Monday, May 4, 2009
Bookkeeping in a Jewelry Business
Before we moved to MA, we lived near one of the small Finger Lakes, Hemlock Lake. (The small Finger Lakes are Conesus, Hemlock, Canadice and Honeoye) That is in New York State for those out of the country.
While the kids were in school, I tried several small businesses (this is way before my jewelry designing) In order to do things the right way, I consulted with a local accountant. I only mention the location because this accountant was in the sticks. That says nothing about his expertise. In fact, I found him very well versed in what I was trying to do. His office was in his home in Honeoye. Now, that is really a beautiful area. I've noticed that when I tell people that I'm originally from Rochester, NY (just north of the Finger Lakes area) they always think about New York City and figure it is very crowded, city like. Not so. Driving around the area where we lived was always a pretty ride. Even in the winter when a drive to Honeoye involved hills and curvy roads with lots of snow and often icy conditions.
Anyhow, my Honeoye accountant gave me excellent advice for both what I was doing then and my jewelry business now.
His first statement was to tell me that even if I was not making much (if any) money, it was a mistake not to claim my business on our income tax. A loss could be claimed and lower what we owed the IRS.
His second statement was to say that accounting can be very complicated and also very simple depending on your wishes. For me, I opted for simple.
Then he suggested setting up a business checking account would ease the procedure. This would track income (deposits) and expenses (checks) I set up an account in my name (as opposed to a family account.) I did not get a "special" business account as they are usually more expensive. Just an account that was mine and separate from the family account.
Back then, we did not have a computer let alone special computer programs for accounting. But he set me up with paper spreadsheets. It was just like Excel or any computer spreadsheet.
Fast Forward to now. (I don't have room, nor would you be interested in a blow by blow account of the changes I've gone through)
I use Jewelry Designer Manager to keep my inventory and my trusty personal checking account. The checking account has not changed.
I enter each purchase, including count of beads purchased, description and cost in Jewelry Designer Manager. Then when I make a piece, I take a picture, enter all the parts used and give it a number for easy identification. Pricing is easy then.
When tax time comes a few reports will give you your inventory and its value. The check book will give your income and expenses. That is about all you need to calculate information on a Schedule C income tax form.
Now I realize all this sounds as if this is easy. Not necessarily, so. You have to keep up with it. Still, my original accountant's advice of keeping things simple still holds. My check book includes deposits from sales and expenses from purchases. Inventory is the kicker and Jewelry Designer Manager does that for me. This, however, is the part I find hard to keep up.
Surely you all must have ways you do your bookkeeping. I'd love to hear your ideas.