Because the Internal Revenue Service lists this as a REQUIREMENT when claiming your business expenses every year.
So for every “office expense” or “business meal” you incur, you will need to have a nice little annoying receipt right along with it.
Let’s say you claimed these business expenses on your tax return, and you were later audited, the IRS will ask you to submit these receipts to verify eligibility.
And if you claimed several expenses you had no proper documentation for, this will become a nightmare, FAST.
You want and deserve every deduction you are entitled to on your tax return so you must take the proper steps to ensure that you have a system in place to keep track of all of your receipts and expenses.
Small Business Owners tend to use shoe boxes or folders to categorize and keep receipts. If this is what you use, and it works well for you, there is no use in changing it.
The purpose of my content is to provide valuable information to empower every Small Business Owner who tends to struggle in the Accounting area of their Business.
No matter how much you love what you do and how passionate you are about it, the numbers matter. Period.
Here are some options for people out there who hate keeping receipts:
If you are using an Accounting Software such as Quickbooks Online, you can snap a photo and attach it right to your transaction. My clients love this feature because everything is in one place and they can trash the receipts after sending them.
Another option would be using a document retrieval software such as Hubdoc or Shoeboxed. These software digitize, organize and archive receipts into one secure location for one monthly fee starting at $10/month.
Whichever option you chose, consistency and organization is key. If you set up a weekly Bookkeeping schedule, it can help you stay on track and minimize tasks from piling up.
Have a great week!