As a creative services entrepreneur, you may lack the time to keep up with bookkeeping or may feel intimidated by the process. QuickBooks is time-saving accounting software that may take some mystery out of creative services tax planning and bookkeeping.
Use QuickBooks to Track Business Expenses
There are several necessary and ordinary business expenses creative services companies may be able to deduct a part of their creative services tax planning. These could include software subscriptions, such as Adobe Creative Cloud, project management software, or client resource management tools. Web hosting for your website, telecommunication services, and physical tools that help you complete your designs may also be deductible.
The IRS requires documentation of your expenses, so it’s important to track your deductions during the year. QuickBooks may help simplify this process by allowing you to connect QuickBooks to your bank accounts, PayPal, credit card, or other payment sources. QuickBooks has the functionality to help you categorize and itemize your expenses based on different rules you create. This should allow you to run reports that show how you are spending every dollar.
Keeping track of receipts for transactions made in cash can be challenging, but QuickBooks may make the process easier. It allows you to photograph receipts with your mobile phone. The information from your receipts will be categorized based on the rules you set up.
Use QuickBooks to Manage Capital Expenditures
Your creative services company may need to purchase expensive hardware, like powerful computers, laptops, electronic sketch pads, studio cameras, high-resolution monitors, and quality office equipment. These may be top dollar items that have a useful life of multiple years.
As a capital expense, it will be recorded as an asset in your creative services bookkeeping as opposed to an expense on an income statement. The asset will be depreciated over its total life, and a depreciation expense charge will appear on your company’s monthly income statement.
You can record this expense in QuickBooks by using the following steps.
1. Select the transaction menu.
2. Then click “Add Transaction.”
3. Enter the amount of the purchase and a brief description.
4. In the “Select a Category” menu, choose “Other Business Expenses.”
5. If you have photographed or scanned the receipt, you can drag or drop it into the form.
6. When everything is complete, select “Save.”
After entering the capital allowance as an expense, use form SA103 to record the capital allowance. Fusion CPA has a team of experienced creative services CPAs who can show you how to monitor deductions, expenses, profits, and more using QuickBooks.
Use QuickBooks to Take the Pulse of Your Creative Services Business
Creative services financial advisors may recommend that entrepreneurs regularly assess the status of their business. Creating and reviewing detailed reports may be time-consuming. However, QuickBooks has tools to help expedite this task.
For example, creating a profit-and-loss statement can be done by selecting “Reports” in the navigation bar. From there, it gives you the option to create a profit-and-loss statement and balance sheet. You can also get a snapshot of your yearly income and expenses and create an account payable summary.
Get Help Growing Your Business from Creative Services Financial Advisers
At Fusion CPA, we are a group of creative services financial advisers focused on the unique needs of creative services businesses. Our experienced creative services CPAs offer to perform cost segregation studies and multi-state income taxes and explain R&D tax credits. We can help ensure tax law compliance and prepare returns for businesses that deal with complex tax matters.
We are a tech-forward firm. We can help your staff become better acquainted with QuickBooks and other accounting software. If you are ready to take control of your company's finances, minimize tax liability, and set the foundation for future growth - you can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice, or other professional services. Articles are based on current or proposed tax rules at the time they are written, and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.