TeachMarket.com

By Kathy Swann

Keep these tips in mind for tracking your business expenses and save time when you prepare your taxes:

Keep business and personal expenses separate. Open a checking account for the business, even if you are a sole proprietor. Use this account to deposit all money you earn in your business and to pay all of your business expenses. Apply for a credit card that you use for business purchases only. Use another credit card for your personal purchases, even if you have to ask the cashier to ring up two sales.

Be sure to record all of your business income and expenses. If you don’t want the expense of purchasing a software program, at least create a spreadsheet with columns for monthly income and expenses. Create a few columns for business expenses such as telephone, office supplies, etc. Don’t forget that cell phone and Internet charges can be claimed as deductible expenses if you use them for your business. Make sure you keep copies of all your receipts and bills for tax purposes.

Track your business miles. Keep a log of all miles used for your business. Trips to your client’s work site, the bank where you keep your business account and even the office supply store are all tax deductible. Take the time to record your beginning and ending miles and the reason for the trip. You’ll be amazed how much this adds up during the year.

Taking the time each week to record your mileage and business expenses will save you from the headache of trying to reconstruct the whole year at tax time, and most likely will keep you from missing a deduction you could use to lower your income tax.

Kathy Swann has over 25 years experience in office management, payroll and human resources and also works as a consultant for several small businesses. She is the author of the “How to Win” series of ebooks available on her website, Suncatcher Press.