L.I.L.A. Network Magazine

Keep a separate business checkbook: use three part checks. Regardless of your business form, whether a corporation or sole proprietorship, the three part check is necessary to build good, easy-to-use records in your regular files. § Send part one, the original check, to the vendor. § Staple supportive evidence such as receipts or invoices to the yellow copy (part two) of the check and file alphabetically in the vendor file. § Put part three in a numerical file for later viewing by IRS and reference by you.

Strategy 3: Join the pack-rat brigade and pay less tax.

Save every receipt, whether personal or business, for all money spent.

It’s virtually impossible for you to know all of the receipts you are required to keep. Since you don’t know what’s important and what’s not, it’s safest to save everything for at least three years. Remember, you carry the burden of proof. It’s rare that you can establish proof retroactively.

Strategy 4: Use a business credit card.

To keep your record keeping burden to a minimum, use a separate charge card for all your business expenditures. The charge card copy acts as a receipt for your travel, entertainment, and gas and oil purchases. It also eliminates the need to make an audit trail for the deductible interest. By using one or more credit cards solely for business, you can deduct the finance charges on the business cards as well as the annual fees on all cards used solely for business. ¨ JRivera