Frequently Asked Questions About Keeping ReceiptsApril 15, 2021
Most of us are fond of keeping receipts, either it is for personal or business reasons. We put on the trash those receipts that are not important to keep for so long. The decision is based on what kind of bills we have paid. For business purposes, it is crucial to know the importance of expense receipts and what are the useful receipts for tax deductions.
Here are some frequently asked questions about keeping receipts:
- DO YOU NEED TO KEEP YOUR RECEIPTS?
Yes. In any business, receipts expenses are part of your financial reports that need to declare and keep and organize in a filing folder. It serves as proof and supporting documents during a tax audit. Knowing the receipts you needed will keep you on the right track.
- HOW LONG SHOULD YOU KEEP YOUR RECEIPTS?
How long will you keep your receipts depends on the actions you’ve made with your records but generally it is between 3-7 years. You can refer to IRS How Long Should I Keep Records for more learning and understand what is the period of limitations that apply to income tax returns.
- SHOULD YOU KEEP PAPER RECEIPTS OR ELECTRONIC RECEIPTS?
Both. Just be mindful that some paper receipts like thermal paper get faded in the long run. Office space is also becoming an issue because of too many filing papers to keep in your cabinets. To minimize your stress on receipt management, using electronic receipts is highly suggested as this becomes an acceptable method of documentation. Make sure the electronic system you use, meets the IRS conditions to avoid any undue stress.
- WHAT ARE THE RECEIPTS EXPENSES THAT ARE CONSIDERED DEDUCTIBLE?
The IRS listed some situations in Publication 463 (2020), Travel, Gift, and Car Expenses and it identifies which expenses are deductible or not. You can check the link for full information.
Receipts tell some of your business and financial story. It is always an advantage on your end if you stay compliant as it allows you to save a lot of money. It is just a matter of organizing and making it a good habit to get what you are entitled to especially on your tax claims. Storing receipts in a secure place is helping you to track everything quicker and more accurately. One main point here is that you do not need to keep all the receipts. It varies for every taxpayer. Knowing your rights as a taxpayer and the audit process keeps you prepared and well-informed.
The available receipt templates give you good options to use Expense Fast when it comes to the receipt management system as people get amazed with technology innovation and will definitely love this kind of way of organizing receipts. Moreover, it is appealing to people particularly to many business owners as you can access it both on computers and mobile phones. To know more about this digital system you can check the FAQ’s section.