I've just started accumulating income from my cake business. I'm wondering how those of you who are operating your own business keep track of your individual expenses. I have a bunch of receipts from 2007 and 2008 (both cash and credit/debit purchases). Now that I'm preparing to have my taxes done, I know I need to come up with some kind of workable system. Do you just use a spreadsheet or some other system? Do you actually enter each purchase or just keep totals by category (by month maybe) and then keep your individual receipts? I use Microsoft Money for managing my personal accounts. Does anyone use this program for their business?
Thanks in advance for your help!
thats a great question...i will be watching this post too , to see if someone can help us both! I just ordered cakeboss and so I am not for sure if it can do all that or not!
I just keep a big excel spreadsheet. We did buy quickbooks but hubby decided he would do the books for me and screwed everything up so I went back to my trusty excel spreadsheet. I talked d to my accountant and he said quickbooks is not required ... if a spreadsheet works for me, then it works for him.
One thing I would suggest in whatever system you use is to use some kind of posting ID. At the end of the year, if there is a question on "what is this receipt for?", you need a way to identify that particular receipt instead of the "I don't know .... let me sort thru 537 walmart receipts and see if I can find the one for $11.28." I use the transaction approval number as my ID#. I also keep the cash/debit receipts in folders by month, with a copy of that month's P&L in the front of the folder. Any credit card receipts or monthly bills are kept in their own folder. (i.e. I pay my dumpster bill. I put it on the spreadsheet as paid via ck#123, posting ID #inv 5678. If there is a question on that item, I go to the dumpster company file and pull invoice #5678.)
Ha ha! I also tried quickbooks but went back to excel after totally screwing it up..I throw all my receipts and notes about mileage, etc. into a basket, then enter it in a paper ledger once a week, then also into the computer. That way I have a computer version to print out (and add up on the computer so I don't have to do it by hand) and also a hard copy. It helps too, to have both, because if you make a mistake in one you have the other to check. The categories I use are : Income, sales tax paid to state, refunds, food expenses, non-food expenses (boards, etc.), advertising, trade dues (BBB, bridal networking groups, etc.), mileage/tolls/parking, magazines/books, telephone/utilities, deposits. I think there must be more, but i can't think of them right now.
- Office supplies (including postage, computer supplies, pens, envelopes);
- biz meals (on event day, I frequently buy lunch or dinner for my crew; or when I meet with other wedding vendors/clients;
- website fees (you might throw these into advertising but I choose to split these out);
- rental fees (rented linens; those times when I need to rent a 2nd van);
- insurance (car, liability)
- Bank fees (ATM fees; monthly bank charges; my credit card machine charges)
- professional services (acct; attorney)
- Education (food safety class; workshops; classes)
Indydebi and costumeczar, thank you so much for the information. This has been very helpful. I was excited to see that you both are using Excel. That's what I was leaning toward. It was especially helpful that you both included some of the categories you use. There are some I hadn't thought of. Now, I need to get busy setting this up.
I also use Excel for now.
I bought Peachtree...omg...it was SOOOO confusing! My accountant said Excel works for her as well. As my business grows, I may change that down the road.
I pretty take the receipts for the month and enter them in at the end of every month. That way I don't have a billion receipts at the end of the year. Then I file them away by month and keep everything, Just in case I happen to get audited.
I like IndyDebi's suggestion about having a code for what each expense is. I'm going to try that. I use all those same categories. Except mileage. Gah I need to start keeping track of that!
I put everything, and I mean EVERYTHING in quickbooks Pro. Invoices, expenses and payments. I give the entire file to my accountant and he does the rest for taxes.
My accountant will also take my bank statements for expenses too. For a business you really should be doing everything from one bank account (do not use cash to pay for anything) THis will also make it very easy to keep track of your expenses. I also "pay myself" from this account (Owners draw)
A lot of accountants have a service (mine charges like 100 dollars) to sit down with you and go over how to do your invoicing and such in quickbooks if you go that way. You really need to learn a little accountating and that is the ONLY part I hate about my business!
wow, this has been a wealth of info! thanks for everyone posting.