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So you want to go pro #6: Paying Your Way

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Blog entry by odie posted 01-08-2008 11:21 PM 1216 reads 0 times favorited 9 comments Add to Favorites Watch
« Part 5: Becoming Legal Part 6 of So you want to go pro series Part 7: Pinky Up You Artists »

Well here we go again. Can you be a book keeper? Well, how about a good record keeper? When we started this little endeavor we asked, asked, and asked some more questions. Most of the questions, we asked our friend and tax accountant. He handles many businesses’ taxes and accounting problems in the state of California. I need to point out something here, accountants speak a different language than woodworkers. He was asked such questions as: ”what”, “what did you say”, and “what the hell does that mean”? The last I asked the most. The highlights of these stimulating conversations will follow.

The first and most important is to save everything. Your saying, “easy”, right? Not so fast my fellow woodworkers. How many times have you brought a bag home from the hardware store? Do you put it in the shop take out the receipt and walk it into the house? I never had before. A week later, who knows where that receipt is? So, Sue and I needed a common place to put these things. We do, and it works about 75% of the time.

Use the double receipt method. I charge it or write a check for it, then I have a paper trail of my purchases to fall back on. Also, these checking and charge accounts should be separate from your household accounts. Business is business, and household is household and keep it that way.

I have kept everything separate. My shop (garage) is household, and my tools are part of the business. We have done it this way all along. It is a personal choice that has to be made. If you start deducting the use of your house for business you will save a little on taxes each year. But, when you sell this house, it’s a whole new ball game. I won’t go into that anymore. Have a nice long talk with an accountant before you make this decision. It’s a big one that can bite you down the road.

Both cars have tripmeters in them. This is a little thing you think. Mileage is a very large deduction at tax time. We do most of our shopping in Reno and we are religious about using our tripmeters. When we get home, we enter the results of the tripmeters on a calendar. This method works great, but do whatever works best for you.

These topics make it tough to think of the right pictures to post. The last topic I almost posted one of Raymond Burr playing Perry Mason.

Can you believe it’s snowing again? And let’s hear it for: http://www.dustnlint.com

-- Odie, Confucius say, "He who laughs at one's self is BUTT of joke". http://woodstermangotwood.blogspot.com/ (my funny blog)



9 comments so far

View Karson's profile

Karson

35035 posts in 3866 days


#1 posted 01-08-2008 11:39 PM

Good Odie. Keep those receipts. You’ve spent the money you might as well reduce your taxes because of it.

-- I've been blessed with a father who liked to tinker in wood, and a wife who lets me tinker in wood. Southern Delaware soon moving to Virginia karsonwm@gmail.com †

View dennis mitchell's profile

dennis mitchell

3994 posts in 3780 days


#2 posted 01-08-2008 11:44 PM

Yep we got snow and taxes. Wouldn’t be January with out em.

View MsDebbieP's profile

MsDebbieP

18615 posts in 3626 days


#3 posted 01-09-2008 01:09 AM

those receipts are nasty.. they disappear so easily!! my best success has been to put them in a compartment of my purse at the purchase (that should work for you, shouldn’t it Odie??) haha and then i collect them there until I remember to put them where they are supposed to go.

-- ~ Debbie, Canada (https://www.facebook.com/DebbiePribeleENJOConsultant)

View Scott Bryan's profile

Scott Bryan

27251 posts in 3288 days


#4 posted 01-09-2008 01:33 AM

I agree that keeping track of receipts can be problematic. One of the ways to resolve this is to start keeping financial records electronically (Quicken/ Quick Books). Another change that could be made is to quit paying with cash. This way all expenses (via receipts of course) can be recorded. It takes discipline and practice, but like any other skill keeping track of expenses becomes easier with practice and perseverance.

-- Challenges are what make life interesting; overcoming them is what makes life meaningful- Joshua Marine

View johnjoiner's profile

johnjoiner

160 posts in 3359 days


#5 posted 01-09-2008 01:50 AM

I’m liking your series Odie. I hope I can put the knowledge to use some day.

-- johnjoiner

View Greg3G's profile

Greg3G

815 posts in 3551 days


#6 posted 01-09-2008 03:14 AM

I found a neat way to handle receipts while I was Scoutmaster for a few years. I carried one of those bank bags with the zipper on the top when I went into the store or what ever. It works just like Deb’s purse but I don’t get funny looks from the rest of the guys standing in line and I lost a lot fewer receipts that way.

My biggest down fall was the odometer. I always forgot to record it.

BTW…you can deduct mileage for charity work, and any supplies you provide to charity. So if you happen to work with the Boy scouts, Girl scouts, or Habitat for Humanity. Keep track of it. I was regularly deducting around $2700 a year just working with the Scouts.

-- Greg - Charles Town, WV

View Todd A. Clippinger's profile

Todd A. Clippinger

8901 posts in 3565 days


#7 posted 01-09-2008 04:24 AM

Yep, I track mileage everyday. The trip from Montana to Ohio racks ‘em up.

I keep my receipts in order.

And I gladly pay my accountant.

-- Todd A. Clippinger, Montana, http://americancraftsmanworkshop.com

View Mario's profile

Mario

902 posts in 3517 days


#8 posted 01-09-2008 02:49 PM

Thank you all for the advice. Especially to odie for starting this thread.

-- Hope Never fails

View Muzhik's profile

Muzhik

173 posts in 3604 days


#9 posted 01-13-2008 08:41 PM

Is that a photo of a Mazerati speedometer/odometer? Man! I was worried that I would be a “starving artist” if I took the leap into woodworking as a business. You must be rollin’ in it if you drive your Mazreati to Reno to pick up supplies for your business! No question now, I’m goin’ for it!

Seriously, though, I just found your blog and I’m loving it. My wife and I are really thinking about taking a similar path after I retire from the AF (8 more years). We’ll have my retirement to fall back on (though there’s no way to really “live on it”) and the added benefit of not having to worry about health insurance.

Thanks for taking the time to put this blog together.

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