How to prepare tax info for this coming year

SmackDog · #1 01-04-2008, 07:25 PM

All this talk of tax season approaching got me thinking. What is the best way to track your payment and payment received records?

Right now I simply use an excel spreadsheet to do this. Since all of my transactions are via PayPal or via Poker Room account how should I track this?

I assume the best thing to have is hard copies of these transactions, but how do I do this?

Any thoughts?

Also, does anyone use accounting software like MS Money or Quicken?

GamTrak · #2 01-04-2008, 08:05 PM

The person that keeps my affiliate payments use Quicken. I thinks it's a good program and very simple to use.

Steve S · #3 01-05-2008, 10:50 AM

The best method of maintaining your records is the one that works for you and the one you will keep up with. Having said that, the state of records presented to me by clients ranges from shoe boxes full of receipts (don't laugh, it happens) to profit and loss statement printed from an accounting program. Guess which one gets a larger bill?

Keeping you transactions in excel is ok. Although your tax preparer is probably going to want to see your bank statements and will then start asking you questions from there.

Quicken is not a bad little program. It will help keep up with you revenues and expenses just fine and allow you to do some things on the personal side such as track investments. However, it is limited as it is not a true double sided accounting system.

In my opinion, if you are going to run a business of any type, and you are serious about it, then you need to get a small business accounting program. There are several out inexpensive programs out there that are not difficult to learn and use. I prefer Quickbooks. It is very easy to get started with. Being a Quickbooks Pro Advisor, I can get you a discount on the program if you pm me. If you have problems or questions you can pm me and I will help you out.

You also need to open a separate bank account for your business and never commingle your personal and business records. If you need money to pay personal bills, write yourself a check or transfer funds to your personal bank account.

Keeping hard copies of you paypal transactions is a good idea. You will want to keep copies of your bank statements as well. Presenting your tax preparer with neat, well kept records should get you a better rate for tax return preparation and put you in a better situation should your return be selected by the IRS for examination.

TheGooner · #4 01-05-2008, 05:32 PM

After 7 years of doing this I have a three step process that seems to speed up the tax preparation with our accountant (and therefore reduce fees) :

(1) Keep the bank statements.

(2) Each month create an EXCEL spreadsheet with a line entry for every bank statement transaction.
- simple stuff like date, other party, amount.
- also categorise each expense into the correct expense bucket
(based on previous years reports from accountant).

(3) Get 2 concertina files (boxes with 12 or more compartments)
- in one put all small cash receipts and till invoices - split on a monthly basis.
- in the other put all invoices, bills and bank statements - split by company.

Now you have a pretty good feeling for how your business is going, you can see income and expenses, and also see which expense groups are biggest.

We give all this to our accountant :
- he goes through the bank statement
- finds the excel description
- and can refer to the concertina file if he's unsure or needs more info.

As I said this system has evolved over a few years, and by directly asking the accountant what he'd like to see us do to make the task easier.

We find it simple to do - and it certainly seems to reduce the time the accountant takes - and thus the fee.

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