You need not face tax time worrying about your various tax claims and exemptions If you dedicate time and effort to record keeping, you can avoid last-minute worries about having proper documentation in support of your tax filing. The key is to create a record keeping system that is consistent, organized and maintains receipts and other documentation.

Keep a tax calendar. Your tax calendar should show all deadlines for filing returns and making payments. If you refer to that calendar weekly, you’ll be able to take action promptly in order to avoid financial penalties. You want to pay your fair share of taxes, without either overpaying or owing additional funds to the Internal Revenue Service.

Your checkbook or general ledger should be your major financial documentation. All funds passing through the business should be documented in your checkbook and logged into the general ledger. This is the master record of the financial transactions of the company. This record of cash flow may be needed for verifying information to the IRS.

Even if you are a solo entrepreneur, you should still set up a separate bank account for all business transactions. This ensures that all incoming and outgoing funds associated with the business are properly documented. If you do not have a business name, open the account in your name as a business account. This account is a master record of the financial history of your business. Don’t use it for any personal expenses. Deposit and enter all cash and check receipts into this business account. Post all expenditures through the account. You may keep a separate cash box and records for expenses that you draw from petty cash.

You can set up petty cash as a cash box or as a subsidiary of your bank account. With a petty cash account you can obtain advances for certain expenses. Whatever the amount, the business needs to have petty cash for small day-today expenses, such as parking or postage stamps. A limited number of people should be authorized to disperse such funds, and signed receipts should be required for any use of petty cash.

You will need additional information from the IRS for tax planning purposes. Information such as depreciation and allowances for interest should be gathered from the IRS or your tax consultant or accountant. You can access tax forms and information on the Internet at the IRS Web Site at http://www.irs.ustreas.gov. The site has a wealth of information and can provide insights to help make your tax preparations less complicated. Downloadable publications are available on the web site.

If you would like to discuss how taxes affect small business or business record keeping, contact the SCORE® Association (Service Corps of Retired Executives). More than 12,000 volunteer, business counselors donate their time and expertise to assist entrepreneurs. SCORE® is a nonprofit organization, which provides free and confidential business counseling to small business owners. For a referral to the SCORE® chapter nearest you, call 1 (800) 634-0245.