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Record Keeping Basics for Handymen

Even before you ever meet with a CPA or a bookkeeper, get these basics done:

1) Get a separate business and personal checking account. Make sure you have a debit card for each. Put all business purchases and income on the business account. Put all personal expenses on the personal. If you have to check out twice at Home Depot because half the stuff you got is business and the other half is for personal use, so be it.

2) Get a business credit card (if you must) and use it exclusively for business purchases.

3) ALWAYS break out materials and labor on every invoice. You have to pay taxes on materials, but you do not have to pay taxes on what you charge for labor. If these things are not broken out, you and your CPA will have to guess, and guesses are like honey for the IRS auditor bees.

4) Get yourself to an office supply store. Buy
- A little notebook you can keep in your truck for your mileage log (more about that later). It should fit in your gloveox, or in the visor.

- File folders for each of the following: business bank statements, insurance documents, tax documents, overhead costs like your phone and your truck repairs, receipts for everything you buy that's business related, client invoices and payment records, licensing documents, odometer records. Sort them oldest first, so when you're doing your 10 minute filing at the end of every week, you know to just stuff the papers at the back of the file.

5) Keep a mileage log. Take that little notebook and put it in your truck. Every day, before you leave, record your odometer reading and the date. When you leave your first job of the day, record the odometer reading again and which job you are leaving. When you leave your second job of the day, record the odometer reading and the name of the job. When you get home at night, record the odometer reading. At the end of the month, tear off all the sheets and put them in your odometer folder. The IRS won't let you deduct your mileage unless you record it.

6) Get a bookkeeping program like Quicken (for bookkeeping beginners) or Quickbooks (for more advanced users, though this is what most CPAs and bookkeepers prefer). If you are totally broke, you can just use an excel spreadsheet to get started. If you are so broke that you do not have a copy of excel to use, you can get a free Gmail.com account. That will give you access to "Google Docs" and that has a free spreadsheet program that is better much than nothing. Print out a copy of the file veery once and awhile just for backup.

If you were wondering about getting a CPA or a bookkeeper, the answer is yes. Bookkeepers are much cheaper than CPAs, and its worth $50 or so to have a competent bookkeeper review your record keeping system after the first month or two. Then, in the first year of your business, its worthwhile to have your taxes filed by a CPA. If you are comfortable doing your own taxes, then do them the followig years, using what the CPA did as a template.







More articles about starting a handyman business:

How to Start a Handyman Business

Are You Cut Out to Be a Handyman?

Tools for a Handyman Business

Payment Options for Handymen

How To Advertise a Handyman Business

Customer Service Tips for Handymen

Choosing a Name for a Handyman Business

Record Keeping Basics for Handymen

Being a Handyman Versus Having a Handyman Business or a Franchise

Getting a Website for Your Handyman Business

Getting Paid Upfront: Deposit Policies for Handymen

How Much To Charge Per Hour

Should You Charge by the Hour, or by the Job?

Insurance for Handymen

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