Passion, ingenuity, hard work. These are important personal attributes that can help ensure business success. But it’s not what you make, it’s what you keep (after tax) that counts, so follow these tax tips to improve your bottom line.

1. Set up an accounting system. You don’t need an accounting degree to use simple and inexpensive software or online solutions to record your income and expenses. Make it a habit to log in your gross receipts and your payments on a regular basis. Don’t have the time or inclination for data entry? Find someone—an employee, outside bookkeeper, or accountant—to do this for you.

2. Use a separate business bank account. Don’t co-mingle your personal finances with your business matters. A business-only bank account can simplify your record keeping and help you easily manage your finances so you can focus on running your business. There are many tools out there that can help you easily make this separation. Bank of America’s Business Fundamentals checking package provides small business customers with the control to easily manage fees and account information as well as the security of knowing that transactions are guaranteed to be safe and protected. Take it one step further and go online. Besides tax savings, using online banking can save you considerable time in monitoring your cash and paying your bills.

3. Understand how your choice of entity impacts your taxes. Are you a sole proprietor? An S corporation? The legal structure of your business affects tax payments. For example, if you’re a sole proprietor, you must pay Social Security and Medicare taxes (collectively called self-employment tax) on your net earnings from self-employment, regardless of whether you actually take this money or reinvest it in the business. Factor tax considerations into your choice of entity.

4. Keep receipts. To claim various tax deductions and tax credits, you need proof of expenditures. You also need a diary or other written record of travel and entertainment costs (BlackBerry entries and other electronic records can be acceptable). Get organized so you can find receipts at tax preparation time.

5. Plan ahead for tax payments. Usually, as a business owner you must pay taxes on your business income in quarterly estimated tax payments. To ensure you have enough cash on hand to meet this obligation, it’s a good idea to set aside money on a regular basis for this purpose. For instance, if you’re in the 25% tax bracket for federal income taxes, you might want to transfer 25% of all fees or other earnings into a separate bank account used for making tax payments.

About Barbara

Barbara Weltman is a top selling author, attorney, tax and small business expert. Barbara serves as an expert on Bank of America’s Small Business Online Community. She recently conducted an expert forum on the Small Business Online Community, where she answered questions about the impact of the stimulus package on small business owners. Barbara has also authored several books include “J.K. Lasser’s Small Business Taxes” and “The Complete Idiot’s Guide to Starting a Home-Based Business.”