Tip o' the Day #1

[jhiggins]

Hi folks!

This is for all you Full-Timers out there, and all of you who want to be someday. Heck, even if you are only a p/t maker but sell your knives this tip will help you a lot!

Ever dread this time of year? No, I'm not talking about the holidays. I'm talking about the END of the year. The end of the year is when we all have to face the reality that tax season is upon us. I have some tips that will help you get through it in flying colors!

#1) Get yourself an accordian file folder.

The kind that is divided into 12 monthly compartments is the best kind. Then begin by putting EVERY receipt into it, by the month, and I mean EVERY RECEIPT! You'd be surprised how much you actually spend on your craft/business each year. You'll be even more surprised to discover how much you can actually get back. Get into the habit of saving all your receipts and asking for them. This will save you so much money you'll wonder why you never did it before.

I bought a huge F350 w/plow last year. $35k truck. Its a brute. Black Crow Forge owns that truck, so naturally I got to deduct it from my taxes as an equipment expense. I figured out I spent approximately 24% of my time last year in my shop, so guess what? I was able to deduct a protion of my heating oil from my income tax for that. Starting to see what I'm on about? Save your recipts and learn what defines your business and what defines your personal income. All those grinding belts, buffing wheels, compounds, sandpaper, steel, handle materials, etc., are ALL DEDUCTIONS!!! They are all expense items and all 'expendibles' are deductable. Get back, or at least save, all the money you spent on belts last year.

Ever go to a show to sell your knives? Pretty near everything can be deducted, from the breakfast you had on the road, to the gas in your car, to the cost of your lodging and table at the show. Everything pertaining to the cost of doing business is deductable. By the way, if this sound incredulous to any of you, its perfectly legal. Your ability to claim business expense is protected under federal laws regarding small businesses in America.

#2) Get Quickbooks Pro.

QB Pro is the best, easiest to learn program available that will help you manage your income and expenditures over the year. With the annual tax pack that comes out with all the new laws every year, you can do your own taxes lickety-split! Now heres the sweet part...

Enter all your receipts - you know, the ones you've been saving? Quickbooks will make all the adjustments for you and at-a-glance give you an updated figure of what you owe for taxes or what your refund will be. Breaking even would be the goal for this (and if any of you want to know why breaking even would be the goal I can explain the theory behind that in a future thread maybe).

Now print out your forms right from your Quickbooks program. They have all the updated tax forms required each year. Send them in. Its that simple! Then put all your receipts back in the folder and tape it up. Write the year on the outside, ans stash it someplace safe. If you ever get audited (which is a rarity these days), you'll have them. Uncle Sam requires 7 years (or less if your business is younger than 7 years) of receipts for an official audit.

#3 Buy another accordian file and start it all over again for the next year.

Peace

 

[Mark Williams]

Does Quickbooks have a payroll feature that will do the accounting as far as social security and state and fed deductions?

Mark

 

[jhiggins]

Originally posted by Gouge
Does Quickbooks have a payroll feature that will do the accounting as far as social security and state and fed deductions?

Mark

Yes, but you have to have the yearly Turbo-Tax pack to get that function and make it current with the yearly regulations. They change them every year based on legislation and whatever adjustments to withholding regulations have been made.

Also, let me reiterate that this is for Quickbooks PRO, not the regular Quickbooks. The pro version breaks down all your income, inventory, and disbursements. Regular QB is severely limiting for the small business. With Quickbooks Pro, perhaps the nicest feature I can think of is custom packing slips and invoices generated for your customer to reference. It also generates reports and will tell you instantly where you have spent most of your money for that year, and which vendors, etc.

 

[etp777]

I would suggest something along these lines to anyone, not just a full time maker.

98-99 I took a year off from school and worked full time at various jobs. Don't have the tax forms here on me right now, but I think I made around 13-17K after taxes. Was living at home, so no rent, food, etc. Somehow though fall of 99 I made it to school and started my new bank account with only 1400-1500 dollars. Somehow(and I still don't really know to this day) I blew 12-16 thousand dollars in that year, and I don't know where it all went. So since January 2000(2001?) have used quicken to keep track of all my expenditures. Now I know exactly where my money goes. Course, some of the accounts are rather depressing. THink my knifemaking bubdget right now is running at a grand total of negative $1700 dollars. That's a full months pay.

SO while that's not encouraging, at least it does let me know wher emy money goes, anbd help make adjustments as needed. Will be even more helpful next april when biggest batch of school loans starts coming due.

That bieng said, i also have file folders full of stuff by various categories(bank statements, check stubs, so on and so forth).