First, general rule: your vehicle is deductible to extent you use it for business.

So, if you drive your car 100% for business, all car- related expenses are deductible.

But if you use it less than 100% for business, do not despair. Less-than-100% use is very typical among small business owners and self-employed -- you'll still come out way ahead by keeping good vehicle expense records.

For example, if you drive your car 75% for business, then you get to deduct 75% of your vehicle expenses.

Now to fun part.

There are two methods for reporting your car expenses: 1. Actual Expense Method 2. Mileage Method

With Actual Expense Method, you have to keep track of all your vehicle related expenses, such as: -- gasoline -- oil -- maintenance & repairs -- insurance -- license & registration -- wash & wax -- supplies & equipment -- depreciation expense (including Section 179 deduction) -- lease payments -- loan interest -- state and local taxes

So you add up all those deductions and multiply total by your business use percentage, which is determined by dividing business miles by total miles driven.

The Mileage Method works like this: instead of tracking all actual expenses listed above, you only need number of business miles driven, which is multiplied by standard mileage rate published each year by IRS.

For 2003 mileage rate is 36 cents per mile. For 2004 mileage rate is 37.5 cents per mile.

If you drove your car 10,000 miles in 2003, your deduction is $3,600 -- regardless of what your actual expenses might have been.

You should have a general drawer, which contains banking information, supply information, general forms, business license, answering machine message, expense envelope. Anything of a general nature.

Your Real Estate files should have a general section for correspondence(sent and received), faxes sent, e-mails sent, consultation correspondence, forms letters, signs(for rent), general advertising, prospects, consultation prospects.

You should have a file drawer that contains all your contracts and forms.

You should have a file drawer for marketing materials. Flyers, brochures, letterhead, cards, newsletter.

You should have a file drawer for clients. A file for each client. For Lease Purchase a separate file for sellers, this should also contain tenant/buyers and be separated into open and closed. Open contains property you are currently working on. Closed are those properties you have found tenant/buyers for and have completed deal.

If you take credit cards, a file drawer for monthly transactions.

You should also have a file drawer for any products you sell.

The files that should be handy and placed in your graduated tray are: (Note: Some files are specific to Lease Purchase only)

1. Calls to Make