My father has not long ago non-stop his own tiny business, the landscaping company. It’s the one-man show, he does all of the work, accounting, etc. At the finish of the year, when it comes to tax-time as well as totaling, he is regularly scrambling to get all together.
My father is not really mechanism savvy, as well as I’m seeking for the little discerning as well as easy ideas for him to stay orderly upon the every day basis, so his finish of the year isn’t so dreadful.
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your dad should probably take on an assistant for that type of stuff if not; to make it easier for him he doesn’t have to use his computer to for his financial affairs he could do it by hand on his own it may take some patience though.
I have been a tax accountant for 27 years. For people like your father I have found that keeping it basic and simple is best. Help him set up file folders for his various expense items. Because a receipt may document many different kinds of expenses items, the practical thing to do is to set uo folders for expenses paid by cash and by check and by credit card. These would be your “master folders.” Then, in the separate expense folders, he keeps an expense log which shows the date, amount and method of payment. There should also be a folder used for logging income; include the date, customer and amount received. This will prove to be a physical equivalent of a cash-basis set of books. At tax time, add up all the expense receipts, regardless of category, for business-related credit card transactions. That number should be divided by the total amount of charges made to the crefdit card—both business and personal–for the year. The resulting ratio is then used to determine the amount of interest to deduct as a business expense.
Where he will likely run into difficulty is with his equipment purchases. These are capital assets and as such must be depreciated over a number of years instead of deducted in full in the year of purchase. However, it is also quite likely that his total for the year will not be greater than (nor even close to) the amount he would be allowed to claim under the “first-year expensing rule” (IRC section 179) which allows for a deduction in full for capital assets used in a trade of business to a maximum well in excess of $100,000. I doubt he’s spending more than that on trimmers and lawnmowers. If he is, maybe I should start cutting lawns!
I can definitely understand the predicament of your father. Here’s some tips that can help improve his book keeping:
1. Make sure he has a special place or box where he puts all receipts for business expenses. It would be best to sort it by month, but if he can’t, at least finding receipts for business deductions at the end of the year wouldn’t be so bad.
2. Have a separate place or box for all his invoices and contracts. Again it would be best if someone could tally his income every day or at least every month, but if he can only do it once a year before tax time, at least he knows where all the information are.
3. If he’s not computer savvy, look for some manual products that he can really use. It can be as simple as a big ledger or accounting notebook where at the end of the day he lists all his income and expenses. Or you can use a system such as Tax Minimiser system http://www.taxminimiser.com/ which is a paper based daily planner system designed specifically for keeping track of your business expenses and income.
4. Hire an accountant or bookkeeper for him
Goo to http://www.score.org and put in your zipcode to find the SCORE office nearest you. Their counseling is free and the counselor might know of someone who can help you and your father.