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Training for Success With Your Internet Business, Article 2, General Expenses Now that you have your own home based business and whether or not you have already received any income, it is absolutely essential that you keep a record of all your expenses. If there's one thing more annoying than record keeping, it's paying unnecessary taxes because you didn't keep a proper record of your expenses. What are expenses? Any money that you spend with the intention of earning income for your home based business may be considered to be an expense for your business. So go back to the date upon which you either set up your home based business or started your business and find all the receipts that show that you spent money for your business. If you cannot find receipts for some of the money you have spent then make a note of what the expense was for, to whom it was paid and the amount. You will find it easier to have a separate piece of paper for each expense. From now on, ALWAYS get a receipt when you are spending money on your home based business, even if it is only for a cup of coffee. If you use a credit card and cannot find the credit card receipt, keep a copy of the credit card statement and highlight the entry. I suggest that you obtain some file folders and label one for each month. Keep your receipts for each month in the correct file folder. Alternately, you may wish to keep a record of your expenses by category. This may simplify completion of your Income Tax Return for your Home Based Business at the Taxation Year End. A suggestion of the categories required are as follows: If you are purchasing product for resale: Invoices for all purchases of products, including shipping costs. This will enable you to establish Cost of Goods Sold. We will cover these calculations in a later issue. Period End Inventory. (You will need to count the stock that you have in hand at Year End). This means your Taxation Year End. Remember it may be possible that your home based business has a different taxation year end than you have personally. Value Added Tax Records such as VAT or GST if required. Advertising costs, Business Taxes, Business Licenses & Fees, Business Dues and Subscriptions, Business Meals & Entertainment Costs, Business Memberships, Fuel Costs (Except for Motor Vehicles) Motor Vehicle costs will be covered in a later issue. Home Entertainment, Home Office Expenses, Insurance, Interest, Repairs & Maintenance, Management & Administration Fees, Motor Vehicle Expenses. These will be covered in more detail in a later issue. Supplies, Legal Accounting & Professional Fees, Real Estate Taxes, Rent, Salaries, Wages & Benefits, Travel Costs, Telephone & Utilities, Training Courses / Seminars / Meetings, While this list is not exhaustive, it does cover the main areas of permitted costs. Most Tax authorities will not allow costs to be expensed for individual items purchased in excess of a certain dollar value (say $1000.00), they insist that the items be capitalised and then depreciated over a number of future years. You will need to find out from your tax advisor or the Tax authorities what these limits are and what the depreciation charges are that they will allow. Every country has wide ranging and differing rules in this respect. You will also need to maintain records of such capital costs that you might incur. These will normally be for such items as: Automobiles, Office Furniture, Office Equipment, Computers, Printers and Peripherals, We will go into more detail on Capital items in a later issue. Taxation legislation differs between countries and each country may change their rules at any time. The information provided in these newsletters is accurate at time of publication. You should however seek specific information from your Tax Advisor or Taxation Department as it relates to your own situation each year that you are required to provide Income and Expense Statements. Other topics in this series are as follows: Number 1, Record Keeping, Number 3, Purchase of Goods for Resale, Number 4, Deductions for Use of Home Office, Number 5, Home Entertainment Costs, Number 6, Motor Vehicle Expenses, Number 7, Depreciation Costs, Number 8, Business Meals, Number 9, Salary Payments to Children, Number 10, Travel Expenses, Number 11, Demonstrators Samples & Promotional Tools, Number 12, Gifts, Number 13, Here Comes the Tax Man, Number 14, Capital Items, John Ritchie, A.I.B., A.I.C.B, F.I.C.B, e.mail:brlynt@gmail.com Copyright to this article belongs to John Ritchie. http://johnritchie.blogini.com. You may download and distribute this article freely and without restrictions. You must not, however, delete the resource box link.
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Article Tags: Internet Marketing, Home Business, Home Based Business, Internet Based Business Article Source: http://www.articlesbase.com/home-business-articles/training-for-success-with-your-internet-business-article-2-general-expenses-486545.html  About the Author:I spent over 17 years in the banking industry in the U.K and then a further 8 years in Canada. For the last 20 years I was a senior executive for two private sector companies where I was chief operating officer and chief financial officer for a business that had 7 divisions, all open 24 hours a day 364 days per year and which operated in 6 different locations across Canada. Additionally I have been also the quality manager and general manager, responsible for all in house operations for a company which was ISO registered. As a recently retired Canadian Small Business advisor and mentor, I am moving my attention into the internet world of small business, where my existing experience and knowledge, will prove of significant value once I get the hang of how the internet business world thinks and works.
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