| A | B |
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| Monitor the progress of your business. | Good records can increase the likelihood of business success. |
| Prepare your financial statements. | These statements can help you in dealing with your bank or creditors and help you to manage your farm business. |
| Identify source of receipts. | You need this information to separate farm from nonfarm receipts and taxable from nontaxable income. |
| Keep track of deductible expenses. | You may forget some expenses when you prepare your tax return unless you record them when they occur. |
| Prepare your tax returns. | You need good records to prepare your tax return. |
| Submit an annual tax return to the Federal government or... | potentially go to jail. |
| Support items reported on tax returns. | If the IRS examines any of your tax returns, you may be asked to explain the items reported. |
| Except in a few cases, the law does not require any special kind of records. | You can choose any recordkeeping system that clearly shows, for example, your income and expenses. |
| You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. | If you are in more than one business, you should keep a complete and separate set of records for each business. |
| Your recordkeeping system should include a summary of your business transactions. | For example, they must show your gross income, as well as your deductions and credits. |
| It is important to keep these documents because they support the entries in your journals and ledgers and on your tax return. | For instance, organize them by year and type of income or expense. |
| Travel, transportation, entertainment, and gift expenses. | Special recordkeeping rules apply to these expenses. |
| Employment taxes. | There are specific employment tax records you must keep. |
| Assets. | You must keep records to verify certain information about your business assets. You need records to figure your annual depreciation deduction and the gain or loss when you sell the assets. |
| Commuting expenses. | You CANNOT deduct the costs of of driving a car between your home and your main or regular place of work. |
