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Managing Financial Transactions, 
Bookkeeping Basics 
and Small Business Tax Tips 
Wray Rives, CPA CGMA 
Certified Public ...
Topics 
• What it means to be in business for 
yourself 
• Getting paid and paying others 
• Dealing with independent cont...
Welcome, business owner… 
As a “business owner” you must: 
Generate your 
own income 
Fund your 
expenses 
Track and 
repo...
Money in…money out 
Goal: Get paid quickly 
Income 
• Use free online tools to track time and invoice 
• Use Paypal to get...
Using contractors 
• Make sure they are contractors, not 
employees 
• Independent contractor agreement 
• Fill out a W9 
...
Bare-bones bookkeeping 
Keep it simple 
• Use “cash” method 
• How much did you 
earn? 
• How much did you 
spend?
Key “deductions” 
Home office deduction (form 8829) 
Meals & Entertainment 
50% deductible 
Cost of Goods Sold 
Depreciati...
Taxes 
Self employment taxes • Social security: 15.3% of first $117,000 
income 
• Medicare: 2.9% of all income 
Income ta...
Tips 
• Track/save everything – you can always 
figure out details later 
• Be cheap – cash is king, barter 
• Embrace tec...
Wray Rives, CPA CGMA 
www.NeedaCPA.com 
• wray@NeedaCPA.com 
• @rivescpa
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Bookkeeping primer

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Bookkeeping primer for self employed individuals

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Bookkeeping primer

  1. 1. Managing Financial Transactions, Bookkeeping Basics and Small Business Tax Tips Wray Rives, CPA CGMA Certified Public Accountant Chartered Global Management Accountant
  2. 2. Topics • What it means to be in business for yourself • Getting paid and paying others • Dealing with independent contractors • Bookkeeping – the simplified version • Handling the more confusing deductions • Taxes • Tips
  3. 3. Welcome, business owner… As a “business owner” you must: Generate your own income Fund your expenses Track and report income and expenses Contribute to Social Security and Medicare Pay income taxes on your profit Pay those taxes 4 times a year Track and report payments to contractors
  4. 4. Money in…money out Goal: Get paid quickly Income • Use free online tools to track time and invoice • Use Paypal to get paid (www.paypal.com) • Create simple contract (www.docstoc.com) Goal: stay organized, Expenses avoid missed deductions • Get a separate checking account •With online bill pay • Get a separate credit card •With annual summary
  5. 5. Using contractors • Make sure they are contractors, not employees • Independent contractor agreement • Fill out a W9 • Report all payments > $600 in a year – File 1099 at end of year
  6. 6. Bare-bones bookkeeping Keep it simple • Use “cash” method • How much did you earn? • How much did you spend?
  7. 7. Key “deductions” Home office deduction (form 8829) Meals & Entertainment 50% deductible Cost of Goods Sold Depreciation Do you spend more than $25,000 on equipment in a year? No Then don’t worry – write it off Mileage $0.56 per mile for 2008 Electronic records are permitted Value of inventory on Jan 1 + $$ spent on new products - Value of inventory on Dec 31 Square footage of office Square footage of residence X Household expenses (rent, insurance, Utilities, etc)
  8. 8. Taxes Self employment taxes • Social security: 15.3% of first $117,000 income • Medicare: 2.9% of all income Income taxes Based on total household income Quarterly payments 1st quarter: April 15 2nd quarter: June 15 3rd quarter: September 15 4th quarter: January 15 Safe harbor provisions No penalty if you pay either: • The same amount you paid last year • 90% of what you should pay this year Penalty for underpayment Interest on the amount of underpayment, currently at 3%
  9. 9. Tips • Track/save everything – you can always figure out details later • Be cheap – cash is king, barter • Embrace technology – it is your friend • Value your time
  10. 10. Wray Rives, CPA CGMA www.NeedaCPA.com • wray@NeedaCPA.com • @rivescpa

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