Bookkeeping and records

What are people doing with bookkeeping and paperwork dealing with the sites they run and own and all the costs and expenses? It is critical to keep accurate records when tax time comes every year.

How do you handle your bookkeeping to know how your business is really doing and cover yourself when it comes time to fill your taxes?

For example I pay somebody from these forums $100 to design a website for me and I use Paypal to send the payment. Do I need to print off a copy of my Paypal receipt which shows I sent $100 to the person? Or do I simply record the $100 on a spreadsheet as an expense and move on.

The same question when I pay somebody X dollars a month for a text link. Do I print off the Paypal receipt or simply put the expense in a spreadsheet.

 

My entire business is web-based. We keep meticulous records about income, including any advertising revenue, along with all costs related to the running of the business, no matter how small. That information is used to prepare tax returns.

If you are operating out of the home you will be able to claim a share of the rent, if you rent, utilities and so forth that pertain to the running of the business. The percentage you can claim is normally based on the square footage of the dedicated office space as a percentage of overall house space -- or some reasonable number. In Canada the dedicated office space needs to be clearly dedicated to the business. It is best if it is in its own room(s). A laptop at the couch does not count as office space.

I have been declaring business income from the first business I started when I was in my mid-20s. It does not matter if the income is small. It matters that it has the prospect of truning a profit.

In Canada, the part time, unincorporated business can even generate a loss which is applied against you regular income.

Frankly, I would recommend registering it as a sole proprietorship business -- depending on whether this option is available. This legitimizes it as a business and allows you to realize some of the benfits of running a small, unprofitable business.

Talk to friends and family in business in your community to get some ideas about how the tax laws affect you and how they might work to your advantage as an entrepreneur.