Posted on April 29, 2017 @ 08:34:00 AM by Paul Meagher
As always, I am under the gun to file my taxes on time. Might not make it but this morning I am setting up my accounting files for my 2 sole proprietor businesses and an accounting file for my personal business (business use of home). I will also be setting up a separate accounting file for fuel costs related to my farming business.
Talked to my month-in-law about interest penalty associated with filing late if I have to exercise that option. We agreed that if I start paying off what I expect to owe before the filing date, then filing late does not have much consequence. I will start transferring money to the government today.
While I do my farm accounting, I will be scanning through Fearless Farm Finances: Farm Financial Management Demystified (2nd Edition) for potential guidance.
I completed a day of accounting on Saturday and am getting started on another day of accounting. Yesterday I spent most of my time going through credit card statements for my two businesses and assigning the transaction to various expense categories of those businesses. Within each category I order the transactions by date from earliest to latest transaction. I retain most of the credit card transaction text that accompanies the transaction.
What I am doing is setting up the conditions for reconciling my paper trail with the official version of my accounting year. My paper trail is organized by month and I will be able to sample transactions from my official accounting version and see if I can find the paper receipt for that transaction. I don't have to do this for all the paper receipts if I have a high level of confidence in the correspondence of the official accounting and the paper trail. I'm not an accountant, they probably have more rigorous methods than this.
Getting all transactions into time ordered sequences is the key, for me, to getting paper trails and accounting records reconciled efficiently. I still have work to do on this today but hope to get to the point of recording totals into the Statement of Business Activities that I have to complete for each business that I operate as a sole proprietorship entity. In the case of farming, the Statement of Farming Activities form I have to fill out already comes with many different categories than the generic Statement of Business Activities. Some accountants will not deal with farming businesses because it is a separate beast and you sometimes need specialized insights into farming (and sympathy) to do it best. I think it is helpful, however, to learn how to do it myself so I better appreciate how the government likes to do their accounting on farming activities.
I'll be updating this blog with new accounting/finance related content as the day progresses.