When it comes to preparing for tax season, keeping track of your receipts is essential—especially if you’re a small business owner. Properly organizing and retaining your receipts can help you claim deductions, avoid audits, and ensure that your tax return is accurate. Here are some helpful tips for keeping receipts for taxes and managing your business expenses effectively.
- Know Which Receipts to Keep
It’s important to retain any receipt that supports deductions on your tax return. This includes receipts for business-related expenses such as office supplies, meals, travel, equipment purchases, and utilities. If you’re not sure which receipts are tax-deductible, a good rule of thumb is to save anything related to running your business. These receipts will serve as proof of expenses and can be helpful if you ever face an audit.
- Use Digital Tools
Gone are the days of stuffing paper receipts into a drawer. Many small business owners now rely on digital tools to store and organize receipts. Scanning your paper receipts and saving them electronically not only reduces clutter but also ensures you’ll have backups in case any physical receipts are lost. Apps and software for bookkeeping for small businesses often come with receipt-tracking features, allowing you to upload, categorize, and store receipts in a central location for easy access.
- Organize by Category
One of the best ways to stay on top of receipts is to organize them by category. Whether you’re using paper folders or digital tools, create categories for expenses like meals, travel, office supplies, and equipment. This will make it easier when tax time rolls around and you need to locate specific receipts to claim deductions.
- Track Mileage and Vehicle Expenses
If you use your vehicle for business purposes, don’t forget to track mileage and vehicle-related expenses. Keep receipts for gas, repairs, maintenance, and parking. Many apps are available to track mileage automatically, which can save time and ensure accuracy.
- Hold on to Receipts for at Least 3 Years
The IRS recommends keeping tax-related documents, including receipts, for at least three years. This is the time frame during which the IRS can audit your returns. However, keeping receipts longer—up to six years—is a smart move, especially if you’re reporting substantial deductions.
Get Organized Now
By organizing your receipts and utilizing digital tools, you can streamline the process of tax preparation and ensure that you’re maximizing deductions. If you need assistance with organizing your receipts or general bookkeeping for small business, contact us for professional support to make tax season stress-free.
