By Evan Vitale
If you’re working at home or starting a new business, it’s easy to mix personal and business money and expenses. However, it’s extremely important to keep these two types of “funds” separate for record-keeping and tax purposes.
One of the ways to do this is by using Quickbooks accounting software or by subscribing to an online subscription-based software service. While every program and software may have its own way to create different accounts, the basic principles will be the same in order to help you keep better track of your revenues; expenses and separating personal from business.
By entering (recording) accurate expenses and revenues, you’ll be able to generate proper reports for your accountant to review. Many of these reports will come in handy during tax season and for completing and filing local, state and federal tax returns.
The best way to set up such accounting systems is to talk to your accountant and get his/her advice on which programs they like and recommend for your current business situation. Some accountants prefer Quickbooks, but others are starting to favor online systems in that will allow accountant to login to your account (with proper credentials, of course) and generate reports, etc.
A friend of mine, who has been self-employed for nearly 20 years, tells me his accountant helped him establish accounts and categories within Quickbooks. He also creates business invoices within Quickbooks, so all accounts receivables and payables reports can be easily and quickly generated. Software programs also alert you to “past due” dates on both receivables and payables and trigger reminders for sending regularly monthly invoices; making deposits, etc.
Sometimes, when you’re starting out with a new business, it’s easy to make purchases at a store for personal use and for business use. Some will separate the order and have it totaled separately for easier receipt purposes. Another idea is to make all business purchases with a business credit card, in which the credit card company will generate a monthly “receipt” for you.
Regardless of your system and style, record-keeping will be the most important item on your agenda as you get started with your own business.
