Keeping organized with your income and expense records in a tutoring business is simple with one basic tool – a journal or notebook.
Make sure it is small enough to fit in a purse or bag to take with you wherever you go.
Every time you meet with a client, record in the appropriate column:
- Name of student
- Mileage (if you travel to meet)
- Hours tutored
- Payment received/or owed to you including check number or note if it was cash
That’s it regarding income!
For expenses have a section in the back for recording:
- Place of purchase
Keep the receipts in an envelope at home.
Use a new journal each year.
This system is simple so that when tax time comes, your records will be all in one place: income, mileage, and expenses.
You will just need to add up the columns and you’re done!
At the end of the year, place the envelope of receipts inside the notebook, write “Tutoring 201x” on the outside and secure with a rubber band. Then hold on to it in case you should get audited.
The IRS website states:
“Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.”
These records also serve another purpose – they show you how your business is progressing, and serves as a record in case you need to look back regarding a student or purchase.