Now for obvious question: Which method is better?

Well, here's how I look at it. If you want to get highest deduction, you should "run numbers" under both methods and then use whichever method results in higher deduction.

You are allowed to pick whichever method you want.

But once you pick a method, be careful to follow rules on "switching" from one method to other: You can switch from Mileage Method to Actual Method, but generally are not allowed to switch from Actual Method to Mileage Method.

Having said that, let's be practical. If you hate recordkeeping, use Mileage Method. It's much simpler and faster. You won't have to keep all those receipts.

Even Mileage Method requires some recordkeeping, however. You should keep a log that documents business use of vehicle. Here are 3 IRS-approved car logs:

1. Daily Log. Yep, you just record all business miles for all 365 days of year.

2. 90-Day Log. Here's a little-known rule -- instead of keeping mileage records for entire year, you can get by with just a representative portion of year -- and a 90-day period is considered an adequate representation of entire year.

So you would keep a Daily Log for a 3-month period, say January through March. To get your annual mileage total, you multiply 3-month total by 4.

3. One-week Log. Here's another short-cut: The IRS also allows you to keep a log for just first week of each month. Then you multiply that week's mileage by 4 to get monthly total.

Regardless of which method you use, there's a goldmine of deductions sitting right there in garage.

Wayne M. Davies is author of 3 tax-slashing eBooks for the self-employed, available separately or as a 3-volume set, "The Ultimate Small Business Tax Reduction Guide". http://www.YouSaveOnTaxes.com/ultimate-guide

5. Letters To Do

6. To Do On Internet

You should also make up files for forms we provide in Lease Purchase section.

1. Tenant/Buyer Telephone Credit Form

2. Tenant/Buyer Preliminary Info Form

3. Lease Purchase Property Research Form (Note: Along with your telephone script, you should also have a sheet typed up with advantages you want to discuss with seller)

You should make up a fax file, so if someone requests a brochure, newsletter, products you offer, or a tenant/buyer wants you to fax form, you can do so.

The fax file should contain:

Newsletter (if have one, single sided)

Products Offered (if you have any)

Tenant/Buyer Evaluation Form

Credit Card Authorization

Brochure (on white paper, single sided)

House flyer (flyers for any properties you control)

Your tickler file (accordion file with days 1-31, and manila folders with 12 months), should fit in your desk drawer or under it. You can put your To Do List folder in it at end of day for next day if your space is limited.

Your filing system is an integral part of your business. Be sure your files are set up properly and you will be able to manage your business more efficiently and professionally. Which in long run, will lead to a successful and profitable business for you.

Copyright 2003 DeFiore Enterprises