It’s almost the tax submission deadline (for businesses) again. This year, I handed my accountant my records a whole 5 weeks before the deadline, so she has plenty of time to compute my taxes.
It wasn’t always like this. Filing my tax return in the first 2 years of running my business was a big headache and involved sleepless, stressful nights leading up to 30 June. I’ve come a long way since and thought I would share my process to help individuals just starting out.
Disclaimer: I am not an accounting professional. What follows is what works for me – your own mileage may vary. You should take this article as a guide, and consult a licensed accountant for specific questions.
First, let’s be clear about what my system is and isn’t. This process works to:
- Record invoices and payments (money in)
- Record expenses (money out)
- Make it easy for you or your accountant to compute and file your taxes
This system isn’t a solution to:
- Be an accounting solution
- Generate financial statements
- Forecast your business financials
It’s important to stress that this isn’t really an accounting system – it’s more of a bookkeeping system. For most freelancers and sole proprietorships though, it is quite adequate.
If you’ve just started your business, I don’t think you need a full-on accounting solution like Quicken or MYOB. It will confuse you and make it an enormous chore to keep your books in order. Just keep it simple for now. Read More »