Web 2 Point Dough: Get Rich, File Later and Tweet What You Spend

032109: Hotel Mini Bar Snickers

Happy Weekend! Here are three great money tips that you should check out.

Read this blog: I Will TeachYou To Be Rich.  At first I was skeptical when I heard about the blog because the title sounds so ambitious, but when I read some of Ramit  posts, I realized that the content of the blog is chock full of good personal finance tips.  There’s also a book.

It is less than three weeks to April 15. If you know you won’t be able to file your income taxes properly by the tax deadline, then file later. FileLater will file personal tax extensions for only $17.95 and file business online tax extensions for $39.95.

Yesterday, I met Alex Ressi, the founder of Tweet What You Spend which is a great tool for tracking your daily spending. Instead of sending a public tweet, you use the direct message to “twys”. He showed me that you how his site takes your tweet and can export your tweets into a cash journal that can be an Excel or a .CSV file. This is good because you can later import the cash entries into any accounting applications that accepts those files.
Tweet What You Spend reminded me of Kate Bingaman-Burt who draws what she spends like the illustration above.

Vitamin C For Your Schedule C And Nine Tricky Business Deductions

April 15 is less than a month away. Don’t panic! If you are self-employed and do not have C-Corp, then you will be filing a 1040 with Schedule C.  A Schedule C shows the Profit or Loss from Business.  The income is the easy part,  but the tricky part is knowing how to classify expenses.  First look at your Chart of Accounts. The Chart of Accounts is to a business’ financial picture as a table of contents is to a book. Use your Charts of Accounts as “vitamin C” and it will prevent errors in recording your income and expenses. I recommend printing a blank copy of a 1040 form with the Schedule C and then printing out a copy of your current Chart of Accounts. Then you can “map” accounts, which means to assign what deductible expenses that will properly correspond to your business’ Chart of Accounts.  If you are not using Quickbooks or have no idea what a Chart of Accounts is, then I suggest you sign up for a free Outright account. You can use Outright to figure out your taxable income taking the income and expenses for 2008 that you already have calculated on an Excel spreadsheet. 🙂

Outright enlisted the help of two bookkeepers Jeanné Neubelt of BookWorks Total Bookkeeping Services and Cheryl Hinkson of For Your Business Bookkeeping Services to compile a list of nine “hardest to classify” business deductions.

1. Business cards
When you first hang out your shingle, you might head down to the local printer to get some business cards made up.  But what kind of expense is that?

Which do I choose: Supplies, Legal & Professional Services or Advertising?
Recommendation: Advertising

As a self-employed individual, odds are your business cards will be given out to prospective customers in an effort to generate revenue.  For this reason, the most appropriate category would be Advertising.

2. Website Hosting
You pay a monthly hosting fee to firms like Host My Site. Does that go under equipment rental?  Office expense?

Which do I choose: Advertising, Utilities, Equipment Rental or Office expense?
Recommendation: Advertising or Utilities

According to Jeanné, this expense is similar to business cards in that it is likely used to help attract customers and drive revenue.  However, Cheryl sees it a bit differently: “Web Hosting is a service and with a detailed P&L you would list it as Service Provider but on a simple P&L you will list it as a Utility.”

3. Stock photos/icons (and other digital media)
Which do I choose: Cost of Goods Sold, Office Expense, Supplies, Legal & Professional Services?

Recommendation: Cost of Goods Sold, Advertising, or Supplies

In this case, it depends on how the items are used.  As Cheryl explains, “A web designer or graphic company that has signed up for unlimited access to stock photos available online would expense the monthly or quarterly fee to supplies for Cost of Goods Sold.”  However, in the case where the images are being used for your business web site, “you could easily classify the expense as Advertising or Supplies”, says Jeanné.

4.Getting a DBA/Fictitious Name
You’re now in business for yourself, so you get a super cool name to use.  How do you treat the costs of doing that?

Which do I choose: Taxes & Licenses or Legal & Professional Services?
Recommendation: Both, unless you file everything yourself

According to Cheryl: “Formation Fees should be broken into two categories:  The portion of the fee that is paid to the state and the annual renewal fee should be recorded as taxes & licenses and the portion of the fee that is for professional services provided should be classified as legal & professional fees if you contracted a licensed professional to complete your formation documents.”

5. Payments to web designers (and other independent contractors)
How do you treat the graphic designer who created the look and feel for your web site?

Which do I choose: Legal & Professional Services or Contract Labor?
Recommendation: Contract Labor

“Professional services is generally used only for legal, accounting/tax/payroll and business consultancy,” says Jeanné.  Better to use Contract Labor – and “be sure to get a completed W-9 so you can send 1099s where appropriate.”

