2
Review your small business's existing record keeping policies. All financial information should be stored reliably, securely, and in an organized manner. All relevant information, such as bank statements, cancelled checks, and cash register tapes should be stored at least through the end of each reporting period. Having this information stored and readily accessible will help you resolve any issues or discrepancies that arise.[8]
There should be associated documentation for every transaction, with relevant explanations for transactions that will be used for deductions. For example, if you spent $100 on gas to travel to meet a potential client, there should not only be receipts (or bank records) for the transaction, but it should also be recorded that the $100 expense was to recruit a new client, and is therefore a deductible business expense.