Spreadsheets 1, Schedule C 0! (or: Five Minute Taxes)

Schedule C, Have at thee!

One of the joys of having a crafting micro-business is doing yearly battle with the Schedule C (Profit or Loss From Business).

I might not have pulled in the big bucks last year, but I made it into the black and now it’s time to pay up. Thankfully I’ve learned a trick or two over the years and the actual form only took me a few minutes to fill out!

Stacking the deck for your Schedule C fight is as simple as tagging all of the entries in the accounting Ledger with a code for which line they go on. That way when tax time rolls around all you have to check for is if any costs have shifted groups.

Spreadsheets Are Your Foe Friend!

My basic accounting spreadsheet is below. It tracks the year-month, date, description, GL (General Ledger) code, Amount, and if Inventory moved in or out with the transaction.

It’s a very simple setup — I have another spreadsheet that tracks inventory, collects customer data, and calculates the profit per horse — but I don’t really need those details when it comes down to the actual accounting.

Simple Accounting Spreadsheet

Thanks to Google Docs, it’s a snap to go from this to the nicely summed total below on the right. All I had to do was add in the inventory changes and boom– taxes complete!

Since I’m too small to have a lot of paperwork (even if I did turn a profit), I can cheat and use homegrown GL codes to link the costs back to a Schedule C line.

Decoding the Codes

Simple Accounting GL Subtotals

General Ledger codes are used to split up income and costs into handy buckets for review. They are then subdivided into smaller groupings as needed, like splitting out income from the eBooks versus the Models Horses.

Most companies stick to something along the lines of the USG’s Standard General Ledger Chart of Accounts:
1000 Assets
2000 Liabilities
3000 Net Position
4000 Budgetary
5000 Revenue and Other Financing Sources
6000 Expenses
7000 Gains/Losses/Miscellaneous Items
8000 Memorandum

I’m more of ‘build as you go’ so my GL Codes were created as I added entries to the ledger. As time passed I moved things around, reorganizing to match the Schedule C changes and now they look like this:

1000 Taxes (Line 23 – Taxes and licenses)
2000 Sales & Payment Processing Fees (Line 10 – Commissions and fees)
3000 Web Hosting and Domain Names (Line 27 – Other Expenses)
4000 Office Supplies (Line 18 – Office Expense)
5000 Art Supplies (Line 38 – Materials and Supplies)
6000 Inventory/Bodybox (Line 36 – Purchases less cost of items withdrawn for personal use)
7000 (unused)
8000 Advertising (Line 8 – Advertising)
9000 Income (Line 1 – Gross receipts or sales)

This link (to Nifty Knowledge Rocks) is a wonderful rundown of everything that falls into each general category for the lines on the Schedule C.

The Five Minute Fib

Did it seriously take me only five minutes to copy then numbers into the Schedule C? Yup!

Could I have goofed off the entire year, not entering anything into the spreadsheet, not coding it correctly, and still have it take five minutes? Heck no!

Having accounting systems in place, even if they are as simple as mine, makes a huge difference in how much you can manage your business. Without that constant monitoring it’s easy to end up spending more than you expected to and a whole lot harder to pay the piper his due when the year is done.

Martha Bechtel

My name is Martha Bechtel and I write fantasy and science fiction stories, paint small model horses silly colors, cast resin and plaster magnets, code random code (and Wordpress plugins)... Come on in and join in the fun!

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