I have had some kind of sewing business off and on since 2008. I always struggled to understand the financial side of business, but I dutifully kept my receipts and income records and gave them to whomever did our taxes each year. I took a few years off the business and when I started it up again a little over a year ago, I was a little older, a little more experienced and working from home was my full time occupation so I really wanted to try to come to a deeper understanding of it all.
Soon after starting up again, I won a really cool prize through my Etsymom Street Team – a free bookkeeping course with LS Bookkeeping Services (formerly Crafty Bookkeeping). Lisa was great and helped set me up in WaveApps.com. I got all my bank, etsy & paypal accounts pulling all the information straight into it and all I had to do was organize it into categories. But I ran into a few hiccups with duplicate entries due to Etsy and paypal bringing in the same transaction. Then when paypal or etsy deposited money into my bank account it was accounted for a 3rd time. Then I started adding my own categories and things started to get a little more convoluted. I got confused and stopped keeping up on categorizing everything in June and by the time January of this year came, I was feeling overwhelmed. I just didn’t have a grasp on the basics of bookkeeping.
I joined the WAHM Tax Group on facebook, which is a great resource! But in fear of asking a million questions and getting more confused, I started to look around for a concise, hold in my hand book that addressed my small business and helped to make sense of it all.
Somehow I stumbled upon the book Small Time Operator by Bernard Kamoroff. I was attracted to the subtitle, “How to Start Your Own Business, Keep Your Books, Pay Your Taxes, and Stay Out of Trouble” Apart from starting my business, the rest of those topics were exactly what I needed to know more about! I started to read in the evenings and on the weekends about single entry accounting, about using a pencil, ledger and calculator, and I started to understand the context of it all. I decided this year to keep my books differently, more simply. So I purchased the Dome Simplified Weekly Bookkeeping Record book.
All the standard tax categories are listed and defined in the front of the book. There is room to add your own, but I’m trying my darndest to understand & keep within the recommended categories so my CPA and I are speaking the same language next year. So far, I love the pencil and paper, weekly method because it keeps me intimately aware of what I am bringing in and what I am spending. I also came up with a method (different color highlighters and tally’s in the memo section) for keeping track of sales and use tax for next year so I am hoping for a more peaceful Jan-April 15 2016!
But back to Small Time Operator!
- The first chapter of the book covers things to consider when starting a business, location and zoning for home or brick & mortar businesses, Financing, Legal Structure (Sole Proprietorship, Partnership, Corp or LLC, etc.), Business Names (DBAs), Licenses and Permits, Insurance and your business plan.
- The next section of the book deals with setting up your books, explains the single entry system and cash vs. accrual accounting, recording income & expenditures, as well as keeping track of inventory (& COGS!).
- Chapter 3 talks about issues relating to business growth – employees & a little more in depth on legal structures.
- Chapter 4 is all about taxes: what really counts as a business expense, self-employment tax, retirement deductions, the IRS, Federal & state taxes.
- Chapter 5 speaks specifically to the home business.
- Chapter 6 discusses balancing your bank account, a balance sheet, hiring professional help, multiple businesses, importing/exporting, franchises, freelancers, pricing, contracts, websites, employee-owned businesses, collective and cooperatives, as well as managing and marketing your business.
As of the time of this post, I’m almost through Chapter 4. I’ve gone slow and implemented the recommendations as I went. Bernard Kamoroff’s writing style is very clear and makes an overwhelming topic very understandable. Now that I have been using the paper ledger & pencil method for a few months, I have a much better understanding of bookkeeping in general and find it easier to manage in WaveApps.com. So, as Bernard Kamoroff mentions in the book, the method isn’t as important as the understanding behind it. I think I will keep both going this year and use them to compare notes when next tax season rolls around. But I HIGHLY recommend this book if you run ANY type of small business. I wish I had read it back in 2008 when I started it all!
I’d love to know what you think if you pick up the book! Also, if you have any resources that have helped you in your business bookkeeping, please share! If I get a few responses, I’ll do a round up post to share with everyone!
*This post has NO affiliate links – just sharing some resources that have helped me.