Dear M & M: What financial statements do I need to use to better prepare my business to be successful? -Don

Dear Don: The most important thing you can do is to open a business checking account separate from your personal finances. All sales including cash sales must be deposited into this checking account. Only business expenses will be withdrawn from this account.

Eliminate petty cash. Always write a company check or charge any other allowable business expenses on the company debit card. That way you will always have a record of all transactions from any eligible business expense as they occur.

Remember, only have allowable legitimate business expenses coming out of that business checking account. Remember at the end of the day it’s all about verification of allowance deductions. It is highly recommended to seek professional help from a tax professional competent in compliance and tax regulations to make sure you have filed on time and never miss any deadlines from state or federal laws.

All businesses should have a balance sheet, income statement and a cash flow statement. You should be reviewing all three financial statements at least quarterly to compare to past years’ performance.

Watching the ending balance daily on your business checking account is a good indicator of how you are doing. Looking at the quarterly financial statements and the year-ending ones will give a more complete picture.

The business checking account will be the best way to track and record sales and expenses to enable you to generate your tax forms as they come due. Besides year-end tax filings for the profits or losses of the business there will be quarterly payroll, monthly sales tax and possibly self-employment taxes for most small businesses.

ASK M&M is prepared and submitted by Mark Schmitt, director of the Small Business Development Center at Cochise College; and Mignonne Hollis, executive director at the Arizona Economic Development Foundation. To ask your questions: Call the Small Business Development Center (SBDC) at Cochise College (520) 515-5478 or email schmittm@cochise.edu or contact the Arizona Regional’ Economic Development Foundation at (520) 458-6948 or email hollism@aredf.org; www.aredf.org.