Most people start their own business because they want to make money. The potential for profit along with making your own rules is motivation enough. But then consider the money you can save by leveraging the tax benefits of your business. Certainly, business ownership has some potentially tricky tax issues. However, with a little advice you can easily navigate those issues and still glean the tax rewards.

The best tax tip for anyone, in any situation, is to keep good records. This is especially important for new business owners. My advice is to record every cent of your business-related income the instant you receive it. Some clients may send you a Form 1099 during tax season; the IRS gets a copy as well. So accidentally misplacing records can be a big problem when the IRS finds income missing on your returns. Hang onto those 1099s, and create your own record-keeping system for all income, with or without a 1099. And be sure to keep your business income separate from any other types of income.

An easy way to do this is by setting up separate bank accounts for your business and for personal use. This way your business income and expenses will be clearly discernible from your personal income and expenses. Keep both checkbooks on you at all times so you will not be caught without the one you need. Writing descriptive notes in the memo field (e.g., Business--computer software) can also be useful come tax season.

Another good idea is to enroll in the Electronic Federal Tax Payment System. This will ensure that you make your estimated tax payments on time. The process is simple, and once enrolled you can have tax payments automatically debited from your checking account. Make sure you include your self-employment tax (15.3 percent of your business's net profit) while you are at it. This easily overlooked payment creates more tax debt than you would imagine.

Of course, the best part of owning a business is the tax deductions, right? The trick here is to keep immaculate records; you might find it helpful to track your expenses using the same categories as on the Schedule C form, as I have shown below. It simplifies things when you are figuring your taxes months from now. Anything that does not fit in one of the categories below can be placed in an "other expenses" file.

• Advertising. This includes business cards, online marketing, etc.
• Insurance. For life, property and casualty, or business insurance. (Note: Do not include health insurance in this category.)
• Business-related interest. Credit card or loan interest
• Legal and professional services. For example, fees your attorney charges for reviewing contracts, accounting fees, etc.
• Office expenses. Anything beyond routine supplies
• Rent or lease for business property. For example, rent paid on your office space
• Repairs and maintenance. For example, computer repairs
• Supplies. Routine office supplies such as paper, pens, toner, etc.
• Travel. Costs of traveling to a convention or meeting, or taking a business trip
• Meals and entertainment. Cost of business meals
• Utilities. Electricity, gas and telephone for your office or workspace
• Dues and subscriptions. For example, journals relevant to your field, and dues for membership in professional associations

What constitutes "other expenses"? That depends on your business. For example, as a tax writer, I buy books on taxes. I also buy books about personal finance, operating a business and even books on writing. All of those pertain to my work, making all of those books allowable business expenses.

There are dozens of ways you can use your business to save money on your taxes. The information here is just a start. I encourage you to expand your own tax knowledge so you can claim every deduction and credit your business entitles you to. By doing so you will not only help keep your business profitable, but it will also be a money-saving entity when it comes to your taxes.