Number one: Miles driven
If you use your personal vehicle for your home business then any miles that you drive for your business can be deducted as an expense for your home business. To help keep track of miles you will need to get a notebook and a pen to keep in the car at all times. If you get in the car to drive for business purposes you will need to write this down in your notebook. Be sure to record the date, the mileage when you left and the mileage when you returned, as well as the total miles driven. Also, be sure to include what the purpose of the trip was. At the end of each month, you can input the information into your computer using a spreadsheet or similar software; do not get rid of the papers from the original notebooks. When the notebook is full or if it is the end of the tax year, you should file the notebook with your tax papers.

Number two: Computers and other electronic devices
If you plan to use your personal computer and any other personal electronic devices that you for your home business as a home business write-off you are going to need to keep a log of all activity. With this kind of a write-off the IRS requires stricter reporting when it comes to using computers, video cameras, etc for business expenses because so many of them are also used for pleasure. To do this you should keep a notebook of some sort right next to your computer to record the day and time spent using the computer for business purposes, you should do this every day. Then make sure that you file the records with your tax papers at the end of the year so you can prove to the IRS that you did use your computer for business purposes.

Number three: Business expenses
You want to make sure that you keep a list of all your business expenses through the year or at the end of the year, you can write a list of all of the possible business expenses that you had throughout the year. If waiting until the end of the year to do it take your time when making the list because you can easily overlook the most obvious expenses. Some expenses that you might consider is paper for your printer, your coffee that you drink during working hours, computer software that is used for your business (if you also use it for personal use you should not deduct all of the expense) and the list goes on. By keeping track of your potential deductions, you can maximize your business write-offs and can keep better records of the expenses. You will also need to have receipts for all of these expenses for your tax records, so be sure to keep all of your receipts throughout the year.

Number four: Home office
If you have a home office you can deduct it as a business expense, however, you need to be sure that it meets the IRS's requirements of a home office. In order to claim a home office the room has to be used only for business purposes and can only have one entrance and exit to the room. If your home office qualifies, you need to record in your tax records the exact location of the home office, how many square feet it is, and the square footage of your home. This will make it easier if the IRS ever wants proof that you are using a home office for business purposes.

Number five: Utilities
You need to keep all of your utility bills throughout the year so that you can deduct a portion of them for your home business. When deducting utilities you cannot write-off the entire utility bill, unless it is something that is used strictly for your home business, such as a separate phone line. The reason for this is that most of your utility bills are going to be from personal use, so you will only be able to deduct a portion based on how many hours you work at home.