5 Reasons You Should Save Your Receipts
As a military spouse, there are plenty of challenges we experience. Long deployments, being far away from family, and the constant moves are just a few of the things we have to overcome - but it’s not all bad! There are silver linings to everything and the constant moves provide plenty of opportunities to purge!
It keeps for a tidy home and the ability to live a bit more minimally. It is also a good reminder to clean out my computer and all the various files. After years of being in business, it is good to review what’s on hand.
Usually a folder that is bursting at the seams is my receipts folder. As an accountant, I know there are plenty of good reasons you should save your receipts. I also know the importance of keeping things organized.
So why keep all these receipts? Turns out there are a ton of really good reasons you should keep and organize your receipts.
1. Proof you bought it / warranty
If your business deals with equipment or physical products, you may notice from time to time an item is defective. A printer breaks within a year or the milk for your coffee shop’s lattes went bad 2 days after it arrived!
Things happen and one of the most important documents to help make it right will be the receipt. I know this may sound like we are just complicating your business more but apps like Expensify allow you to take a photo of the receipt and store it for safekeeping.
2. Expense Reimbursement
Keeping with our coffee shop example, say your shop unexpectedly runs out of caramel. You ask an employee on their way in to grab some from the store. They get the caramel and now it is time to reimburse them.
You should have a process for employee reimbursements and it should definitely include the collection of receipts. This will help make sure you are submitting the appropriate reimbursements when it comes time to run payroll.
3. Bookkeeping
Today everyone has an Amazon account and we use it religiously. From knick knacks to widgets, you can have almost anything at your door in 24 hours. Which makes it an excellent tool for businesses.
However, when you submit an order, not all items are going to necessarily be for the same line item in your books. For example, you may purchase some snacks for the office which would fall under meals. You may purchase some printer paper and office supplies. All those little expenses will need to be recorded and properly divided up.
Having the receipts to do so makes this process so much easier. Without the receipts, your accountant will struggle to properly divide up the items which could then result in your financial reports showing “off” numbers. Bye bye tax deductions!
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4. IRS Evidence
The unfortunate reality regarding tax returns is sometimes the IRS contacts you with a question or two. In these cases, you generally have nothing to worry about if you were upfront and honest with your accountant about all of your income and expenses.
Sometimes though, the IRS wants proof. They want to see actual documentation recording any various income or expense items in question. This sounds stressful but only if you do not have the appropriate documents in place. Creating a system where you always have the receipts on hand can actually be easier than you think.
5. An Audit
I know this is never a fun one but audits may not be as scary as they seem when you are confident you have all your appropriate documents in order. There are also plenty of reasons you may undergo an audit. Depending on the nature of your business, you may need one to apply for a grant or loan.
When you are audited the auditor will select a sample of transactions to determine whether all the transactions in an account are reliable. This means they may ask for a receipt for that $1000 printer you purchased. Again, depending on the size of your business this may be considered immaterial (meaning that it is too small of an amount for them to care).
However, we do not know what the threshold for what the auditor will consider immaterial so it is always best to keep the procedures standard for every transaction.
Another thing you need to remember to do? We don’t want collecting receipts to feel like this big stressful task. It should be a habit that you don’t think about and can effortlessly implement into your day. Think of receipts like insurance. Insurance for warranties, audits, and reimbursements. It supports a strong paper trail so you can be confident you have all the appropriate documents when the time comes.
To learn more about how to implement a process for storing receipts into your business, consider scheduling a consultation with me:
