We've all wondered whether or not we need to save all of our receipts. As a business owner, this might be something you are concerned about on a day-to-day basis. We've all at some during our career compiled receipts in a extra large Nike shoe box. The common question that we are asked on a daily basis is do you have to save your receipts for your business expenditures?
Many will automatically save receipts on big purchases for their business, such as a car or a new laptop. But, what about those smaller things such as the supplies you bought to restock your businesses file cabinet? Or, the coffee machine for the break room?
The short answer, in most circumstances, is yes. It's extremely important to have adequate record keeping in case of an IRS or state examination.
WHEN TO SAVE RECEIPTS
You should save receipts for all income, credit, expenses, and deductions from your business.
- Cash Register Receipts
- Cash Sales
- Credit Sales
- Receipt Books
- Bank Account Statements
- Canceled Checks or documents that prove cancellation or refund
- Business Travel, Transportation, Entertainment, and Gifts you plan to deduct
- Assets (furniture, tools, any property, etc. that you own for business)
It's important to save these records because they backup the information that's on your business' tax return. Your word is not always going to be enough for the IRS, so having all of these documents to support your earnings and losses is crucial. More importantly, if you're audited by the IRS, having receipts and proper documentation can be crucial in determining the end result. It's important to be able to back up your expenses with authority!
We understand this may sound tedious. However, with apps and the use of QuickBooks Online, saving receipts has become easier and less time consuming. You can scan your receipts easily into the QuickBooks database and save a backup as well. We have recommended mobile applications like Expensify and Receipt Bank in the past to help digitize your system.
ARE RECEIPTS EVER NOT NEEDED?
Items and purchases under $75 can often get by without a receipt. However, this does not include hotel expenses.
If one receipt goes missing, it's not the end of the world. But, always remember the IRS can audit you for anything. So, it's best to have all records on file
HOW LONG SHOULD I KEEP THESE RECORDS FOR?
It's recommended by the IRS to keep your records for at least 3 years.
When in doubt, just keep the receipt. You never know when something will pop up and you'll need that one record that you threw away!