Record keeping is suitable for any business. It prepares your financial statements, assists you to keep track of your expenses, and can assist you whenever you get sued or audited. Therefore, you need to learn how long to keep your small business receipts to avoid future challenges.
Keeping your receipts for extended periods is essential for any business. Are you aware that the IRS also requires you to store your businesses’ financial records? Well, it is, therefore, crucial to store these receipts for as long as IRS can audit your records.
The IRS usually audits records that have lasted for three years. You should, therefore, store your documents for at least three years as proof of your sales.
If your business is suspected of any tax evasion or fraud, then the government is forced to dig deep into your records. The IRS will be responsible for auditing a six-year worth of your business financial information.
Other situations might need you to keep your records for extended periods. These situations include:
• If you have employee records
• Exclude any income from your tax return
• Omitted worthless securities or bad debt costs
• Fail to file your returns or file a fraudulent return
You can consult an accountant if you’re not sure of how long to store your receipts.
It’s not a necessity to keep every business receipt according to the IRS. If one of the following applies, then you don’t need to keep any receipt:
• If you have expenses that aren’t more than $75 (excluding lodging). But you still have to provide the IRS with the expense details.
• If you have transportation expenses, but the receipt is not available.
Here are some simple ways of how you can keep your business records. You can either fill folders or cabinets to store your business receipts in an organized manner. Or, you can choose to use receipt scanners or digital systems to keep your receipts.
But you have to keep in mind that no law allows you to keep your records in paper form. Therefore, it’s wise to use the digital method.
A perfect example of using a digital method to keep records is by utilizing electronic calendars such as Google, to keep track of travel expenses purpose for business meetings.
Always keep them in an organized manner to avoid spending a long time looking for a receipt when you need it.
If you require assistance in organizing your small business transactions, don’t hesitate to contact us.
Tax Tips for the Self-Employed
An Overview of the Net Operating Loss Tax Provisions in the CARES Act
How To Decrease Your Small Business Debt? A Step-By-Step Guide
Why Every Small Business Needs a Bookkeeper?
Tax Credits That Could Benefit Small Businesses
Why You Should, and Shouldn’t, Apply for a Tax Extension