INTRODUCING THE BACKBONE OF ACCOUNTING.
The Basic Chart of Accounts
This is a great place to start.
The Basic Chart of Accounts is as Evergreen and timeless as small business accounting itself! The numbering system and alphabetized and categorized accounts, income & expenses will trim serious time off TADBLHO (The ADministrative Black Hole) and can be customized to your small business startup needs.
It may not seem exciting to most but this is the real foundation of every accounting system! Without it, there is no accounting and no financial statements.
DON'T START A BAD BUSINESS!
Answer a few simple questions and know you're on the right track.
Most businesses fail and that's a fact. What's alarming is the number of those solopreneurs never generate one single dollar in revenue. Knowing exactly what you sell, whom you sell it to and at what price that will generate a profit is fundamental information yet, the vast majority of those failing never answered these simple questions.
IRS AUDIT CLASSIFICATION CODES
Don't let IRS jargon fool you.
When you file your first business tax return apply for a Federal Tax ID # you have to choose your business activity on form SS 4 line 16 (See graphic below) When you file your 1st business return IRS will ask you for your NAICS code that they match against your SS 4 application. The codes greatly expand the categories into sub-categories which IRS then uses to track industry statistics. If your income and deductions are not in line or there are deductions that don't match with your industry your more likely to get audited.
IRS FORM SS4-APPLICATION FOR A TAX ID#
IRS FORM 1120S ACTIVITY CODE ENTRY
S-CORP ACCOUNTABLE PLAN-EXPENSE REIMBURSEMENT
An accountable plan is one of the easiest methods an S-Corp shareholder can recoup their cost of doing business while adhering to strict IRS guidelines on the subject. Not too long ago taking a home office deduction was taboo because it raised a big red-flag at IRS Audit headquarters. Things have changed because technology has made working from home the norm. Form 8829 (Business Use of The Home) is still required to be attached to a sole proprietors tax return but not so with an S-Corp as long as you use an "Accountable Plan" for reimbursement. Now if your an employer and your employees work from home or use their cell phone for work you can use this method as well. How many employees don't need their phone for work? As long as you come up with a "reasonable percentage" and document it consistently your good to go!