A good article about tax from Ebay forum# ebiz - 电子商务
J*y
1 楼
There are two different reasons for bookkeeping, one is for tax purposes,
and one is for actually knowing where you stand and if you are meeting the
goals and budgets you have set...in order to make changes, or do future
planning. This does not mean you keep two sets of bookkeeping records, it
just means you extract different information from them.
Some expenses involve taking cash out of your pocket, or checking account,
or get them deducted by ebay or PayPal...or you charged them.
Some expenses do not involve payments or real money...depreciation is the
main one. The biggest one of that type to pay attention to is the 179
deduction which allows you to deduct some investment in normally depreciated
items all in the year you actually bought them. To take advantage of that
you have to have a close estimate of your own profit or loss situation and
whether you want to or can take a loss in some year. Then you actually have
to purchase it in that year. After 12/31 you are too late. That' why I
just invested about 900 bucks buying a new Epson printer. My personal plan
is to show a profit, but the smallest one I can. But if I had already
operated at a loss for the last few years then I might have waited until
after the first of the year to invest in that printer because I would not
have wanted to put myself in a loss situation more years then the IRS would
allow me before declaring me a hobby business and disallowing all deductions.
In a past life I was a bean counter so this comes as second nature to me. I
know exactly how much it cost to maintain my dogs, and my chickens, what I
spent on groceries, gasoline, house repair, medical, materials and supplies
(I make my widgets I sell) and a myriad of other expenses. I have receipts
for everything. I'd be very surprised if I could not produce receipts for
all my expenses within fifty bucks total for the year. Accountants just
love it when you bring in a box of unsorted receipts backed up by little or
no bookkeeping. Someone in that office will reconstruct your accounting for
the year...but they charge for that. Back in the late 80s I did the
billing for our firm. Back then for someone to do that I billed out at 35
bucks an hour...plus time added for all phone calls requesting more detail,
or clarification.
You do not need 'books' or receipts for filing taxes, you need them if you
are audited. The very worst thing you can do if you get an audit letter is
to meet with someone; bring them a box full of unsorted receipts; and have
an attitude. The first step...and I expect there to be a lot more of these
from now on...is for the IRS to send you a letter requesting particular
pieces of information. That's all they want to see. That's all they will
examine...but if you give them a box full of stuff, that allows them to
expand their inquiry to everything and anything you gave them.
The very simplest way to track your income and expenses is with a
spreadsheet...an Excel, or Excel clone will do the job nicely. The secret
is to write everything down...or record it as it happens. Not necessarily
every day, but at least once a month. Keeping track of every sale (unless
you have only a hundred a year for thousands of dollars each) is way too
cumbersome. Way too many details, it will take you forever to 'do your
books'. We all forget that almost every business has a position of '
bookkeeper' and it is a full time job most of the time. I describe my
spreadsheet as a simple 'either it came in, or it went out' concept. First
column is the date, second and third is what came in and how...PP, check, mo
, or cash. Then you 'spread' the 'outs' of the thing. In Excel you can use
as many column headers as you want to, paper forms are usually limited to
13 although they come with more, and are very expensive. But either way...
the method is the same. If you can understand how to do it on paper, then
you can understand how to do it in an electronic spreadsheet.
The rest of the column headings are where your expenses that are actual cash
out lay, credit card usage, or fees withheld are recorded. You use the
first two columns the same as above...the date, and how you transacted that
expense (cash, visa, etc) then you take the amount spent and put it under
some column according to the type of expense it is. For example, postage,
packing supplies, inventory, the ebay listing fees and final value fees (for
some month)...all the expenses you want to track. Then you take the
receipt for that transaction, and put a number on it...I'd suggest numbering
them 11-001 for the first one (receipt number one in the year 2011) and
putting that receipt number in the same cell that you recorded the how part.
In other words if you go to the PO and pay cash for sending out packages
on the fifth of February then the first column says 02/05, the second says
cash number 11-037 (or whatever number you are up to) and some column to the
right says postage at the top and on the proper line you write the amount.
What if you also bought some packing supplies at the PO...then you split
the total and under the supplies column you note what they cost, and under
the postage column you note what the postage cost was.
You can file the receipts then using a simple numerical order. You never
need those receipts again unless you are audited. Your accountant does not
want to see them. And to be orderly you can put on some line a date and a
transaction that is out of order...but keep the receipts in numerical order.
..it is those you will need to find.
This simple system will not tell you what your business is worth...it does
not contain the information used on a balance sheet. But it is good enough
for tax purposes...but lacks three things...your depreciation (you give your
accountant a list of what you bought and what you paid for it and they can
figure out your deduction for it whether they set up a depreciation schedule
, or take it all on a 179 deduction...this is usually 'big stuff' like
equipment and machinery) and it does not record your transportation expenses
(for that you should keep a mileage log...keep that in the vehicle and
record the date, what the trip was for and the mileage...a little cheap
notebook hanging off the rear view mirror will work)...and it will not
record the expense of your home office deduction. There are different ways
of determining that which your accountant will also do. Some things you'd
think are deductible aren't...like your first phone line...but a coat of
paint on your storage area is. Sometimes a percent of your square feet is
used, and sometimes actual expenses for a dedicated area are used. At the
least you accountant will need the total for the year of all your utility
costs, rent or mortgage, taxes, insurance, and maintenance....and the square
feet of your house, and the square feet devoted to 'business'.
