Your E-Business - Keep The IRS Happy - Keep A Ledger Part 2

Keeping a regular monthly ledger goes a long way towards keeping your accountant happy, and Jamesjones IRS man happy as well. In my previous article I talked about how the basic set up of a monthly ledger with columns for money in and money out. This article explains how to have your monthly ledger figure out your tax due for each month if you are using a spreadsheet program like Excel. It also explains about setting up a year end ledger.

If you want to get really fancy, and are comfortable working with formulas, you can put in some more fields at the bottom to calculate your taxes due each month based on your Gross - Expenses column. At the bottom of mine I have a field for Federal Tax, Self Employment Tax, State Tax, and Local Tax. I just put in the appropriate formula in each corresponding cell telling the program to multiply the number in the Gross - Expenses cell by 20% for Fed, 1% for local, .0308 for state, and .0765 for self-employment.

Then anytime I pay a bill or get some money in, I just exchange hosting open the ledger and fill amount in the appropriate cell, save it and I'm done. Then at the end of the month I print it out so I have a hard copy, and then put the Excel file in a folder I created for my ledgers, open up the blank master and start all over again. See, it is simple! I also create one more ledger, the year end ledger, to total up all the monthly ledgers. It's the same as the monthly ledger except where you put in the numbers for the days down the left hand side you put in the name of the month. Then at the end of each month just copy the totals from the bottom of you monthly ledger and put them in the appropriate column in the year end ledger.

Keeping a ledger will go help you keep things organized and will Whitegoddessss keep the IRS, and your accountant if you are using one, very happy. If , god forbid, one day the IRS does come in to look over your books, it's nice for you to be able to pop out the monthly ledgers and show them exactly where all the expenses were used and when the bills were paid. The IRS man hates nothing more than walking into a place of business and asking to see the records and you point over to a shoebox stuffed full of receipts and student loan consolidation faq checks, and say "there you go".

If you do have the unfortunate luck of being audited by the IRS you want to make sure you have ALL your receipts for all your expenses that you are claiming. The easier you can make it for him the happier he will be. And in my opinion, if I am getting audited by the IRS, I want to keep that guy going over the books as happy as I can. If he is not happy you can bet that the results of your audit will reflect it!

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Author: Mike Hagerty

I have been working and playing on the web since back in 1995 with my first computer, a Compaq 386, with the "lightning fast" 56k modem, that new fangled windows 95 OS, and my massive 40MB hard drive and flat rate data recovery 16MB of RAM! .....my how times have changed.