Hate to be a wet blanket here on the zone...but was looking at how all of you do your accounting. I have been collecting all my receipts for my expenses, keeping track of mileage, and track all my income (including making photocopies of all the personal and bank checks I get. Figured I'd just turn it all in to an accountant at the end of the year and shell out a couple hundred bucks. Recently, a buddy of mine said he wouldn't waste the $$ on an accountant because there was software out there that would do everything he could and for cheaper....Not looking for gory details about your money matters, just curious about how you guys doing this for a living approach this issue...Also, do you have checks madeout to you, or the business...and is your business registered and logos copyrighted (ooops, sorry UD)....cheers b2

B2,

Technically, don't you work for the government? hmmm, isn't the IRS part of the government? LOL Just kidding.

This is a very personal subject. It's like asking if you download MP3's off of Kazaa.

I personally claim all my income and then offset the income with expenses via my Schedule E. I do all of this via Quicken and Turbo Tax. The only "gotchas" are when you start allocating auto expenses between personal and business use, home office/studio expenses, depreciation, etc. If you are diligent and detailed you can get by with using TurboTax. If you are lazy and don't like to read tax codes, pay the $300 bucks or so and let an accountant take on the risk.

Hope that helps a little.
Al

I do something very close to what Al describes above - I use Quicken for day-to-day accounting and then export to TurboTax for tax filing. Nearly all of my employers file 10-99's now so my life is pretty much an open book if the IRS cares enough to audit me (they never have, knock on wood).

The best thing about using a Quicken-type of program is that you can put all of your income and expenses into the proper tax categories as you go instead of trying to do it all at once when the tax crunch comes. I just do a daily download of my bank accounts and assign the categories to my expense day by day. This also helps because there's a lot of everyday things I buy that are deductable; and doing my taxes is a breeze. The easiest way I've found to keep up with car expenses is that my wife and I just claim one car as 100% business use (and that's being truthful). So there's no need to keep up with mileage etc.: all expenses related to it, including depreciation, are deducted. The home office/studio deduction isn't hard to figure out - Turbotax walks you through it.

I have a business name that is registered both locally and with the state. Checks can be made to either me or the business, and the business's accounting is the same as my own. I forget what this is called for tax purposes but it's something like sole proprietership - I don't have to file separate taxes for the business.

Thanks Pro and Al....Al, I don't really want to pry into anyones business and get personal.. That's what I meant about not getting the gory details. I'm just looking for a system to organize myself better and get any advice that can save me some time and $$ perhaps. Biggest issue for me is that this is all above board and by the book. Pro, a buddy of mine recommended the Quick Books software and said it would walk me through anything I needed. I think I'll give that a look see. I like the idea of keeping up with it day by day....Thanks again

B2,

I've been self employed singe 1975 and my ultimate goal in life is to pay $1-million in income tax for a single year--oh yeah!

Like most folks who have been self employed for some time, I discovered early on that the best business is one that you totally run yourself. This includes all the accounting, bookkeeping and filing taxes. Claim every dime you make, but be sure that you claim every dime you spend. Don't guess at anything, keep good records and you'll do just fine.

An example of keeping track of your expenses was provided by an old friend who said "If you have to use the restroom and there's a pay toilet that costs 50 cents. Put the 50 cents in the slot, do what you must obviously do, then the minute you get home, write that information on your calander. The same holes true for other cash items such as tolls, parking fees, etc. However, all other things should be paid for using company checks or a company credit card. I purchased a book several years ago called "Tax Loopholes--All The Law Allows." It was a great investment and has really saved me a ton of money over the years.

I too use Quicken and Turbo-Tax, both of which are great programs and easy to work with. As for the accountant/tax-person standing behind you, they'll stand so far behind you that they'll be in another area code.

Good Luck, make lots of money, and hope for that year where you must pay $1-million in income tax--it's gonna' be a great year.

Gary

I agree, Quicken and TurboTax.
A lot of people don't turn in all their cash income, but that could be dangerous if audit ever comes.
DonM

Amen. They busted me for over $70k because I had lousy records and unreported income a few years back. Now-a-days, I claim every lousy guitar pick with a receipt. HAVE to, to stay alive !
Don't learn your lessson the way I did (The EXPENSIVE way)

Quickbook IS NOT simple guys and gals. I have used it for many years, even my wife who has acctg degree does not know all yet and get stumped once in a while. And we are fast learners (get good grades in school).
It has inventory functions, etc, etc and will probably confuse 90% of the people.

I don't know how easy compared to quicken. I suggest that you borrow or get a trial version first and see how comfortable you are with the program. That's how I got into quickbooks - but my primary business is not music.

I also have quick-books as well, but quicken is by far more user friendly, and additionally, as performing musicians and entertainers, quick-books offers no advantage other than the ability to create and track invoices. As for inventory, most of us don't carry any, therefore, quicken is the program of choice. The only thing I use quick-books for is generating and tracking invoices to some of the government and non-profit agencies that I also do work for. Everyone else pays me by check, and that is entered into quicken.

The only time I was ever audited, which was more than 10 years ago, I was asked for details of all expenditures for that particular year. I merely went into quicken, printed out the reports in every expenditure category, and placed it into a large mailer and UPS'd it to them. It was about 200 pages long. After three months, a post card arrived saying "Thank you for your cooperation. No farther documentation is required." Good record keeping is the only way to survive in this business.

Cheers,

Gary

Thanks everyone for taking the time to reply..I'll never have the income you all do in this business, but what little I do make, I want to account for it correctly....been sucking off the Gov breast for so long, this self employment thing is erie to me....I just realized, I've been employed by the Gov since I was 21....I'm now 43...long time to be coddled....have a great week everyone B2