Often overlooked, receipt keeping is a necessary component of good bookkeeping. Receipts are the primary and easiest way for a business to support all entries recorded on the books and on tax returns. Should the IRS audit your business’ tax return, they will require supporting documentation showing not only the amount paid but a detail of record proving that the item was, in fact, a qualified business expense.
Contrary to common belief, bank statements most times do not include the detail that is needed to verify the expense. There have been several cases of the IRS disallowing business expenses due to lack of detailed verification. A simple receipt with notes would have easily done the trick.
When considering which documents to keep, some or all of the following could suffice as long as the payee, amount paid, itemization of items purchased, and proof of payment are all identified:
*Invoices *Cash register tapes
*Cancelled checks *Account statements
*Petty cash slips and ledgers *ITEMIZED RECEIPTS
While receipt keeping and coding could become extremely time consuming, it could save you both time and money should the time come when you need them!
ReceiptsRecord KeepingDocumentationIRSBusiness Expenses