By Garrett Sutton, Esq.
Bookkeeping may not be your forte, or even something you want to do, but keeping financial records doesn’t have to make you miserable. For businesses, the basics are these: every transaction involves money in or money out. Income is all money that comes into your business. Expenses are all monies that flow out of your business. As long as the two balance, the basics of your bookkeeping are in order.
Your business expenses will include any payments you make to acquire inventory, expenses related to actually doing business, including marketing and advertising, creation of a product, shipping and receiving, research and development – in short, the costs of doing business.
Other expenses of running a business include hiring your professional team, paying employees, paying for business licenses and overhead. Many of your business expenses are tax deductible, meaning you get to write them off to reduce your net income. Tax deductible expenses can be based on depreciation – those items like major pieces of equipment that lose value after a certain amount of use or a certain period of time and are thus written off over several years or more. They can also be written off quicker as a fully deductible expense. These are expenses incurred in operating your business, and are deductible immediately which helps to reduce your net income.