If you run an online business, categorizing your expenses and income is probably something you haven’t looked into very much. An online business usually has digital records supporting what money is coming in and what money is coming out. You may be using PayPal to do your transactions which provides a complete history so that you always have everything on file. However, when you are reporting your income and expenses to the IRS, simply using PayPal is not enough. You need a third-party service that can track your income and expenses at a higher level. For instance, you should always be sending your PayPal income into a business bank account. You never want to mix business money with personal money, you should always have an established business bank account and a separate personal account. When you pay yourself through PayPal, that money should go into a business bank account which you can then write a check to yourself. This allows you to get paid in an adequate amount of time and you are complying with all of the regulations that are necessary in case you get audited and have to prove where your money is at. A good practice is to use a third-party service, that can help you categorize income into different categories so that if you do get audited, you can tell the IRS agent exactly what you are spending your money on for the business since you have it all categorized. Additionally, when you pay yourself you can also mark these payments as a transfer so that you have a complete record of how many payments you have made to yourself, how often you’ve made them and for how much money.
Mint:
Mint is a free program that is primarily used for individuals to track their income and expenses. Mint is actually a really complex program and it works extremely well. Basically, you hook up your bank account and PayPal account into Mint and it will completely and automatically process everything that goes in and out. Additionally, it allows you to categorize incoming payments and outgoing expenses into your own customizable categories. The program has a lot of categories built into it already, but most of these are for individuals and not for businesses. Believe it or not, you can actually manage your income and expenses through Mint. Since it’s free, it won’t cost you a dime and it is an extremely efficient way to keep track of everything you are spending money on and how much money you are making as a business. If you run an online company, you will probably love how straightforward and technological the Mint program is. It’s very advanced and it allows you to view a number of different graphs and trend reports that are completely customizable to your needs. For instance, you can view how many expenses you have paid to an individual contractor over the course of one month or several and you can also see how many payments you have made to yourself through checks out of the business bank account. Ultimately, Mint makes managing your expenses when running in SEO or other type of business extremely easy. I highly recommend it to anyone that offers digital products or services online and needs a way to organize their finances.
