Home-Based Business, Keeping Records
Home-Based Business, Keeping Records
University of Missouri Extension

Department of Consumer and Family Economics

A good recordkeeping system is essential to operating a successful home-based business. Would you believe you could save more than $112 an hour by keeping good records? Suppose you had a $20 business expense that you forgot to record. This oversight, in effect, raises your business's net income by $20. Using 1988 figures, overstating net income by $20 causes

* Your social security tax to go up $2.60 ($20 times 13.01 percent for a self-employed person)
* Your federal income tax to go up $5.60 (assuming you were in the 28 percent federal income tax bracket)
* Your state income taxes to go up $1.20 (assuming a 6 percent state tax).

The $20 expense not recorded will cost you $9.40 more social security, federal income tax, and state income tax. If you had recorded this expense in five minutes or 1/12 of an hour, you would have saved $9.40 in 1/12 of an hour or $112.80 per hour. That is a pretty good use of your time

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