Wednesday, January 27, 2010

This year is gonna be different!


Instead of making some of these, I spent a great deal of time today figuring out one of these:


Now I am not complaining about having to file my taxes. And the 1040 C is actually a very simple form, only 2 pages, and only 11 pages of quite clear instructions. The economist in our house takes care of the rest of it. For which I am grateful. So it is very little to ask that I fill out my own self employment form and keep track of my expenses, income, etc. In fact one might reasonably argue that this would be good business practice and that you could even find some useful information from these sorts of records.
The problem is that my records consist of 12 envelopes of receipts and what not, one for each month of the year. I generally have a pretty good idea of what's coming in and what's going out. Every year I look at accounting programs and record keeping systems, and sigh. I don't want to learn anything new. I then head out to the studio.
And then today, after much groaning and sorting those envelopes, it all kind of clicked. I don't actually need bells and whistles, the IRS wants very little from me, I don't need to learn anything new. How many years did I spend managing huge research projects and budgets?


I just set myself up an Excell spread sheet system, one for each month, and one that collects a running total of income and expenses for the year. The best part is the IRS already had things organized for me. I just used the schedule C, typed up my particular needs for income, expenses, and costs, and voila! I have a system. I like Excell because in its most basic form it is just a calculator and the formulas you type in are simple and intuitive. For example, when I want to sum up a collumn of numbers, I just type in sum=(, point my mouse to the top of a column and slide to the bottom, hit enter and there it is the total. Yeah! Gosh that's a lot clearer in my head than written here. You can do all sorts of complicated things but for my needs, this works.
You can click on that pic up there and it will get large enough to read my categories. Basically, its just divided into income, expenses (office, packaging, etc), and the actual cost associated with producing my jewelry components and pottery. This is really just broad strokes of where I'm at business wise. It's no good for figuring out the cost of producing a single item. I do that in a much more tedious and boring way. Oh yes, there are things even more boring than tax record keeping. But I can get an idea of where I'm at overall, and if, Lord forbid, I need to set aside tax money.
I can live with this. My headache is going away now. And I promise, promise, really promise myself that I will keep this up every month. This year will be different!

14 comments:

Winchell Clayworks said...

My "real" job is income tax prep, with some bookkeeping on the side, and I admit, when faced with a mountain of client receipts to plow through, I always turn to Excel. I can mindlessly do all the data entry (which includes date paid, to whom, amount, expense category, and payment method), and at the end I sort it by "expense category." Once it's sorted, I can copy and paste the data into my category spreadsheets (ie office expense, supplies, etc.). Auto-sum, print totals, and I'm done. Accounting software is great when you're religious about entering the info, but when I'm faced with two Walmart bags full of receipts I want to get it done, fast. Love it.

SummersStudio said...

Winchell, I am relieved! Because while I've done my fair share of record keeping, I've never set up something for specifically tax purposes. Thank you so much for your feed back!

Judy said...

LeAnn, while you work on your taxes I will run my fingers through that little bowl of beads. I can hear the twinkling sound they will make!

SummersStudio said...

Judy, I would so much rather have you here with me running out fingers through beads! And they do twinkle when you do that!

Mellisa - Chinook Jewelry said...

I'm singing the same tune but I have the feeling that this year might not actually turn out to be any different...especially since January is almost over!

sharon said...

You are waaaaay better than I am LeAnn. I could just cringe looking at that sheet! You have very reasonable and sound advice, but I despise business.....I'll keep going to the TaxMan, in my case, Tax Woman!

Esther said...

hi Le ann.. beautiful beads!! the las one have gorgeous colors!!

Cindy Gimbrone said...

Hi LeAnn,

I feel your pain! Over the years, I've developed a pretty simple excel spreadsheet similar to yours. I don't keep up on it every month but maybe each quarter, about the time I have to pay quarterly taxes.

It's taken me years though to get the jist of how it all works. You've made a huge step! Congratulations!

:-) Cindy

kelleysbeads said...

I love excel. It is my friend and also helps me keep track of all my bead/business expenses. :)

stregata said...

LeAnn, I hear you!!!
I am in the midst of doing my bookkeeping for 2009 (groan), which I need to get to my accountant. Our tax department needs things differently - they want to see every single receipt and bill etc., etc. If I don't have a piece of paper to prove it, it doesn't exist. And when that is done, then I can have the accountant do my taxes...
I would so much rather be running my fingers through beads...

Jenny J-V said...

Paperwork...that dirty business secret we don't talk about! haaaa

I'm with you on the Excel, but also to keep track of things as the year goes, I bought a plain old ledger book and I write in each receipt for things going in and out every couple of weeks. It has made me much more aware of what I'm spending and the tax man (my lovely accountant) is much happier.

Thanks for sharing!
Jen

Alice said...

Excel is just the best! I try very hard (but don't always succeed) to enter receipts and expenses the day they occur so things don't pile up. Too bad I can't seem to keep the house clean using this method!

I love that bowl of beads!

donna said...

I have tried ALL of the ways. spreadsheets, accounting software, the "Wal-Mart Bag System", and they all have pros and cons. I was a CFO in corp Amer and have always had a home business.

What works for me, for a small business (50-100k a year gross) is the "12 Manilla Folder System". Which is very similar to the "Wal-Mart Bag System". I found that it only takes 4-8 hours to total up each folder at the end of the year vs. about 2-4 hours each month. Quarterly might be good. I have done the "Quarterly Manilla Folder System" but the biz was really, really small.

Unless you really need to know your numbers during the year, and I am of the belief that we know in our head on a small biz if we are selling or spending, time may be better spent marketing or producing.

I started the tax prep course required by law to work here in Oregon. I am on the fence about doing it for a living. Art or brain damage? Broke or not broke? Goin' for broke probably. ;)

The Joy of Nesting said...

LeAnn,

I personally think the 12 envelope method is the best. It was about all I could master in the olden days. I solved that headache. Moved to Mexico on a non-work visa, and a government tax exempt pension. Life is GOOD!!!

Hang in there kindred sister, a lovely glass of wine or cup of tea might help!

Pattie ;)
Mazatlan Mx.