I need an accountant

I got some good news on my voice mail this morning – my tax audit is unofficially over. I haven’t mentioned it here before: The “Small Business Self Employed” division of the IRS audited the Schedule C of my 2005 tax return. It took about 2 months of mailing binders of documents back and forth between Washington and Pennsylvania, but the examiner has closed the case with no change – I accounted for every penny on my return.

With the threat of a $20,000 tax increase if I didn’t have receipts for a questioned expense no longer looming over my head, I decided it was about time I figure out where I stand for this year financially. I always have a gut feeling whether I’m on track or not, but there are just so many transactions going through my accounts both ways that I have to sit down for a few hours to figure out how any period of time went overall. I did that tonight with the help of QuickBooks and lots of printing of statements.

If I believe what I see, I’ve already made more in the first 6 months of this year than all of 2006. While there’s a noticeable drop between March and April when a record number of chargebacks ate up several thousand dollars, overall I’ve reached 6-figure revenue earlier into the year than last, and spent less per month on advertising despite that.

The sad thing is it’s going to take me a much longer time to figure out where the extra revenue is coming from (higher sales volume obviously, but why are there more sales?), why my expenses are down, and where the profit has gone, as I can only account for about a third of it making it into savings. I’m sure everything is accounted for, as it always has been when I’ve gone back and balanced accounts to check, but the fact that right now I haven’t a clue, shows how much I need both an accountant and better tracking of ROI on my advertising.

That brings me back to one of the projects I’ve wanted to start for well over a year now, which is replacing my broken AdWatcher install with my own ad tracking system. On top of saving $240 per year I’m paying for software that botched itself during an upgrade, it’ll be a lot of fun, and being involved in it like I was with W3Counter will give me tons more insight into the ROI of my currently-almost-unmanaged advertising spend.

P.S. I forgot to explain the “unofficially” part. My examiner is closing the case, but I won’t get official notification until it’s approved by a manager some time in the next few weeks.

Posted on June 28, 2007 in Business, Personal

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  • http://www.ilovecode.com Sara

    Augh, what a pain. This year (actually a couple months ago) we finally got an accountant. business has been growing and we didn’t want to make any mistakes with that. I can’t believe the audit took that long. That is just awful.

  • http://www.CleverTools.com Jason

    Dan, will you be releasing your ad tracking software as a service or downloadable software? I too, hate Adwatcher and I am going to drop them very soon. We are going to build or own system for Clever Tools, but your software is so good I’d love to take a shot at using it instead.

    P.S. I am very impressed with how much revenue you have- good job!
    P.P.S. How is your new fight with chargebacks going? I have had quite a few lately too.

  • Dan

    I’ll be able to answer the first part better in 3 months. I’ll be developing it for myself either way, but whether I release it commercially depends on the career decisions I make at that point. Check out my post and comments from Monday for the chargeback situation. Things are improving, but I’m still far from happy with it.

  • http://sitetruck.com oliver

    To make the amount of money in 6 months to what you made in the whole of the last year is pretty amazing. We’re only $1,000 a head of last year to this point.

    Accounting wise, you could build a web based system to calculate the amount you’ve spent and the amount you’ve made.

  • http://www.mysiteonline.org/ Brendon Kozlowski

    I’m really looking forward to using Mvelopes(.com) sometime within the coming year. The fact that it can integrate with *all* transactions seamlessly is extremely beneficial; and the UI helps too.

  • http://www.doolally.net doolally

    Dan, I think it’s amazing the turnover you do and the fact you work as well and develop w3counter.

    good work!

  • http://121directresponse.com JMG Hatboro

    Hey…Good job getting rid of the IRS headache with giving in for even $1.00. They usually don’t settle without taking in a few bucks as result of an audit!