You aren’t ready to hire a bookkeeper, but those books still need to be done! What can you do?
If you need help with setting up a software like Quickbooks and doing your books there, I wrote a book called DIY Bookkeeping to help business owners who are just starting out.
But what if you can’t afford software yet? What is important for you to record for your taxes?
You’ll need to try to imitate the two major reports as much as possible. This can be done on an excel spreadsheet or on notebook paper.
Balance Sheet
In lieu of a balance sheet, record the balance in your accounts at the end of each month. Make sure you include the balance on all business checking accounts, credit cards, and loans. It’s also important to keep track of how much money you are putting into the business and taking out for yourself on the balance sheet. Be sure to do this at year-end to bring to your CPA.
Profit and Loss
In lieu of the profit and loss report, each month, list out the total of your business income and your expenses. Subtract your expenses from your income to see if the business is profitable. Combine these reports at year-end to bring to your CPA.
When you’re just starting out, the books are usually quite simple. As you grow, they will become more complex and you will need to move to a bookkeeping software (especially if you hire employees and need to keep up with payroll taxes.)
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