6. Desktop Software
You fork over the money to purchase the latest version of Adobe’s CS4.

Which do I choose: Supplies?  Office Expense?  Depreciation/Section 179?
Recommendation: Depreciation/Section 179

As Cheryl states, “Software Purchases are a depreciable item unless the program has a useful life of less than one year. In most cases you would not replace your software each year so it should be listed as a depreciable item.”

7.Web-based software subscriptions
Being the fan of web-based software that you are, you have monthly subscriptions to FreshBooks  for your invoicing.  But where do those expenses go?

Which do I choose:  Utilities, Office Expense, or Taxes & Licenses?
Recommendation: Utilities or Office Expense

Here we get different opinions.  For Cheryl, “In a simple set of books I would classify payments to a Web Services Provider to utilities as you are utilizing their program.”  However, Jeanné recommends placing them under Office Expense.

8. Postage
There are still times when you have to send this by snail mail.  And that does in fact cost money.

Which do I choose:  Supplies, Office Expense, Other Expense?
Recommendation: Office Expense if small, Other Expenses if significant

According to Jeanné, you would place the costs under “Office Expense if it is a few rolls of stamps or the postage meter for letters.”  However, for large shipping costs, place them under Other Expenses.

9.Coffee machine, coffee and filters
You need your caffeine, we know.  But what kind of deduction is that?

Which do I choose: Supplies or Office Expense?
Recommendation:  Office Expense

“Office Supplies are physical widgets and stuff you use up (paper clips, pens, sticky notes, toner, legal pads, thumb drives, computer supplies, planners and calendars, etc),” says Jeanné. “Office expense might be more substantial or service related  (janitorial supplies, cleaning service, coffee supplier, water cooler, etc.)”

Bonus expenses: Using the “other expenses” category

The following are very common self-employed expenses that should be placed under the “other expenses” category:

* Bank/ATM fees
* Survey and research costs
* Professional “How To” Books (web design, programming, etc.)

Web 2 Point Dough: Banks and Jobs on Twitter, Tax Tips

Share photos on twitter with Twitpic

Royal Bank America is on twitter with their Spur The Economy Program. Maybe not all banks are evil. I going to follow them to see what’s the deal.

Looking for a job? Posting a job? On Twitter? Check out Tweet My Job.

Less than one month to go before the April 15 tax deadline. Here are some tax tips. Don’t forget to make a contribution to an IRA.

Nickelwise: Notes From SXSW

South by Southwest Interactive is way more tech than small business, but there was some good business information to be gleaned from my four days in Austin.  Two great panels that were applicable to small business were the “Making Ideas Happen” talk by Scott Belsky of Behance, and the Bootstap Your Startup panel.  Check out the slideshow presentation by Bijoy for the Bootstrap Panel. One of the best pieces of advice I heard about being productive is: “Don’t let your inbox overrule your to-do list”.

The Finance 2.0 panel was great.  I just wish more people came to the panel, because the panelists and I really want people to know that managing your money is important.  Here’s some links to people who wrote about the panel.  Check out the tweets at http://twitter.com/sxswfinance.

On the SXSW tradeshow floor,  I got a quick demo of Rudder.com.   It looks like a good tool for cash flow management.

Yesterday, Saul Colt from Freshbooks set up a lunch so I could meet the founders of Outright, Shoeboxed and Batch Blue.  The cool thing about all four of these companies is that they are using each others’ APIs to collaborate.  This results in an online eco-system of small business applications that goes from soup to nuts.  The business cycle includes CRM (Batch Blue)  invoicing (Freshbooks) , expense management (Shoeboxed)  and basic bookkeeeping and Schedule C calculation (Outright).

@SXSW: Finance 2.0, Money Management to Save This Generation

I am here in Austin for SXSW. Today, I will speaking on a panel at 10am. I am so happy to be on the panel with Mint.com‘s Aaron Patzer, SmartyPig.com‘s Michael Ferrari, Murali Subbarao of Billeo, and Stessa Cohen. Please come if you are in the town for “South By”. The panel will be in Room 18, Level in the Austin Convention Center. The hashtag for our panel is #finsxsw. WAKE UP!

Nickelwise: Stimulus Bill, Cheap Business Cards, and Free Resume Printing

The New York Times has an article about how the Stimulus Bill helps small businesses. Namely, it may help some taxpayers avoid the alternative minimum tax.

Looking for cheap and stylish business cards?  This blog post may help.

Fed-Ex is doing something special for job-seekers. On March 10, you can print 25 copies of your resume for FREE.

Check out LaidOff Camp and Miss Pink Slip for resources if you are newly unemployed.