What is a Self Employment Ledger
Say you found something that you are super passionate about and want to share it with other people. What could you do with that thing? Maybe you would like to start a business, that way you get to share your passion with other people and be in charge of that thing. Your business could be something that you make, or it could be something you like to do, such as a fitness and wellness company. Whatever you decide to do with your business, you would be considered self-employed. You’ll soon realize you’re asking yourself “what is a self employment ledger”, but we might be getting ahead of ourselves. Read on, we’ll get to that.
Once you decide to go down the self-employment route, there is a lot that needs to be done. First off, you need to decide on what to do, then you need to find your niche and narrow it down to the exact thing you want to make your business about. Following that, you need to set your goals to make sure that you have a blueprint for success. You have to make connections, which is both for finding partners and people who want to buy from you. All of that falls under the marketing aspect of the business.
Marketing your business is one of the important things that need to be done for your business but that can’t happen after a few other things. You can’t market a business if you don’t complete all the necessary paperwork. And after that, there are a lot of legal responsibilities involved, such as bookkeeping and finances.
One of these legal responsibilities is proof of income and expenses, which is a self-employment ledger. What exactly is all included in a self-employment ledger, and what is all?
What is a Self-Employment Ledger
As mentioned above, a self-employment ledger is something that provides your business, or mainly you as the business owner, proof of employment. Documenting proof of self-employment is very important for multiple moments. It is a way to track your income, that way you know how much you charge people for different services so your income can be consistent. That way it will be easier to estimate your income in case you need to qualify for government healthcare subsidiaries.
Another reason to have a self-employment ledger is that it can be difficult for business owners that work independently to prove income when applying for a loan. Having a self-employment ledger will make that process easier. And although a self-employment ledger is not an official record such as a tax return might be, it can corroborate your income.
What Goes in a Self-Employment Ledger
Income is one of the main things in a self-employment ledger, but there are more things in it. Other parts of a self-employment ledger include expenses, assets, and liabilities. Self-employment ledgers are great at keeping track of your business’s financial health and making it easier to file taxes. It will also help make sure there are no major problems by spotting them early and taking corrective action early on. Another way you can use a ledger is by generating invoices or making your w-2s.
We explained more the reasoning behind why a ledger is important for income aspects. But we haven’t gotten into why it would be good for assets and liabilities. Assets are anything that has value and is used to generate income. It could be money that sits in a bank, any equipment, or prosperity. Liabilities are what your business owes; these can be loans or credit card balances.
How to Make a Self-Employment Ledger
A self-employment ledger is not complicated and is useful because it tracks all your self-employment income and expenses. When applying for health insurance, there is no set form required. The only thing that needs to be on the ledger is your income reported accurately. Meaning you can use any software to generate a spreadsheet yourself. Or you can find a self-employment ledger template online.
Self-employment ledgers can be very straightforward. It is important to remember that a self-employment ledger is accurate and up to date. It is also necessary to have it be easy to read and support your income history.
It is important to have a method for tracking your payments. There are different levels of intensity you can use to document this. It could be as simple as writing down how much the payment was, who made the payment, and what day the payment was made. Or you could use accounting software to make a more sophisticated method for tracking payments.
Whatever way you choose to make your self-employment ledger, you need to make sure that it is consistent and to update it regularly. That is the only thing that matters, and it makes sure it is accurate. It will help you stay on top of business finances, and track your progress. Falling into a schedule such as updating it once a week to ensure that it is up to date. It will also keep you organized and efficient with your work.
Good and Bad Examples
Just like anything else in the world, it is possible to have good and bad self-employment ledgers. A good self-employment ledger is accurate and supports records of your income. There is no set way it needs to look; it could be handwritten, a spreadsheet, or made on accounting software. As long as it is accurate and clear to read, most institutions will accept it.
A bad ledger can be easy to make. If there are any inaccuracies or misrepresentations, it can harm you in the long run. If the IRS cannot verify your income, then they might deny you government healthcare subsidiaries. Banks may deny your loan applications. If you use your ledger for taxes, it is important to make sure you report accurate income to avoid the attention of the IRS. If your tax return is inaccurate, it may result in an additional tax bill. Or you could get tax penalties and interest charges.
It is important to have a self-employment ledger at any stage of your business. It doesn’t matter if your business is starting or has been around for many years. A self-employment ledger documents your income and expenses for all points of your business.
When having a ledger, you can see how well your business is doing. You can also decide what the best ways to allocate your resources are. If your self-employment ledger is well-kept and up to date, it can be used as evidence if you or your business happens to get audited. The well-kept self-employment ledger will avoid any potential penalties.
Once you know how to use and keep using a self-employment ledger; and know you can use it for your income, expenses, assets, and liabilities, it will be a useful tool for any business owner.
Need Some Help?
Keeping a self-employment ledger can be a lot of work, and there are a lot of things that need to be included in it. There needs to be income, expenses, deductibles, and a lot more included in it. Maintaining your self-employment ledger can take up a lot of time, and there is a lot to remember.
All of that takes up a lot of time, thought, and energy. There has to be some way to make this easier on you as a business owner, but what could it be? Here at our company, Persona, we can do it for you! Your self-employment ledger will let you do all of that automatically.
At our company, we will monitor your expenses and log them. Meaning you don’t have to worry about that. We have expense management where we save you hundreds of dollars by allowing you to easily track deductible expenses and provide you with a business account. We have every feature of your traditional bank account, and we have even more! Including financial partners of Goldman Sachs & Stripe Payment Company. And, your business will be FDIC insurance eligible through us. Your money is fully FDIC insured, meaning you can sleep soundly knowing your money is 100% safe.
Summary and Conclusion
There are a lot of important things needed to run your own business. Quite a bit of thought goes into it by deciding what you want to make your business be about, might even need some schooling involved. Not only that, but there is more than enough paperwork when you are starting a business, and during the entire time you are running the business. One of the things needed is a self-employment ledger. It is where you keep track of your income, expenses, assets, and liabilities.
Self-employment ledgers take up a lot of time and work; it can get hard to remember to log everything when needed. That is why our company, Persona, is here to help. Our app and website will take care of it all automatically. You don’t have to worry about any of the logging. You only need to focus on your business. Download our app today in either Google Play or the App Store. And, it’s completely free!