I get asked this question a lot.
What receipts do I need to keep for tax time?
Honestly, the answer is quite simple - ALL of them.
You need to keep copies of everything.
Yes, that even includes the automatic charges that you don’t even actually get a copy of a receipt for.
It includes all those $27 courses you bought that you didn’t even use.
It even includes the receipts to that coach you paid who may not have even helped you in your business.
Long story short, just keep it all.
How do you store these receipts?
The question then becomes, how do you actually store them?
My personal recommended way is to make each one into a PDF file and save them to a folder on your computer, in the Dropbox or in Google Drive.
Create a folder that is just for your business receipts.
And then create a new folder for each year.
Then name each receipt with the date of purchase and the vendor name.
This makes it super easy to find your receipts if you ever have a question about a purchase.
Save your receipts as soon as possible
You run a busy business and things happen quickly.
So set up a time to go through everything, like once a week, and save copies of your receipts.
Make it as easy as possible on you.
If you get your receipts emailed to you, leave them in your inbox until you have a chance to PDF them. Then after you PDF them, you can save those emails somewhere else in your inbox.
How long do I need to keep these receipts?
The statute of limitations is 3 years, but the recommendation is 7 years.
If everything is electronic, then just keep them for the 7 years.
You honestly never know when you are going to need them.
Is there anything else besides receipts I should keep?
I’m glad you asked. Yes there is.
You should keep copies of every single bank statement.
FYI, if you think that just because you do electronic banking and they have everything stored there for you it will be available when you need it, that’s not always true. Many banks have started limiting these bank statements and you can only go back so far when you are looking. If you just download and save the bank statement to your folder, then you already have it and don’t have to jump through hoops and possibly even pay extra to have the bank statements made available to you.
You should also keep the download files of your sales from your merchant account/bank statement.
If an audit were to happen, you’ll need to produce this file. And just like your bank statements, the information can get limited to you over time.
Just keep everything
The answer is plain and simple, you really do need to keep everything.
If you don’t have the proof when you get audited, you get no credit. (Ask me how many times I’ve denied credit because there was no proof!)
Is it a lot to keep? Probably.
But it’s best to cover your ass and have everything available at your fingertips if you need it. Plus it’s always there saved for you when you have a question while doing your bookkeeping.
