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Tips for Storing Paper Receipts for Taxes

April 21st, 2016 by

While most citizens can afford to be somewhat casual about recording receipts, the same does not hold true for small business owners. Small business owners must keep meticulous records of their receipts in order to justify legitimate write-offs on business expenses should they ever be audited. Following are some basic tips for storing receipts that will help you stay organized and prepared for tax season.

1. Keep all receipts.
During an audit, IRS agents will likely ask for every receipt to support expenses recorded throughout the year. It’s true that you could argue what’s called “the Cohen Rule,” that you can use “other credible evidence,” or rely on IRS Publication 463 which says that you don’t need to keep receipts for expenses under $75, but why get into a fight? Arguing with the IRS can cost you a lot more time and money than just keeping your receipts.

2. Make notes on receipts about their business purpose.
This is an especially great idea for dining and entertainment expenses. It can be easy to remember why you bought a printer, but it could be a lot harder to remember who you went to dinner with three years ago and what the business purpose was.

3. Scan receipts and keep them at least six years.
Yes, the IRS can come knocking for documentation and audit you up to six years back in some cases. However, hoping that the ink on your Home Depot receipt hasn’t faded away is a whole other issue. The IRS allows taxpayers to scan receipts and store them electronically.

4. Take a picture with your smartphone.
With today’s technology, it’s easy to say “Forget the receipt, I’ll just make a note on the receipt and then take a picture of it”. This is a great idea and there are a whole host of apps for the iPhone and Android that can help you better track your expenses.

5. Don’t rely on credit-card statements and canceled checks.
These are important, yet insufficient without receipts. The IRS may see that you spent $422 at Staples, but it doesn’t know what you bought. It could be movies and useless technical gadgets, and not the computer paper and supplies you expensed them under. For bookkeeping purposes, these records are fantastic, but the detail is critical for an IRS auditor.

It’s no secret that audits will continue to only increase and the rules will be only more strictly enforced. The best course of action for small-business owners is to be prepared with a better set of books and receipts for all of their expenses, staying one step ahead of the “tax man.”

At Graphic Tickets & Systems, we supply thermal paper rolls for a variety of paper receipt applications, including: ATM Paper, Parking Ticket Paper, Mobile Printing Paper, POS Paper, and more. Please contact us to discuss your thermal paper needs or to receive a free quote on bulk or customer orders.

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