January has zipped by in a rush, faster then you can say, “tax time”! Are you ready for the tax
man/woman? Confused as to how to get started? Here are some basic rules for keeping track of your
business expenses so you are ready now and for the years to come.

*First, take 33% for taxes purposes, State and Government (out of gross income). You probably won’t be paying out that full percentage, but it’s better to be safe then sorry. Put it in a savings account, or better yet, set up a separate checking account that pays higher interest if you keep a balance under $500 (check your bank with this).

*Next, put 37% (average) back into your business expenses for overhead, office supplies, travel expenses, advertising, websites, etc.

*Finally, you can pay yourself 30% for your earnings.

Now, everyone runs their business differently so you will need to consult your local tax advisor on what is best for you. Different states have different laws in regards to your local taxes as well.

What is the best way to keep track of your expenditures? You can simply get a log book like Simplified Weekly Bookkeeping Records at your local office supply store and log your entries daily, weekly, monthly. Keep your receipts as well, file them in a folder per month or per type of expense with a log.

Keep track of your mileage if you have any per week and if it’s the same average every month, then you can round it out for the year. It is also important to keep track of your gas receipts, write off the one that gives you a better tax return. Ask your tax person for more info.

This is basic info, but when it comes time for filing, you’ll thank yourself for keeping your bookkeeping
organized and simple, so will your tax man/woman.

The IRS has some helpful info at their official site. They have all the necessary forms for you to print
as well. You can go to http://www.irs.gov . They’re even offering a way for you to file your taxes for
free! Go to 2007 Free File for more information.

Tax time can actually be fun (did I say that?!), if you stay organized and develop a system that works for you.

This Article is Written by Kathleen Schmidt (c) 2007

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