There has been much discussion about audits lately and there are many misconceptions out there. Statically, the IRS audits more self-employed individuals because they know that many self-employed are lazy and do not always do what they need to do to show they are in business with the intent to make a profit.

I did not say you must show a profit but you must run your business in such a way that shows you are trying to make a profit. At the minimum you should be sure to have the following things in place:
1) A separate bank account in which you deposit ALL of your sales and all of your bonus income
2) A calendar that shows all of your business appointments, with whom you met, where you met and the purpose of the meeting. You can devise your own shorthand in your calendar to meet these requirements
3) A mileage log of some type. You can use your calendar and mark the beginning and ending odometer readings next to the name of your appointment. Be sure to take an odometer reading on December 31 of each year and mark it on the calendar as well as a final odometer reading and a beginning odometer reading if you change vehicles mid-year.

 
This information is provided in an effort to help you gather and organize the information necessary to file your individual or small business income tax return. While these financial tools are not a substitute for financial advice from a qualified professional, they can be used as a starting point in your decision making process.