If you’ve been using a pen and paper system, start by giving yourself a pat on the back for a good start. You deserve credit for thinking about the issue and consistently maintaining records. It sounds like you are ready to take it to the next level, and yes, there are some better ways. My company uses QuickBooks for bookkeeping, along with the services of a local CPA firm, both popular options worth considering.

Another low-cost way to step up your tracking is to start using a Profit and Loss Statement (P&L) spreadsheet like this one, available free from Entrepreneur Magazine. It provides a basic template for entering sales revenue, direct costs, operating expense categories, and taxes to create a bottom line calculation of net profit. Depending on how you file your taxes, you may also wish to consult the IRS website to check out the expense categories used in the sole proprietorship Schedule C.

Photo by Alan O’Rourke

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