Okay, the first thing about owning your own business is this -- Get a file cabinet. Get a big file cabinet. The reason you need to get a big file cabinet is because You are going to learn to Save Everything!! You will learn to save pay stubs, no matter how large or small. You will learn to save receipts, no matter how large or small. You will learn to save utility bills (especially if you are working from your home). You will learn to save mileage (or get a small notebook to keep track of this), gas receipts, phone bills, records of expenditures on equipment, vehicles, repairs, anything and everything. The more organized you keep these records, the easier it will be for you when Tax Time rolls around.

The next thing is, for the FIRST year you are in business, you probably do not have to worry about putting money aside for taxes or for Social Security. They want to know how much you are going to make first. However, it can't hurt to put money aside for these either. This is because, during the second year, once they know how much you are going to make per year, they will really stick it to you (any self-employed person) on these two items. You can do your taxes once a year, like most people do, or you can pay taxes in advance quarterly. Really, unless you are making a LOT of money and you are in the habit of spending it as soon as you get it, once a year is fine.  

If you subcontract for an out-source company, the company will send you a 1099 (meaning they report your income).  Most doctor's offices and clinics will also send you a 1099.  That's the form that's used if you are not an employee and they don't take out for taxes or social security.  If they don't send you one, call and ask for it.  Even if they pay you in cash, do NOT be tempted to just not claim this income.  Believe me, the doctor is taking your wages off on his taxes, and he has your social security number.  He has to write in your SS number in order to claim your wages as a deduction for his business.  So, the IRS KNOWS how much you made by working for that doctor.  

At the very least, keep track of what you make working for specific doctors, etc.  If you don't pay Social Security in, you can't draw it out eventually either. Also, if something happens to you, your children cannot draw survivor benefits on your behalf. It is easier if you can get an employment contract with a company who will take these payments out for you. If you don't see it, you never miss it!

Taxes are a land unto themselves. The better organized your records are, the more prepared you will be to navigate this land. If you do your taxes yourself, (yes, it really can be done yourself), you will have to have a Schedule C (which lets you calculate how much you have made in profits over the year), and a Schedule SE (which lets you calculate how much you owe in self-employment tax). Now, if you have children and are still within the income guidelines, you can still take the Earned Income Credit on your children even if you own your own business and work for yourself. Yes, people, you really can. If you read the income tax instruction booklets, it will tell you all about how to do this. You can also take daycare costs and health insurance costs just like everybody else. 

If you work at home, measure the room you do your work in. You can take a percentage of your mortgage or rent, your utilities, phone, etc., off on your taxes also for home office expenses, and that's another whole form to fill out (Form 8829) Expenses for business use of your Home.  That room or office space represents a percentage of your entire home space, and this is the percentage you will be able to use as a deduction.  

Any expenditure you make, even if it is just for paper clips or staples, keep records. Organize them into categories such as Utilities, Mortgage, Insurance, Office supplies, Equipment expenditures, Equipment Repairs, etc. You will be so thankful that you did when tax time comes around. Even if you don't do your own taxes, whoever you pay to do them will be thankful if you organize AND they will get your taxes done much more quickly. 

Personally, because we also do our farm taxes every year, on top of the self-employed taxes for my husband, and I now have W2 forms as an employee, our taxes get pretty confusing, and there are about 20 pages of forms to fill out and send in.  I pay for the tax software through H&R Block and do my taxes with a computer program, which makes it MUCH easier for me.

I am NOT an expert on taxes or social security payments.  If you want to know more about either one, here are the links to investigate:

Social Security Administration

Internal Revenue Service

Here's their special section for Small Business/Self-Employed:

Small Business/Self-Employed IRS Info

Okay, that's enough about taxes and Social Security.

Since I work at home and my husband is half-owner in his own business, we have two home offices set up. We have two filing cabinets. One is for his records, and one is for mine. These are only small, two-drawer cabinets. I have my personal records in the top drawer of mine, and business records are in the bottom drawer. He only has stuff in the top drawer of his, and I confiscated the bottom drawer of his for extra office supplies such as paper, labels, etc. Of course, at the moment, his partner handles the accounts receivable and the accounts payable for their business. If he didn't, we would need more file cabinet space. Those file cabinets must be well-organized also.

He has his desk. I have three. My desks contain my computers, my communications phone, a telephone, my modem, speakers, mouse pad, and my in-basket. My scanner and printer are spread out over the tops of the file cabinets. My in-basket contains a pile of stuff, both personal and business, that is waiting to be filed away. His desk contains a calendar, his pipe rack, a mail holder, and a television set. Okay, he really doesn't watch TV at his desk. I only put the television there to move it off the buffet; and I haven't gotten around to moving it back yet. (He really does most of his record keeping in the field, though, and he hands me his receipts to file when there are too many to keep in his portable organizer). We also both have small digital clocks on our desks.

As our homestead grew larger, we added livestock records and AKC records and ADGA records in the files also.  We got a separate hanging file box for receipts with separate folders for farm receipts, painting business receipts, and MT receipts.   We have also added a small metal locking file box for our tax information.  Oh, well. I guess you have the idea by now that Organization is the Key. 

My desk may look a mess at any given moment, but there really is a method to my madness. Anyway, all types of home businesses vary. I can't give you detailed instructions on how to set up all different types of business. I can, however, give you these generalized instructions as above. Every business is different. Having done business consulting for setting up various types of office environments, I can tell you that everything will vary according to what you need for YOUR business, but Organization will remain a key part in ANY type of business.

If you have difficulty in keeping track of paper records, get computer software and put the records on computer, saving them on disk at the end of each day, or hour, or week as the need arises in case of a computer failure. You can always print them out also and tuck the printouts into the file cabinet. It will at least look organized that way. If you do have a computer failure, you will have hard copies of everything already there at your fingertips. Wonderful programs can be found for accounts receivable, accounts payable, payroll, bookkeeping, etc. There are programs that will even print out a financial statement if you want them to. 

All you have to do is enter the numbers. Hire a business consultant if you are not confident in your ability to find what you want. If you just go look at a computer store, or even WalMart, most of those places will have programs that are designed specifically to keep records for small business owners. The Small Business Administration has a web site filled with programs for small business owners that are free for download to your computer. You can find that at: