Receipts: To Keep Or Not To Keep
“Do I have to keep receipts?” That’s a common question we hear from small business owners, many of whom are already overwhelmed by the everyday demands of their businesses. The short answer is “yes”.
Whether you use a simple recordkeeping system (like a ledger book or an Excel spreadsheet), accounting software (like QuickBooks, Xero, FreshBooks, or one of the many others that are designed for small businesses) there are records that you do need to keep in order to support your income and expenses. Ultimately these records are vital when it comes to tax time--and if you’re audited, you’ll need to be able to provide proof of income and expenses to the IRS.
Luckily, once you’ve gotten into the habit, retaining receipts and documentation is not difficult to do. Below are some examples of supporting documentation you should be keeping as a small business owner:
For gross receipts (income):
Cash register tapes
Deposit slips (cash and credit sales)
Receipt books
Invoices
Forms 1099-MISC
For purchases (items you resell to customers):
Canceled checks or other documents that identify payee, amount, and proof of payment/electronic funds transferred
Cash register tape receipts
Credit card receipts and statements
Invoices
For expenses (costs you incur to run your business):
Canceled checks or other documents that identify payee, amount, and proof of payment/electronic funds transferred
Cash register tapes
Account statements
Credit card receipts and statements
Invoices
Petty cash slips for small cash payments
It’s important to keep these documents, even if it’s not especially convenient. They’re proof of the entries in your accounting books, and of the numbers on your tax return. Keep them together in a folder or file and you’ll know right where they are at tax (or audit!) time.
Reference: .irs.gov/businesses/small-businesses-self-employed/what-kind-of-records-should-i-keep