Basic Bookkeeping Systems For Your Home-Based Business

Business Bookkeeping for Your Home-Based Business (Part 2)

As we work our way through the holidays, it’s a good idea to set up your bookkeeping for the coming year. This way, when you start your business activity for the new year you will be all set to keep track of everything. A basic bookkeeping system for a home based business can be as simple as a notebook or as complex as accounting software. It’s best to keep it simple, at least at first.

Get a notebook. You can get a spiral bound book so that you don’t lose pages. I would recommend a book with two sections in it or you can divide the book about halfway through with a tab and create your own. In one section you will record your income from sales or services. Use a separate page for each month (or each week if you are very busy). List the date and the amount of the sale. This way you can total up your sales in increments and get an idea of just how much is coming in. In the other section you will record your expenses. I would label each page with a different type of expense. Track things like the products that you purchase to resell, supplies, meals, anything that is directly related to your business. Again list the date and the amount of the purchase. You can also make a note of what you purchased if you want to. You will make entries throughout the month and then you will have all of your transactions recorded for the end of the year. And don’t forget about the cash transactions. You want to make sure you don’t miss any of those expenses.

Another option is to create an Excel spreadsheet for your transactions. You can set up different worksheets for each type of transaction just like what you did with the notebook. You can do this with income on one worksheet and separate worksheets for each expense category. Or you can set up a new worksheet for each month and record the income and expenses on one sheet for each month. Either way, you will be able to use formulas to total up each item making that one less task for you.

These two types of systems can also be used for household budget tracking. In fact, I encourage keeping track of those expenses as well (rent, mortgage, insurance, utilities, groceries). You will stay on track with your budget and you will have a list of any household expenses that are deductible as part of your home business. Keeping everything organized and recorded makes life a lot easier as the year goes on.

Next time: Getting ready for tax time.

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Brought to you by Wendy Conte, CB

661-993-9313 / wendy@conte.net