Why Do I Need To Save My Receipts?
Welcome back! The cool Fall weather is finally arriving marking the beginning of the holiday season. As Christmas trees are already on display we are reminded that our favorite time of year is just around the corner… TAX TIME! Not your favorite, you say? Are you worried you haven’t been organized enough during the year? Well, you’re not alone. Most people dread tax time because they are unprepared. We are here to discuss the number one way you can prepare for tax time: Saving your receipts. Saving your receipts isn’t optional, it’s crucial to your business and offers peace of mind if you’re up late worrying about the dreaded IRS audits.
Year-round, Moose Creek Bookkeeping is helping companies large and small learn how to prepare for tax time and the very first lesson we teach is “save your receipts”. This is because your receipts contain critical information that might be lacking if you are only looking at a bank statement. Receipts contain the date, description of good/service, vendor, price, taxes/fees, and mode of payment. Your bank statement only shows the date, vendor, and price, which isn’t adequate, according to the IRS. You must be able to show a detailed view of all expenses to prove they were legitimate. The IRS cannot discern between a $400 Epson Printer versus a $400 Cat Tree. You will need to prove the purchase was an office expense and not a luxurious cat condo for Mr. Fluffpants.
Now, we understand keeping track of receipts is no small feat. As a small business, we use and recommend a digital receipt keeper called Hubdoc. Hubdoc has been a game-changer for all our clients who chose to use it. It does require input from you in the form of a photo or upload, but that’s where your work ends. Hubdoc reads your receipts, gathers critical information, and magically creates usable data – no more data entry! This program has saved our clients countless hours with its ease of use and friendly interface. Even our old-school, paper-saving clients have made the change to digital receipt keeping.
In addition to using a digital receipt tracker, we always recommend adhering to best practices to keep track of receipts before you need to enter them in Hubdoc. Here are some tips we offer to all our clients:
- Always write a note at the top of each receipt about what the expense was for. This can also work as a reminder for future reference. Hubdoc features a ‘notes’ section for this exact reason.
- Make sure the receipt contains all the necessary info. If it is lacking information, promptly make a note, to not forget.
- Supply ‘receipt bags’ to employees to aid them in receipt organization and emphasize the importance of receipt retention.
- Keep telling yourself that all this record-keeping will pay off in the event of an audit. All your hard work will benefit your business in the long run.
Please reach out at any time to set up a discovery call with us. We’d love to talk about how we can help your business improve its books, aid in receipt management, and give you peace of mind when it comes to accounting. At Moose Creek Bookkeeping we are dedicated to teaching you the best accounting practices, offering solid advice, and giving you the tools to build a strong financial foundation that can weather any storm that may come; including an audit.