Recently we had a meeting with Raleigh area accountant Lori Aveni of My Shoebox Bookkeeper. The discussion was packed with valuable information and I wanted you to get all my notes!
1. Spreadsheets are good, but not enough. If your business is so small that it only has 5-6 transactions a year, spreadsheets are fine. If you are bigger or growing your business, accounting software is a must!
2. Get a separate credit card for business. Even if it is a personal card that you only use for business.
3. Credit card statements help with record keeping, but hang on to your receipts for actual documentation for expenses. (Digital receipts are acceptable.)
4. Backup your files! The IRS doesn’t care if your computer crashed. Backups suggestions- Cardonite, Dropbox or Evernote.
5. Paying yourself isn’t as complicated as it seems. Simply write yourself a check and record the payment!
6. Always file your taxes, even if you can’t pay! Complete the forms and send them in without payment if you must. Penalties for not filing are far worse than late payments.
7. File your Sales and Use tax even if your totals are zero.
8. Claim sales tax per the date of payment, not the date of service.
9. Give gifts! But you can only expense $25 per person per year.
10. There is gray area between contractor and employee! Consider these things: Do you provide the equipment? Do they set their own schedule? How much supervision do you give? Did you have to provide training? Do they do that same service for others?
Small business bookkeeping is intimidating for many of us! Thank you Lori for giving Vend Raleigh details that help us feel empowered and knowledgable. Your advice really takes the stress out of it! (Lori is a Vend Raleigh Directory member, refer her to your friends!)
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I love Carbonite. I signed up for their product myself this past summer. I found their program to be super easy to follow with picking & choosing what files would be backed up. I was most worried about the files I buy for my Silhouette (vinyl cutting machine), which can be downloaded a few times from their store. I’d already had to download them a second time already! I convinced my mom to sign up too so she’d have her personal & business documents and photos backed up. She was able to do everything herself, without asking me about anything. I double checked it when I visited the next time just to be sure she was covered and it was perfect. It’s awesome having peace of mind knowing that I’m covered if my laptop decides that it doesn’t want to turn on tomorrow!
If you’re thinking of signing up for Carbonite, my referral link gets you a $20 gift card…
I would be interested to know how to categorize charitable contributions. I’ve had a few organizations say they would be interested in having me do a trunk show if I donate a portion of my sales to their philanthropy or back to their organization. Would I count that as an advertising expense?
Erin, Carbonite is my favorite too. I love that it backs up automatically.
Jessica, you will definitely want to record those donations as charitable contributions and not advertising expense, because they are treated very differently for tax purposes. If you’re a sole proprietor, you’ll carry those totals over to Schedule A on your income tax return (Itemized Deductions). If you’re an S-Corp or partnership, you will still record those as charitable contributions on your books, and your portion will flow through on the business tax return to your K-1 and then be reported on your itemized deductions. It’s the same result, just an extra step to the process. I love that you’re giving back to the community this way!