The whole thing gets a lot more complicated as soon as you hire an employee
more then just 'casual labor'...someone you pay ten bucks an hour to help
you pack and ship for three or four days in some year is not an employee.
Someone you hire every Friday afternoon for four hours...is. Being a
bookkeeper is a skill...keeping a 'real' set of books requires some
education...but the IRS does not require a 'real set of books' which I'm
defining as compliance with GAAP... http://en.wikipedia.org/wiki/Generally_accepted_accounting_principles but they do require some system that both you and they can understand and or that you can explain. Fortunately the IRS has a terrific website and if you get a copy of the Schedule C, and the instructions for it...and you understand both, and if you have recorded your income and outgo and know what is deductible and what isn't...you are way ahead of the game.
And my last word on audits. I'm being audited for 2008 and what they are
questioning is my credit for first time homebuyers. The funny part is that
is the year you have to pay it back. So when I filed in 2010 (the first
year to pay it back...payment one of fifteen) I made the required payment.
I sent them what they asked for in the audit letter...my HUD form from the
closing, a copy of the front and back of the cancelled certified check I
used to pay for the house, and a copy of the MO I used for the down payment,
and if they were wondering where the money came from...a copy of the
settlement certified check from my Uncle's estate. All the figures match to
the penny except for the last item which is larger then the total for the
house. They have sent me another letter with their 'findings' which is they
have disallowed the deduction (which is valid, they are wrong) added on
some three hundred bucks for penalties and interest, and no where are they
showing the payment I've made already. So I call them. All I can say about
the results of that phone call is the person to whom I spoke is about as
good at what I'll call customer service as ebay is...and about as
knowledgeable. In about the ten pages of this findings letter...is a form
to fill out to appeal this by going to tax court. So I'll have to do that.
Now I'll not end up paying anything as the credit was valid and legal...but
it is a huge waste of time. Audits are a waste of time. I'll represent
myself in this simple matter but a caution...those folks who tell you they
are going to 'support' you if you are audited and they did your taxes does
not mean that this service comes for free. If you can't or do not know how
to represent yourself...an audit is very expensive.
and one is for actually knowing where you stand and if you are meeting the
goals and budgets you have set...in order to make changes, or do future
planning. This does not mean you keep two sets of bookkeeping records, it
just means you extract different information from them.
Some expenses involve taking cash out of your pocket, or checking account,
or get them deducted by ebay or PayPal...or you charged them.
Some expenses do not involve payments or real money...depreciation is the
main one. The biggest one of that type to pay attention to is the 179
deduction which allows you to deduct some investment in normally depreciated
items all in the year you actually bought them. To take advantage of that
you have to have a close estimate of your own profit or loss situation and
whether you want to or can take a loss in some year. Then you actually have
to purchase it in that year. After 12/31 you are too late. That' why I
just invested about 900 bucks buying a new Epson printer. My personal plan
is to show a profit, but the smallest one I can. But if I had already
operated at a loss for the last few years then I might have waited until
after the first of the year to invest in that printer because I would not
have wanted to put myself in a loss situation more years then the IRS would
allow me before declaring me a hobby business and disallowing all deductions.
In a past life I was a bean counter so this comes as second nature to me. I
know exactly how much it cost to maintain my dogs, and my chickens, what I
spent on groceries, gasoline, house repair, medical, materials and supplies
(I make my widgets I sell) and a myriad of other expenses. I have receipts
for everything. I'd be very surprised if I could not produce receipts for
all my expenses within fifty bucks total for the year. Accountants just
love it when you bring in a box of unsorted receipts backed up by little or
no bookkeeping. Someone in that office will reconstruct your accounting for
the year...but they charge for that. Back in the late 80s I did the
billing for our firm. Back then for someone to do that I billed out at 35
bucks an hour...plus time added for all phone calls requesting more detail,
or clarification.
You do not need 'books' or receipts for filing taxes, you need them if you
are audited. The very worst thing you can do if you get an audit letter is
to meet with someone; bring them a box full of unsorted receipts; and have
an attitude. The first step...and I expect there to be a lot more of these
from now on...is for the IRS to send you a letter requesting particular
pieces of information. That's all they want to see. That's all they will
examine...but if you give them a box full of stuff, that allows them to
expand their inquiry to everything and anything you gave them.
