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

This week we are going to wrap-up our project well before we get into wrapping presents for Christmas.  With this final step you will have your basic bookkeeping 95% complete for the year.  Won’t it be great to forward information to the tax guy in January instead of April?

So since we are keeping this simple let’s break out the trusty Excel spreadsheet files that we recorded the income in the earlier posts.  If you are running multiple businesses then you should have separate files for each already set-up.  Let’s open the first one and start a new tab for expenses.

I recommend you use the following column headings:

• Date
• Vendor
• Advertising/Marketing
• Auto/Fuel
• Bank/ATM
• Insurance
• Meals/Entertainment
• Miscellaneous
• Office Supplies
• Postage/Shipping
• Property Purchased (including closing costs and additional fees)
• Repairs/Rehab
• Telecommunications
• Travel
• Utilities
• Notes

These are recommended for a few reasons.  First there’s a category for most every type of expense.  Also, the key categories that are specifically shown on the tax forms have been included.  You will want to enter the dollar amounts of each expense in the proper category in the same row as the Date and Vendor.

If you are entering in the Miscellaneous column then additional information in the Notes column will be highly beneficial.  If have more than three of the same type of Miscellaneous entry then you should consider adding an additional column and moving those entries out of the Miscellaneous column.

Catching this all up at the end of the year is quite tedious I know because we go through it with countless clients every year.  Next year will be different because we have already opened that new business bank account and we can use this year’s work as a template for the start of the new year.  If you’d like to automate this a bit and save hours of typing then I highly recommend you checking out some technology such as this one at www.easyreceiptorganization.com.

Next week we’ll start getting into how 2010 legislation is going to have some dramatic effects on how real estate investors look at keeping the books.  This goes way beyond your personal and business taxes!

Bryan L. Wakefield, MS Acct.

Principal, Corridor Tax & Accounting, LLC

1020 Philip Powers Dr., Laurel, MD 20707

Office: (410) 630-1538  | Fax: (410) 630-1652 | Team@CorTaxAct.com | www.CorTaxAct.com

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