RECORDS TO KEEP

The DSA Distributor Bookkeeping System has been designed with just two goals in mind: to save you lots of taxes and to be easy to use.

Benefits:

No special training or experience is needed to use DSA Books.
Your checkbook becomes your basic business record-keeping tool.
You are given all the forms needed for tax records.
Usually takes less than one hour a month!
We prepare monthly profit & loss statements for your business; provide quarterly estimated tax payment advice and yearly personal and business tax returns.
Just a low monthly fee and NO ADDITIONAL COST!

There are just a few simple forms that you need to familiarize yourself with in order to use the system and save thousands of dollars in taxes:

The MiniBook: Business Expense Diary, Cash Expense Report, & Vehicle Business Use Log
Home Office Deduction Expense Record

Each of these forms is explained in detail in the following sections.

Two additional forms need to be completed just once per month after you receive your monthly Banking Statement:

SIMPLE WAYS TO MAINTAIN YOUR BUSINESS RECORDS AND KEEP MORE CASH IN YOUR POCKET

These forms, together with your Monthly Banking Statement, your Weekly Settlement Statements received during the month, a calculator and pencil are all you need.

As you set up your record keeping, visit DSA Tax Planning for an overview of tax saving opportunities a an independent operator.

YOUR BUSINESS BANK ACCOUNTS

To avoid confusion and protect your business it is critical that you segregate your business finances from your personal finances. The best way to do this is to open separate bank accounts for your business and use those accounts solely for business related transactions – absolutely no personal expenses!

You should maintain two linked accounts: one checking & one savings or other interest bearing account. Corporate accounts will require an EIN number and corporate resolution.

Checking Account:
Call around and get the least expensive checking account available. Order your checks either from the bank or another check printing company and you are ready to go.

Savings Account:
At the same time, at the same bank, open a savings or other interest bearing account linked to your new checking account. Most banks can give you accounts linked electronically which will allow you to transfer funds with an ATM card. If your bank does not have linked accounts you can make your transfers between the checking and savings accounts by check. This savings account will be your “Reserve Account”.

KEEPING YOUR DAILY RECORDS

The secret to good record keeping and maximum tax savings is maintaining records of expenses and deductions as you incur them. This means keeping records each and every day. This may sound time consuming but it really takes only a minute or two each day and about an hour at the end of the month. You will find that the tax savings that result from good recordkeeping will save you a lot more money than you can earn during an equal amount of time spent running your business and servicing your customers!

KEEPING YOUR DSA DEDUCTION RECORD BOOK

DSA has provided you with two of our handy Deduction Record Books (we call it the “MiniBook”). You should keep one MiniBook in your delivery vehicle and one in your personal vehicle(s) at all times. The MiniBook is broken into three sections:

Mileage Log - Business Use of Personal Vehicle
Business Entertainment Expense Log
Cash Expense Log

These represent three tax deductions that have saved small business owners thousands of dollars in taxes every year. The forms are simple to use and we urge you to keep these records each and every day.

BUSINESS ENTERTAINMENT EXPENSE

Using the Business Entertainment Expense Log in the MiniBook could lead to thousands of dollars in tax deductions every year. Each time you purchase a meal and, in the course of that meal discuss business with a current or potential customer, you have engaged in an activity that entitles you to take a business entertainment tax deduction. Under current tax law, 50% of any such expenses are deductible on your tax return. There are two very important mechanical requirements in connection with this deduction:

You must maintain a contemporaneous record of these expenses. That means that you must make the MiniBook Log entries on a day-to-day basis. DO NOT try to recreate them at the end of the month or the end of the year.
You must retain your receipt only if an expense exceeds $75, otherwise only the MiniBook Log entry is required.

Your MiniBook Business Entertainment Expense Log record contains all of the information you need to retain for tax purposes. This is the only place you need to record these expenses, whether you pay in cash or by check. To the right you will find a sample Business Entertainment Expense Log from the MiniBook, filled out for a typical month. Usually one double page will be enough for each month.

At the end of each month, simply total the expenses for that month and record the total on your Monthly Recap Statement on the Line C, Entertainment Expense. Start your next month on the following page. It is also a good idea to photocopy the finished month’s page and store it in a safe place in case your MiniBook is lost or misplaced.

BUSINESS USE OF PERSONAL VEHICLE

The Mileage Log section in the MiniBook is a valuable tool to help you keep proper tax records for the many times you will use your personal vehicle in your business. Each time you use your personal vehicle for business purposes (visit accounts on your day off, solicit new business, etc.) enter the date, purpose of your trip and round trip mileage in the Mileage Log. That mileage is deductible at 40.5 cents per mile. This figure is for 2006 and it is adjusted annually by the IRS. Any use of your family car(s) that has a business-related purpose is a legitimate tax deduction. This deduction can be applied to any or all of the personal vehicles your family owns and can be used when any member of your family drives those cars, so long as they fulfill a business purpose during the trip.

If you use your personal vehicle to go from your home (office in your home) to purchase product from your vendor (your depot/supplier) each trip is a legitimate tax deduction. You do not have to enter each trip separately. Just count the number of days you have worked during the month, multiply it times the miles per round trip and enter this information at the bottom of the month’s page. Be sure to add this mileage to your monthly total.

Above, you will find a sample Mileage Log page from the MiniBook filled out for a typical month. Usually one double page will be enough for each month.

At the end of each month simply total the miles for that month and record the figure on your Monthly Recap Statement on Line D. Start your next month on the following page. It is also a good idea to photocopy the finished month’s page and store it in a safe place in case your MiniBook is lost or misplaced.

CASH EXPENSE LOG

The Cash Expense Log section of the MiniBook is used to record all purchases that are made by cash and therefore not recorded in your Business Checkbook. For instance, when you buy gas with cash, or purchase pens, sales pads, or other miscellaneous business supplies or pay cash for part-time help, the use of this form is the only way to be sure the expense is recorded to support your tax deduction. YOU MUST KEEP RECEIPTS FOR ALL THESE EXPENSES NO MATTER HOW SMALL. Do not record Cash Expenditures for any Business Entertainment Expense. These are recorded in Business Entertainment Expense Log section of the MiniBook

At the end of each month simply total the four expense columns and, when preparing the Monthly Recap, add the total to the correct category on that Recap. The Categories are numbered both on this Cash Expense Log page and on the Recap for easy reference. Start your next month on the following page. It is also a good idea to photocopy the finished month’s page and store in a safe place in case your MiniBook is lost or misplaced.

It is essential to keep receipts for all cash expenditures. Keep your monthly receipts in your Receipt Pouch and at the end of the month staple them together to the photocopy of the MiniBook page.