| Keeping a regular monthly ledger goes a long way | | | | ledger, to total up all the monthly ledgers. It's the same |
| towards keeping your accountant happy, and the IRS | | | | as the monthly ledger except where you put in the |
| man happy as well. In my previous article I talked about | | | | numbers for the days down the left hand side you put |
| how the basic set up of a monthly ledger with columns | | | | in the name of the month. Then at the end of each |
| for money in and money out. This article explains how | | | | month just copy the totals from the bottom of you |
| to have your monthly ledger figure out your tax due | | | | monthly ledger and put them in the appropriate column |
| for each month if you are using a spreadsheet | | | | in the year end ledger. |
| program like Excel. It also explains about setting up a | | | | Keeping a ledger will go help you keep things |
| year end ledger. | | | | organized and will definitely keep the IRS, and your |
| If you want to get really fancy, and are comfortable | | | | accountant if you are using one, very happy. If , god |
| working with formulas, you can put in some more fields | | | | forbid, one day the IRS does come in to look over |
| at the bottom to calculate your taxes due each month | | | | your books, it's nice for you to be able to pop out the |
| based on your Gross - Expenses column. At the | | | | monthly ledgers and show them exactly where all the |
| bottom of mine I have a field for Federal Tax, Self | | | | expenses were used and when the bills were paid. |
| Employment Tax, State Tax, and Local Tax. I just put | | | | The IRS man hates nothing more than walking into a |
| in the appropriate formula in each corresponding cell | | | | place of business and asking to see the records and |
| telling the program to multiply the number in the Gross - | | | | you point over to a shoebox stuffed full of receipts |
| Expenses cell by 20% for Fed, 1% for local, .0308 for | | | | and cancelled checks, and say "there you go". |
| state, and .0765 for self-employment. | | | | If you do have the unfortunate luck of being audited by |
| Then anytime I pay a bill or get some money in, I just | | | | the IRS you want to make sure you have ALL your |
| pop open the ledger and fill amount in the appropriate | | | | receipts for all your expenses that you are claiming. |
| cell, save it and I'm done. Then at the end of the month | | | | The easier you can make it for him the happier he will |
| I print it out so I have a hard copy, and then put the | | | | be. And in my opinion, if I am getting audited by the IRS, |
| Excel file in a folder I created for my ledgers, open up | | | | I want to keep that guy going over the books as |
| the blank master and start all over again. See, it is | | | | happy as I can. If he is not happy you can bet that the |
| simple! I also create one more ledger, the year end | | | | results of your audit will reflect it! |