Really Need Some Advice About Bookkeeping and Taxes

I've worked from home for the past two years building websites and selling advertising on those websites (through Google's Adsense program).

In the first year I didn't really make that much. I have to admit that I didn't really keep very good records of what I spent and earned. At the end of the year I simply declared all my income without claiming any expenses for fear of being audited.

In the second year (last year) I kept better records but was still quite disorganized. I kept track of how much I spent and tried to keep a copy of paperwork such as invoices, receipts etc.

The problem is that I don't really have a set of books and I find it really confusing to try and go back through my paperwork to put together a set of books for an accountant.

I filed online last year and has to pay the IRS around $20 which was my first year not getting a refund. This year I made a lot more money and I owe the IRS quite a bit this time.

The other problem is that I have been running everything from my personal accounts. I haven't opened a business bank account although I now realise this is something I should do.

I intend to go to an accountant but I would like to put together a set of books myself, both to save money but also so that I understand more about the business finances.

I think I was supposed to make estimated payments to the IRS this year since I owe them more than $5000. How will they determine any penalties/interest when I file?

Last year when I filed online I just have details about my income but it didn't ask any questions about when I earned that income during the year.

Also, how am I supposed to pay myself. I know nothing about payroll or claiming expenses. I've been just taking what I needed out of my personal account. I think I have kept enough back to pay the IRS but i'm not sure if they're going to apply interest for me not making estimated payments quarterly.

I read somewhere that when you operate as a sole proprietor you are free to keep any profits after tax has been paid, so I kind of figured that I could spend anything I made as long as I paid my taxes at the end of the year.

Any guidance and help would be really appreciated. Thanks!