Numbers Don’t Lie
Tax Preparation
I am so very close to finishing up tax prep for 2023. I was off by a huge glaring $6,000. It just did not make sense. What it came down to was operator error. Had I remembered that I might have been calmer and been able to find it quicker. The rule is the larger the error the faster you will find it.
See, the thing is with bookkeeping is that if you’re off $1.50 you could say, “Who gives a crap.” And just fudge something. I know a CPA would likely have heart failure, but you know what? I will fudge away with such small amounts with absolutely no loss of sleep on my own finances. I draw the line at anything over $3 to $5, depending on how I feel. Normally, I go after that stuff. I’ve been doing this for so long that I am comfortable even going after 2¢ which is usually me reading a 9 for a 7.
She trained me to be perfect. So, I’m perfect.
In the beginning, when I didn’t know so much about bookkeeping it was tedious finding those errors. Now, like I said, it doesn’t bother me.
If the error is evenly divisible by three, likely it is a keying error which is operator error. You just didn’t key it in right. Like if you were off $27. Twenty-seven divided by three is nine. Evenly. Just go back through your statement and match every entry number by number. There are some people who try to do that checking between what is on your computer monitor and what you’ve got on the statement, but I have found it is harder to catch mistakes. I need the statement on one side and the printout from the computer on the other and do a line-by-line search. Yes, it takes time, but it’s just what you have to do.
Why I say that is that I’ve also trained a lot of people to do my job. That is where they start resisting what I tell them to do. The younger they are the more they resist. There is also a rule that you do the math on your calculator. That means using paper calculator tape. You would not believe the number of people who either want to do the math in their head or on their telephones. I remember one guy said he didn’t want to waste paper. Yeah, good luck with that. It does not work.
I do save anything I print that I end up not using. I use it all for scrap paper. Nothing gets wasted. For that matter, I could save whatever calculator paper I use, roll it up the other way and use the backside for to do lists, or for recording whatever keywords I use in my articles. I will waffle back and forth between keywords that have been used thousands of times with those keywords that haven’t been used as much.
The earliest mistakes I made were to not be careful about putting the stinking number in the correct column. Like if it was a deposit or a check. One goes in one column for debits and the other one, the deposit, goes into the column for credits. A debit takes something away, and a credit puts something back in. Like the statement for your checking account has a payment or debit of $65 to a credit card. Then, when you get around to reconciling the credit card, that $65 payment is recorded as a credit. One out…one in. If things went right with your program, the credit will already be there for the credit card. That’s another thing people would mess up on putting another payment in when it was already there. Just not being observant.
I have to admit it took me a while to get used to it, but once all those statements for the year for both checking, savings and credit card accounts you can then go through and figure out how much you’ve got for business related expenses and how much for personal expenses.
Because I’m not earning anything with my writing, I did not claim any business-related expenses. Maybe next year. I’m not sure when what you are doing qualifies as more than a hobby. There was the year I made $58 with Medium. That did not count. Last year I earned about $145. That might count.
My husband, however, still has a job and many of the things he pays for are directly related to his job. Things like courses he’s taking, books he has purchased, subscriptions, memberships and things like that. You’d have to talk to your tax person to see if everything you are claiming is admissible.
I remember once we had a client who was a real estate agent. The woman got to claim her shoes, purses and sunglasses as business expenses. Maybe at the end of the year when the taxes got sorted out that might change, but in the first go through I was instructed to always say those were business expenses. Hey, she had an image to uphold with her clients.
There are also rules that apply to how much mileage you could claim for business expenses, meals and stuff like that. With our clients when they went out with their kids, and we saw a child’s meal on the receipt, we could not count that as a business expense. But if it was just the husband and wife? Well, they were in business together and presumably they might easily have a conversation about their business. Like I said, those were all rules of thumbs for other people.
I also remember the one client who used to do a lot of food prep for the office. They were always having lunches which, I suppose could be construed as business meetings. However, the CPA told the client if she supplied the CPA with pictures of what she was preparing then the CPA would count it as a business expense. They never got listed as business expenses because the client thought it was silly. A word to the wise? If your accountant, bookkeeper or CPA asks for something, give it to them.
I could never work with my husband. He pulls that shit all the time. “What do you need that for? That’s silly. You’re crazy.” Fine, we’ll discuss this in heaven where I know you won’t think I’m nuts. I know on that $6,000 I couldn’t find he was doing that. It just irritates me, and I am really glad I found it. My world was not right. Now, it is. I’ll finish everything up tomorrow because I just spent 4 hours sorting through the mess to find it and I am tired.
I did however come up with some rules for my own stuff that will be useful in the future. I take pictures of all the deposits. That way I know where they are coming from.
Numbers don’t lie.
Thanks for reading.
P.S. I use QuickBooks as my accounting program. I suppose you could rig up an Excel spreadsheet to do the same thing, though I wouldn’t know off-hand how. It might be an interesting project.