This essay on taxes is written by Linda Metzger. She does my taxes, and was a weaver before she retired. Now she works with craftsmen and wrote down these tips for this booklet.
For books about running a small business, please see the book list in chapter 7. In addition, there is an excellent book about being a professional in the art field called Art / Work by Bhandari & Melber. Its worth a look through.
Bookkeeping/Tax Tips for New Business
- Open a separate checking account for your business – pay all expenses from it and deposit all income into it. If you need to invest money in your business make a deposit into this account and label it owner investment. Use a separate credit card for business expenses as well. If you get into this habit you will have a more accurate accounting on the status of your business AND you will be less likely to miss business expenses or forget business income. Try to avoid using cash for business expenses. If you do use cash keep all your receipts in a separate envelope/folder to record as well. Get in the habit of marking receipts as soon as you receive them as to what they were for and that it is a business expense – example:”Bus/office supplies”.
- If you use/buy something to be used in your business it is probably a business expense. Taxes are paid on your profit which simply put is:
Income – Expenses = Profit
- If you are “computer” person consider using a software program to track your business records. It can be a simple program for most businesses – such as Quicken – at least to start with.
- Find a bookkeeper/accountant who can help you set up your books and answer questions.
- Keep good records on your vehicle – business miles driven are an often overlooked deduction that adds up very quickly. Keep vehicle information such as purchase price/lease terms, actual costs, total mileage driven, insurance, etc. Your tax adviser can recommend the best way for you to account for auto expenses, depending on your circumstances, but they will need the above data. Get in the habit of recording miles driven for business reasons – going for supplies, making a bank deposit for your business, seeing your bookkeeper, or even trips to the post office when mailing for your business.
- Consider taking an accounting course if you are so inclined. Just getting one entry level class will help to give you an understanding of basic accounting principles that will serve you well in life – even if you don’t go into business for yourself.
Linda Metzger Accounting
Phone: (585) 374-2152 Fax: (585) 374-8865
PO Box 69; 118 N Main St., Naples, NY 14512
Here are some other links with Tax information:
- “Your Guide to your first year paying taxes from on line sales” – from the Hello Crafts Blog