This week’s Tuesday tip was about designating a spot for your receipts, so let’s go ahead and dive deeper into all things receipts because this is a subject I get asked about a lot.
Do I need to save my receipts?
The short answer; yes.
You are creating a lot of entries in your books from your day to day activities and purchases you make to run your business, and the IRS will want to see supporting documents for these entries should you ever get audited. Sure, there are certain things that you don’t technically need to keep receipts for, but if it’s between learning all of the rules and keeping all the receipts it’s really a no-brainer. Keep those receipts!
Do I need hard copies of my receipts?
The short answer; no.
Scanned copies are sufficient for your records as long as they are legible and organized in a way that makes sense. Create a folder structure with your receipts sorted by month or transaction type for each year.
How do I keep track of all of this?
The short answer; develop a system that works for you.
Here’s a simple system that can get you started on the right track:
- Have a drop point for all of your hard copy receipts and another one for all of your electronic receipts – keep a folder or envelope on your desk and be diligent about putting your receipts there. For emailed receipts, create a “receipt” folder where you can drag them from your inbox.
- Digitize your paper copies- it’s as simple as taking a photo on your phone.
- Get to filing – create a folder structure that makes sense for your business. I recommend storing them on Dropbox or GoogleDrive so you can easily access them from your phone. Plus, this makes sharing them with your bookkeeper or CPA super easy.
- Attach them to transactions in your bookkeeping software – did you know most bookkeeping software has this capability? Now your digital receipts are in two places making it a little easier to let go of those paper copies.
Okay, those are the top three questions I get about receipts, but if you have more leave a comment and I’ll be happy to answer!