special rules regarding salaries paid to business owners.how to calculate the deductible portion of vehicle expenses.whether a physical inventory count is required. We will just combine them for the tax return.Ĭost of Sales (a business that has no physical product should probably have nothing here) Of course, if that information would be useful for the management of your business, have as many sales categories as you need. Otherwise, just one category called "sales" for all monies collected from customers is fine, because the IRS doesn't need to know about the various categories of what you sell. If you collect sales tax in California, you need to track your sales by county. If, at the end of the year, any of your income or expense categories shows a very small amount, consider combining that category with another category to keep your chart of accounts as short as possible. I believe the most useful P&L fits on one page. A Profit & Loss Statement is so much more useful for running your business if it doesn't break everything down into tiny little bits. It has too many accounts, sub-accounts, and sub-sub-accounts. I really don't like the chart of accounts that comes with QuickBooks.
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