I Got The Receipts
Business owners, do you really need to keep all those receipts? The short answer is YES. The long answer is… As a small business owner you make tons of purchases for your business. If you are like me, you make them all with a debit or credit card because, after all, who uses cash in 2019? Do they even print that stuff anymore? So that means that all of your transactions are on either, your credit card or bank statements, right? Correct. But this is not enough to prove that an expense is a qualified business expense to be deducted at tax time. Why? Because line items on bank statements do not provide details. For example, say you purchase $375 worth of “business expenses” from Costco. The IRS has no way of telling whether that $375 was spent on actual goods necessary for your business to continue operating or if it was spent on booze. Therefore, this expense would be denied. To be deductible, should your business be subject to an audit, you want to be certain that your records show who was paid, when, and for what exactly. Having a bank that prints cancelled check copies on the statements is super helpful. Just make sure you are also writing what the check was for in the little memo area. Better to be safe than sorry. Oh, and keep all these suckers for 3 years. Capisce?