Business Receipts: How, When, & Why to Keep Them

May 08, 2020

Keeping receipts overwhelms most entrepreneurs and if you're like me, paper does too.

If you put a solid system in place and use your business card only for business, keeping receipts is easy and you likely won't ever have to reference them.

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Why keep receipts?

To prove that your purchases were for legitimate business expenses if you were ever questioned under an audit. Example: If you purchase $300 from Target, they want to see you bought office supplies and not bedding.

When do you need to?

When you pay cash or when the transaction is over $75. The IRS allows you to use your bank statement for purchases under $75.

How to make it so you don't need to reference receipts for your bookkeeping:

Use your business card only for business purchases
If you are at the store buying both personal and business items, split the purchase into two separate transactions and use two different cards
If you mess this up, reimburse the business or yourself so there is a trail of cash

How to store receipts when necessary

I keep this super simple and have one Dropbox folder for business receipts for each year and name each receipt with the naming convention DATE-VENDOR-AMOUNT. That way if I am ever audited, I can find the receipt quickly at a glance without sorting through. It will automatically be sorted by date, then vendor, then amount and make it easy to find.

Example: 2020-04-28 Target $72.63.pdf

If I have a paper receipts, I immediately use the Dropbox app on my phone and use the "scan" feature which saves the receipt as a PDF and toss the paper in the trash.

If I have electronic receipts, I save the document to the same Dropbox folder.

Some people create a folder in their email but I don't find this as good because it isn't sorted as clean and if you lose access to your e-mail you lose access to your receipts. No bueno!

What's Next?

Join my Facebook Group, The Profit Pursuit Community, which is ridden with tips and trainings to help you know your numbers, increase profits, and avoid mistakes when it comes to the numbers side of your biz.