Software isn't required, but it doesn't take much activity before it's well worth it. If you have used a Schedule C, then you know what numbers you need, so it's just a question of how you add them all up.
The money you spend is not the same as expenses. For example, paying a credit card or other debt is not an expense, and purchases of equipment that will last more than a year must be depreciated. So your expenses will not match your bank account. Accounting software will help you track all of that.
To me, reconciling the bank statement to your accounting software is a good way to make sure you did not lose any receipts.
Cash transactions with no receipts are usually unreported, and skirting tax laws.
If you pay for anything with cash, and you want to write that off as expense, you should get a receipt to CYA.
If you end up owing tax at the end of the year, the IRS will want you to make estimated payments the next year so you are closer to "balanced" by the end of the year.
Last edited by jgbreeden; 28th March 2013 at 02:04 PM.