A lesson in record keeping for small business owners.
- If you are claiming expenses, you need to save the receipts. A cancelled check is not enough.
- Never pay cash for anything.
- Always use a separate credit card for business expenses. Don’t mix personal expenses with business. Doesn’t have to be an official “business” credit card or bank account, as long as it is separate.
- Keep your records for at least 3 years after you file the returns, longer if the item or asset is still in use, i.e. a loan or depreciation