The very simplest way to track your income and expenses is with a
spreadsheet...an Excel, or Excel clone will do the job nicely. The secret
is to write everything down...or record it as it happens. Not necessarily
every day, but at least once a month. Keeping track of every sale (unless
you have only a hundred a year for thousands of dollars each) is way too
cumbersome. Way too many details, it will take you forever to 'do your
books'. We all forget that almost every business has a position of '
bookkeeper' and it is a full time job most of the time. I describe my
spreadsheet as a simple 'either it came in, or it went out' concept. First
column is the date, second and third is what came in and how...PP, check, mo
, or cash. Then you 'spread' the 'outs' of the thing. In Excel you can use
as many column headers as you want to, paper forms are usually limited to
13 although they come with more, and are very expensive. But either way...
the method is the same. If you can understand how to do it on paper, then
you can understand how to do it in an electronic spreadsheet.
The rest of the column headings are where your expenses that are actual cash
out lay, credit card usage, or fees withheld are recorded. You use the
first two columns the same as above...the date, and how you transacted that
expense (cash, visa, etc) then you take the amount spent and put it under
some column according to the type of expense it is. For example, postage,
packing supplies, inventory, the ebay listing fees and final value fees (for
some month)...all the expenses you want to track. Then you take the
receipt for that transaction, and put a number on it...I'd suggest numbering
them 11-001 for the first one (receipt number one in the year 2011) and
putting that receipt number in the same cell that you recorded the how part.
In other words if you go to the PO and pay cash for sending out packages
on the fifth of February then the first column says 02/05, the second says
cash number 11-037 (or whatever number you are up to) and some column to the
right says postage at the top and on the proper line you write the amount.
What if you also bought some packing supplies at the PO...then you split
the total and under the supplies column you note what they cost, and under
the postage column you note what the postage cost was.
You can file the receipts then using a simple numerical order. You never
need those receipts again unless you are audited. Your accountant does not
want to see them. And to be orderly you can put on some line a date and a
transaction that is out of order...but keep the receipts in numerical order.
..it is those you will need to find.
This simple system will not tell you what your business is worth...it does
not contain the information used on a balance sheet. But it is good enough
for tax purposes...but lacks three things...your depreciation (you give your
accountant a list of what you bought and what you paid for it and they can
figure out your deduction for it whether they set up a depreciation schedule
, or take it all on a 179 deduction...this is usually 'big stuff' like
equipment and machinery) and it does not record your transportation expenses
(for that you should keep a mileage log...keep that in the vehicle and
record the date, what the trip was for and the mileage...a little cheap
notebook hanging off the rear view mirror will work)...and it will not
record the expense of your home office deduction. There are different ways
of determining that which your accountant will also do. Some things you'd
think are deductible aren't...like your first phone line...but a coat of
paint on your storage area is. Sometimes a percent of your square feet is
used, and sometimes actual expenses for a dedicated area are used. At the
least you accountant will need the total for the year of all your utility
costs, rent or mortgage, taxes, insurance, and maintenance....and the square
feet of your house, and the square feet devoted to 'business'.
The whole thing gets a lot more complicated as soon as you hire an employee
more then just 'casual labor'...someone you pay ten bucks an hour to help
you pack and ship for three or four days in some year is not an employee.
Someone you hire every Friday afternoon for four hours...is. Being a
bookkeeper is a skill...keeping a 'real' set of books requires some
education...but the IRS does not require a 'real set of books' which I'm
defining as compliance with GAAP... http://en.wikipedia.org/wiki/Generally_accepted_accounting_principles but they do require some system that both you and they can understand and or that you can explain. Fortunately the IRS has a terrific website and if you get a copy of the Schedule C, and the instructions for it...and you understand both, and if you have recorded your income and outgo and know what is deductible and what isn't...you are way ahead of the game.
And my last word on audits. I'm being audited for 2008 and what they are
questioning is my credit for first time homebuyers. The funny part is that
is the year you have to pay it back. So when I filed in 2010 (the first
year to pay it back...payment one of fifteen) I made the required payment.
I sent them what they asked for in the audit letter...my HUD form from the
closing, a copy of the front and back of the cancelled certified check I
used to pay for the house, and a copy of the MO I used for the down payment,
and if they were wondering where the money came from...a copy of the
settlement certified check from my Uncle's estate. All the figures match to
the penny except for the last item which is larger then the total for the
house. They have sent me another letter with their 'findings' which is they
have disallowed the deduction (which is valid, they are wrong) added on
some three hundred bucks for penalties and interest, and no where are they
showing the payment I've made already. So I call them. All I can say about
the results of that phone call is the person to whom I spoke is about as
good at what I'll call customer service as ebay is...and about as
knowledgeable. In about the ten pages of this findings letter...is a form
to fill out to appeal this by going to tax court. So I'll have to do that.
Now I'll not end up paying anything as the credit was valid and legal...but
it is a huge waste of time. Audits are a waste of time. I'll represent
myself in this simple matter but a caution...those folks who tell you they
are going to 'support' you if you are audited and they did your taxes does
not mean that this service comes for free. If you can't or do not know how
to represent yourself...an audit is very expensive.