be just starting out, and looking for potential solutions. Or, you may be a seasoned business owner looking for some tips. There is a wide variety of solutions available, and these range from tutorials and e-books, to accounting and bookkeeping software.
By: Jodi Hayes
About the Author:
Learn more about these options here: http://www.squidoo.com/Accounting-1
Posted in Accounting |
Tags: Accountant, Accounting Information, Creditors, Decisions, Government Agencies, Tax Purposes, Tax Time, Thermometer |
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