1) Sole Proprietorships or start-up small business ventures can often get by this way:
(a) if the name of the company is the same name of the person
(b) if there are usually less than twenty or thirty checks being written per month.
Then the personal checking account of the taxpayer can have intermingled personal and business checks in it. IRS does not dictate bookkeeping. Secret of this simple method is to copy the check register. Highlight the business deposits and checks. Summarize only those highlighted for tax purposes.
2) Deeper more complicated bookkeeping will usually demand federal identification numbers, separate bank accounts and complicated software. Before we get into software, let us assume we do not qualify for
(1) above; well the next hand type of bookkeeping is what I did for years—spread sheet bookkeeping. As simple as an Excel spreadsheet with columns for categories such as “office/telephone/etc”. And lines for the information of check-by-check. This is real easy bookkeeping and at the end of the year you simply add the columns.
3) Quicken comes free with a lot of computers. It is the next choice for a simple computer program that summarized the transactions easily.
4) Software steps up to Quick Books which is the most predominant across the country. Costs about $200 and it works well without user being an accountant.
5) Remember, Frater Luca Bartolomes Pacoli in 1486 invented the double entry bookkeeping method. Ever since, everyone runs around afraid of debit and credit. Yet, the simple formula is that if you put in once in the left side (of a two column) you have to put it in the right side, so that both sides balance. Teeter Totter, yea.
Copyright © Michael G Thomas CPA.