Sole Proprietorship Pros: Easy to start and manage Inexpensive No separate tax returns, business gains and loses are reported in your personal income tax returns Flexible to manage, it gives you complete control Business expenses and loses are tax deductible Cons: Unlimited personal liability for business debts and lawsuits Illness can endanger your business Difficult [...]
Archive for September, 2007
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Common Business Expenses
September 26th, 2007 
davidguide Managing all of the different aspects of your small business is a complicated and challenging task, and taxes are particularly difficult. An accounting professional can provide you with advice on what type of business entity you should form and what accounting software is best for your business. An account will also help you with your [...]
Business Taxes
September 26th, 2007 davidguide Your earnings will be taxed according to your company’s business structure and income amount. If your business is a sole proprietorship, you will report your business gains or losses on your personal income taxes. The form that you will need is your usual IRS Form 1040 with a Schedule C, Profit or Loss from Business, [...]
Taxes for Small Business
September 26th, 2007 davidguide As a small business owner, it is important that you understand how the tax system works—it will have a direct affect on how much money you take home. Even if you choose to hire an accounting professional to prepare your taxes, you should know the general principals of taxation. What Items or Expenses are Deductible? [...]
Sample Bookkeping Journal Entries
September 26th, 2007 davidguide The sample journal entries illustrate what information is commonly written in an accounting ledger. Basic Records In any type of business, it is important to know how much money is coming in and how much money is going out. Money coming into the business is revenues; money going out is expenses. Cash Receipt Journal This [...]
Double-Entry Bookkeeping
September 26th, 2007 davidguide Double-entry bookkeeping is an accounting technique that records each transaction as both a debit and a credit, thus making it easier to double-check your financial transactions. To illustrate: You conduct a sale but do not collect the payment. Your receivables would increase. Your sales revenue would also increase. You buy from a supplier on credit [...]
Cash and Accrual Based Accounting
September 26th, 2007 davidguide If you are using a cash-based accounting method, you record a sale when you receive payment. In this case, you only need to keep two journals (disbursements and receipts) and a ledger at the end of the month. There are two terms you will learn soon enough as a business owner: accounts receivable and accounts [...]
Bookkeeping Fundamentals
September 26th, 2007 davidguide Your business records should be kept simple. If you keep your records in a format you can easily understand, you can use them for analyzing trends in your business and be able explain the figures if you are ever audited. Your books should be accurate and error free. The records should be error free, since [...]
Bookkeeping
September 26th, 2007 davidguide Bookkeeping is an important part of running your business. If you do not keep accurate records of your business expenses, you will not be able to prove them and therefore claim deductions. An auditor may disallow the deductions, burdening you with back taxes and penalties. If you do not keeping accurate records, you cannot be [...]
Employee Insurance
September 26th, 2007 davidguide Unemployment Insurance covers workers who become unemployed through no fault of their own. Employee Benefits includes life and health insurance as well as retirement planning for your employees. Workers’ Compensation and Disability Insurance covers an employee’s loss of income and medical expenses through job-related accidents. The workers’ compensation coverage has two components. First, it covers [...]
