I can tell you there is not one thing in the world that scares accountants more than the dreaded shoe box full of receipts. I’m going to tell you how technology can help you eliminate this process of filing hard copy receipts and start keeping digital receipts. From an IRS perspective, you’re going to need to keep those receipts and documentation showing where you spent your money for at least three years and that is three tax filing years, so that’s really four years. Also, you may want to keep them longer, it may come in handy one day. Not only for the case of income tax but also sales and use tax audits and property tax audits. Anytime you buy something big like a fixed asset, a piece of property, a piece of equipment, you want to keep that information. All that information can add up and before you know it, you can have a room full of boxes of receipts.
Sometimes three years isn’t even enough like we mentioned above. So, let’s talk about what you can do first to help you be prepared. If you’ve ever looked at a hard copy printed receipt, take a look at one after they are six months to a year old. The receipt ink starts to disappear, almost like a magic trick. So, can you imagine how that would look in three years? Just think if you were to get audited and you saved every receipt you ever had. You were feeling great because providing evidence of your expenses from three years ago would be no problem. You pull out your box of receipts and its just blank pieces of paper since all the ink disappeared over time.
So, I’m going to tell you from a technology aspect, you need to be taking pictures of your receipts. There are tons of apps out there that allow you to take a picture of your receipt. Most of the apps will even class out the receipt for you with their technology. If you use QuickBooks Online, most versions allow you to take a picture of your receipt from your phone and then it’s in your QuickBooks in seconds. The best part is, you can class it out, so it shows up on your P&L as well. The receipt is then stored for you and the picture remains in QuickBooks for your proof of purchase for the audit. If you ever have questions about what to class a purchase too, the receipt will be in your QuickBooks for your accountant to view as well. It not only makes life for you easier, but also for you accountant.
The best part is after you are done with the receipt, you can crumble it up and shoot it into the nearest recycle bin. Do yourself a favor and stop saving hard copy of receipts and start saving them digitally. If you want any help on implementing this into your workplace or everyday life, feel free to give us a call. We would love to sit down with you and talk about how to improve your business.