As the owner of an Information Marketing business, you need to understand basic accounting in order to remain profitable and avoid trouble with the tax authorities.

Your accounting system does not need to be complex. As you grow, your best bet is to work with a CPA and a tax attorney to ensure your money is working to your benefit. Initially, however, it is possible to set up a simple system to keep your books.

Disclaimer: I am neither an attorney nor a CPA and assume no liability for your bookkeeping, accounting, and tax filing activities. Translation: do your research and consult a professional when you have questions.

The Super Simple Bookkeeping System:
What you will need:
• A spreadsheet program (Microsoft Excel, OpenOffice Calc, etc.)
• 9x12 envelopes
• Expanding file folder, preferably with 12 monthly tabs

What to do:

1. Set up your spreadsheet (or download one from the Resources page at The Breakthrough Marketer)

A. Create 2 worksheets inside your spreadsheet: one or Income and one for Expenses.

B. On the Income worksheet, set up the following columns:

• Date

• Source

• Product Sales – set up the cells as numeric with 2 decimal places, and set up the last cell in the column to automatically calculate the column total. If you pay your state sales tax on a monthly basis, you might want to break down the Product Sales column to separate out product cost, taxes, shipping, etc. This will automatically total how much sales tax you need to pay for the month.

• Commissions – set up the cells as numeric with 2 decimal places, and set up the last cell in the column to automatically calculate the column total.

• Other Income – set up the cells as numeric with 2 decimal places, and set up the last cell in the column to automatically calculate the column total.

• Total Income – set up the cells as numeric with 2 decimal places, set the fields to automatically compute the sum of Product Sales, Commissions, and Other Income for that row, and set up the last cell in the column to automatically calculate the column total.

C. On the Expenses worksheet, set up the following columns:

• Date

• Description

• Paid With

• Set up columns for each category of product you purchase or expense you regularly pay, for example:

- Product Costs
- Advertising Expenses
- Marketing Supplies
- Marketing Expenses
- Merchant Fees
- Communication Expenses
- Office Supplies
- Fulfillment Services
- Packaging Costs
- Shipping Costs
- Other Expenses

Set up the cells as numeric with 2 decimal places, and set up the last cell in the column to automatically calculate the column total.

• Total Expenses – set up the cells as numeric with 2 decimal places, set the fields to automatically compute the sum of all the expenses in that row, and set up the last cell in the column to automatically calculate the column total.

2. Label your expanding file tabs and envelopes
Label each envelop and each section of your expanding file – one section for each month of the year.

3. At the end of each day, record all transactions
Record all of your income for the day on the Income worksheet. Consider using one row per source, for example all eBay income for the day on one row, all website sales for the day on the next row, etc. Work with it until you find a system that works for you.

Record your expenses for the day on the Expenses worksheet in the correct category, and place any receipts you have in the envelope for the current month. Keep your receipts in date order initially. In the future you might want to separate them by category. Recording your expenses by category will make your tax preparation much easier.

4. On the first day of each month, reconcile your records
Check your figures for the previous month. Pay any taxes due and print the spreadsheets. Keep a printed copy of the spreadsheet in the envelope with all of the receipts for the month. Then simply file that month’s envelope in the expanding file folder, and you’re done.

5. Get the next month’s spreadsheet and envelope ready.

That’s all there is to it. You should be able to keep track of your finances in just a couple of minutes every day.