Don’t even bother with New Year’s resolutions in 2011 (cont.)…

First, I hope you and yours had a Happy Thanksgiving!

OK, so picking-up from last week’s post you now have gathered several wonderful piles of data.  Did you keep remembering additional items throughout the week?  Isn’t it nice to be taking care of this with lots of time rather than cramming on April 14th?

So what do we do with all of these receipts?  Before we get to that how about a quiz; did you open that business bank account for next year?  If not then you have about a month before we move the entire operation into that account so now that the football games are over and the tryptophan has worn off you’ll be headed down to the bank right?

Now back to those piles.  Let’s start with the income pile which is of greatest interest to our friends at the IRS.  We initially just piled everything income related into this one stack.  Do you run multiple businesses?  If so, that’s the first thing we need to do is cut the deck once again.

What about those business deposits that I put right into my personal checking account you ask?  Good question:  they go into the pile.  Wouldn’t want the IRS to think we were trying to hide income would we?

Next step is up to you, we need a way of cataloging all of these receipts into a meaningful report.  We can keep it simple and just break out the trusty Excel file or get more complicated and set-up our fully functioning accounting software package.  My recommendation is to just keep it simple at this point.  If you want to move into an accounting package then at this point in the year starting that on January 1st is probably the better way to go.

So what do we need to enter on the Excel spreadsheet?  Remember we are limiting ourselves at this point the income pile.  The following columns should be just fine:

  • Date
  • Amount
  • Who we received the income from
  • Notes/Remarks

If you are one of those multiple entity folks then you will want to set up a separate Excel file for each entity or business.  We’ll build out the expenses in these files too so it will be easiest to limit the number of tabs in each file and make multiple files.

Run a total at the bottom.  Now we might be tempted to think we are in New Year’s resolution territory since we’ve determined our income.  Not so fast, I’ve watched many a client say they want to grow their business.  I recommend that; but, I also recommend not being fixated on that number until you have all of the information…how much did you keep?  We’ll get a better idea of that next week as we begin to fill in the in expenses.

P.S. – on the lighter side and just in case you think all accountants are boring; check out my wonderful bride and myself in this video …that’s her with her arm raised at 3:40 and yours truly in the next frame.

Bryan L. Wakefield, MS Acct.

************************************************************************************************************************This U.S. Treasury Circular 230 disclosure is provided on all electronic communication to assure compliance with new standards of professional practice:

Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code.


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