The book begins with a short background to show education and experience in cost accounting as a Project Engineer, and the introduction to learning about how a weekly budget was able to help the economic situation during early marriage. As the title indicates, this book explains how simple single entry accounting procedures can help families, self-employed individuals or sole-proprietors, and small businesses which can show them how to become economically profitable. It begins with an introduction into keeping monthly (multi column) Income and Cash Disbursement Journals to arrive at annual account totals (calculated both down and across for accuracy) for both income and expenses. This is the heart of the single entry bookkeeping and accounting system. The account amounts are taken from the checkbook register and credit card statements and recorded for the various accounts. Once the annual totals are shown, the monthly and weekly averages can be calculated. The checkbook and bank statement are shown how to be balanced. Then a weekly Budget is developed, first listing the Fixed Expenses, then the Variable Expenses that can be manipulated, up or down, depending on the income that is available to be deposited weekly into the checking account. The budget can then be monitored to determine if any adjustments are needed so no accounts are under or over deposited, to keep the budget in balance, with a little amount left over for unforeseen emergencies. Petty cash for miscellaneous expenses and entertainment accounts should be included in the journals and budgets. The next area of concern is the determination of the Net Worth of the family or business owner or owners. Using the annual figures taken from the Income and Cash Disbursement Journals, a work sheet can now be developed. First is shown the Beginning Balance Sheet, with Assets, Liabilities, and Owner’s Equity or Net Worth totaled. Note, Assets equal Liabilities and Owner’s Equity. Next, are the Expense (Debit or DR) and Income (Credit or CR) columns for the Cash Transactions, and if it’s a business the Expenses first show the Cost of Goods Sold, which includes the Inventory cost, the Material cost, the Shipping and Handling costs and the Sales Tax, then the other expense are listed. These are then totaled to see whether there is a Profit or (Loss). After that, there are the Adjustment DR and CR columns to note whether the assets, liabilities, and Owner’s Equity need to be added or subtracted, so that the corrected Ending Balance Sheet with the Owner’s Equity or Net worth can be determined. However, before an exact picture can be given, The IRS and State taxes must be examined along with the Form 1040 to show what taxes are owed and added to the liabilities in the Adjustments to arrive at an exact Ending Owner’s Equity. This will show whether the profitability is worth-while, or whether further adjustments to the variable accounts of the Budget are necessary or not. For a family, it’s enough to file the Form 1040 to see whether adequate money is being withheld from the wages or other income; but for a self-employed business the Schedule C must be attached. This schedule includes the choice of using actual auto or truck expenses or a standard deduction, whichever is greater and a depreciation deduction along with all the business expenses. It also allows the use of schedule 8829 for a business percentage deduction for use of the home expenses depending on the percentage of either the room used for business vs the total rooms in the home, or the square footage percentage, including the depreciation. Then, the Form 1040 SE or self-employment tax is applied to the gross profit of the business Schedule C. This tax is then apportioned to the business and is used to adjust the Balance sheet to get a true picture of the ending Owner’s Equity. The business owner or owners should keep logs or journals regarding the petty cash, the use of the auto for business and shipping requirements, sales accounts for type of inventory, materials used, and invoices and payments made or past due. A log should be kept especially on hours spent working on business time vs the Owner’s Equity to see whether the business is profitable on an hourly basis compared to the minimum wage per hour. The Small business should be thoroughly acquainted with the bookkeeping and accounting procedures shown above, and also must decide what type of business to be, and then to apply to the State Department to complete the required form and obtain the necessary tax forms also to be completed for the sales tax on goods or service sold and any tax forms for completion regarding employment as well as unemployment. The types of business to be considered are whether to be a sole-proprietor, which is similar to the self-employed individual, a partnership, in which case each partner is taxed on each partner’s share of the business according to the contract agreed on, an S corporation, whereby the share- holder is taxed on each share of the business holding, or a Limited Liability Company. As the name implies, each member has limited liability, and each member is taxed on his or her share of the profit. This last one seems to be the most preferred type of business. Also to take under consideration is the retirement issue, whether to use a portion of or percentage of the business profit for an IRA or 401(k) tax deferred savings, as well as health and pension benefits for the owners, as well as for the employees. It is also a good idea to consult with the Small Business Administration, and the Chamber of Commerce for advice before going to the State Department for starting the business. There are many forms needed for the State or IRS, for the owners, and for employees that may be hired, or for unemployment compensation, sales tax, and so forth. Listed in the book are the many forms that need to be considered.
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