Books by Clarence Parker, Low Cost Eating, Business Handbook

Business Handbook for the Self-Employed

1 Full size cover, click here

2 Some key points, click here

3 Table of contents, click here

4 Free information on getting started, click here

5 Free information on books and records, click here

Some Key Points

You need this book if:

You are starting a new business

You have poor records

You need simple records

You are going to be audited

You think you might be missing write-offs or expenses

For the past 25 years I have been doing annual tax returns as a part-time business. Many of my tax clients are independent contractors or self-employed individuals with no or few staff. They have not incorporated or even registered their businesses.

Several of my clients were subjected to aggressive tax audits and without my help could have ended up owing a great deal more for taxes. It was primarily because of their experiences, that I decided to write this book. The audit problems experienced by my clients were as follows:

Revenue and expense records were not properly recorded.

The business owners did not claim all of their allowable expenses.

The tax auditors were unwilling to accept explanations relating to the errors found and would not give the benefit of doubt to my clients.

The auditors made incorrect assumptions.

This book will be especially useful if you are having difficulty keeping books and records or do not have any reasonable system of record keeping. It will also help those who may not be claiming all of their expenses and those who would have a difficult time if they were audited.

This book is written for both Canadian and USA businesses. A detailed comparison noted there were no major differences except for sales taxes and the handling of a few business expenses. Also, there are no significant differences in dealing with Revenue Canada and I R S. If a person does not have good records, the tax auditor will estimate how much the business made and the owner must prove the auditor wrong.

If however, you find yourself in the middle of a tax audit in spite of all your best efforts, information in this book should help make the process less painful.

You must learn to organize your small business records so they can be easily understood. You need, for audit purposes, a system that makes it easy to trace income tax entries to source documents.

In the book, there are two important procedures that contain detailed instructions for setting up books and records and what to do if you are audited.

Statement made by the wife of a small 1-person construction business.

“Your handbook is a wonderful resource. It got me on the right track. Our books are now up to date, clear and simple to follow. I especially welcomed the information on claiming food, gasoline and utilities.”

Table of Contents
	Preface		v
	Acknowledgments		vi
1	Getting Started		1
2	Books and Records		9
3	Income Tax Considerations		21
4	A Government Tax Audit		35
5	Appendix		45
	1	Personal Expenses	46
	2	Balance Sheet	48
	3	List of Business Assets	50
	4	Revenue Invoices	52
	5	Revenue Invoices Summary	53
	6	Revenue Summaries By Client or Product Type	57
	7	Customer Information Record	58
	8	Basic Expense Ledger	59
	9	Multiple-Column Ledger	61
	10	Employee Expense Ledger	65
	11	Interest, Fees & Bank Charges Ledger	67
	12	Vendor Information Ledger	68
	13	Expense Invoices	69
	14	Business Use of Personal Vehicle	70
	15	Business Use of Home Property	73
	16	Monthly Revenue & Expense Summary	74
	17	Expense Summary for Income Tax	76
	18	List of Yearly Capital Purchases Form	79
	19	Bank Deposit Analysis	80
	20	Source and Application of Funds	81
	21	Estimated 5 Year Revenue And Expenses	82
	22	Business Tax Return Information	83
	23	Procedure for Setting Up Books & Records	84
	24	Small Business Expense Account Form	85
	25	Procedure for Handling a Tax Audit	87
	26	Reference Material for Small Businesses	89
6	Postscript		93

Free Info on Getting Started
The main items included in this chapter are as follows:
1	To start a new business there are few mandatory requirements other than keeping a record of your revenue and expenses. These can be very simple or more complex depending on your business activities. See Chapter 2, Books and Records.
2	Registering your business is not critical but it does offer some advantages such as protecting your business name.
3	While not always required, I recommend you obtain a Business Number (BN) from Canada Customs and Revenue and in the United States an Employer Identification Number (EIN) from the IRS.
4	The tax year in Canada for small-unincorporated businesses is the calendar year. In the United States both the calendar and the fiscal year can be used under certain conditions.
5	There are five possible business taxes in both Canada and the United States. These are income tax, self-employment tax, employment tax, sales tax and excise tax. The rules and regulations vary for all of these and you should obtain advice from a tax consultant.
6	Sales tax in Canada is more complex than in the United States. If you’re unfamiliar with the tax laws in your particular case, review this with a tax consultant to ensure that you’re dealing with them properly.
7	There are many insurance requirements but your primary consideration as a small-unincorporated business should be to protect the business (and yourself) from liability to others and from loss or damage of business assets.
8	Where you operate your business is important for maximum profitability. Initially, operating from your home offers a new businesses potential tax savings.
9	Use of a personal vehicle for business purposes also offers tax savings.
10	For a small business, I do not recommend incorporation. Before incorporating, I suggest you get as much free advice as possible.
11	You should always be prepared for a field audit.
12	If you are a very small business you will probably not be subject to a field audit at your place of business. It is usually not worth any significant tax savings to the government. However, your return may be audited and additional information requested.

Free Info on Books and Records
The main items included in this chapter are as follows:
1	Simple books and records are generally all that you need.
2	Good records will help save you money.
3	While most businesses use double entry bookkeeping, I do not recommend this for most small businesses. If your business grows, however, you may have to use this accounting system.
4	Try to separate your personal and business records.
5	It is especially important that you keep good records of all revenue received. If you do not and you are audited, the auditor will estimate how much revenue you received and you have to prove that you are right.
6	Keep track of all expenses. The government won’t let you claim expenses if you can’t vouch for them. Remember that expense receipts are like money so don’t lose them.
7	It is important to keep track of personal assets used for the business. The use of your home and vehicle(s) can provide significant tax savings.
8	There are mandatory, good to have and nice to have books and records. It is important that you know what you need.
9	To help plan your business activities and for income tax purposes, it is important to estimate how much money you’ll be making in the next two to five years.
10	A step-by-step procedure for setting up books and records is outlined in appendix 23.

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