Your husband has just walked in the door and informed you that he has quit his job and is going to start his own ecommerce internet-based business and you are the bookkeeper!! The only reason he is still breathing is....

because you can't decide whether to kill him for giving up the steady paycheck or for thinking you know anything about bookkeeping. Now since this is the year 2003, it could just as easily be your wife; but since my experience lies with the husband doing this kind of thing, that's how I am going to talk about it. I am a full-charge bookkeeper and have been for the past 30 + years (I've been doing it for so long, I'm not sure just how many years it is!!). I learned the hard way - every mistake in the book, and I am hoping these articles will help you keep from making some of the same mistakes and will give you a guideline.

If you are the one who pays the bills and keeps track of the budget, congratulations, you have bookkeeping experience!! Business bookkeeping just requires more details. Remember, no job is done until the paperwork in finished.

First of all, what are you? Are you a sole proprietor, a corporation, or a partnership? If you are anything but a sole proprietor, you need to contact your taxman and have the paperwork done to make you legal. If you are a sole proprietor, your social security number will be sufficient. Be sure to contact your city and county government agencies to discover what regulations they may have.

I would strongly recommend that you open a business checking account. Your taxman doesn't want to see all of your personal expenses (just some of them, we'll get into that later). Keep accurate records; deposit all of the income to your account. If you need personal cash, write yourself a draw check. Pay all expenses with the checking account. If you use cash for small items, keep the receipts. Cash does not leave a trail; paperwork does!!

Create a worksheet (I hope you have Excel or Lotus on your computer) with the name of typical expenses and income across the top as the name of the column. Income comes first (isn't that good to hear). If you will need to track different types of income, you will need a column for each one; or you can have just one for say "Sales". Every business has different expenses, so I can't tell you what those columns should be, but I will tell you this - there are no miscellaneous or sundry expenses!! Everything is something. If you have one entry a year for an expense, give it a column. It will keep your taxman from turning grayer!! Be specific as to what the expenses are in your definition column. I am always telling my clients that I've never had time to learn to read minds and my crystal ball has been broken for years.

Next time, we'll talk about when an expense is business related and when it is personal. We will also discuss cash and accrual books and which you are.

Jaye

Author: Jaye Mills
Bookkeeper & Business Owner for over 30 years
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