The most important thing you can do for your business is to keep good records. Keep your receipts in good order. Keep track of the business reason for each purchase and which client it was for. If you are reimbursed for a particular expense, make a note of that as well. Keep your business and personal finances separate -- use different bank accounts. Don't pay for personal expenses with your business account -- even if you later pay it back. It's important to keep the your business's records as professionally as possible.
The more your business expenses might look like personal expenses (clothing, for example), the more important your records will be in the event of an IRS audit. You may not be able to reduce the chances of an audit -- but you will be able to make sure that you are prepared to respond in the event of an audit.
Reporting Self-Employment Business Income and Deductions
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