If you are spending most of your money in cash rather than by writing checks, you should list these expenditures on an expense report. Such forms are readily available at stationery stores and are designed by category: travel, entertainment, office supplies and so on. Attach to the form the receipts corresponding to the expenditures.

Paying by check gives you a record of all debits to your company. Most bookkeepers agree that it is best to work out of one checkbook for the business. This will facilitate record-keeping and make balancing your business checkbook much easier. Using different checkbooks is the cause of many financial problems when businesses begin.

Excerpted from Starting a Home-based Business