Thomas is an entertainer for children's parties. He runs the business and works the parties himself; he has no debts so the finances are simple. What is the minimum that needs to be documented in his accounting?
As an entertainer for children's parties, Thomas should document the following minimum details in his accounting:
1. Income: Thomas needs to document all sources of income related to his business. This includes recording the amount received from each party or event he performs at.
2. Expenses: Thomas should document all business-related expenses. This includes any purchase of supplies, costumes, props, or equipment required for his performances. He should also track any travel expenses, such as transportation costs to and from parties or events.
3. Bank Transactions: Thomas should keep a record of all the transactions made through his business bank account. This includes deposits, withdrawals, and any transactions related to business expenses or income.
4. Invoices and Receipts: Thomas needs to maintain copies of invoices or receipts for all business-related transactions. This includes receipts for supplies purchased, invoices sent to clients, payments received, and proof of any expenses made.
5. Mileage: If Thomas uses his personal vehicle for business purposes, he should document the mileage to claim any applicable tax deductions for business mileage expenses.
6. Taxes: Thomas should keep track of his tax obligations and any related documents, such as tax returns, whether he opts for filing as a sole proprietor or chooses a different business structure.
By documenting these details, Thomas will maintain an organized financial record of his business, making it easier to track income, control expenses, and fulfill any tax obligations.