Why You Must Keep the Receipts?
It is necessary to keep the receipts, whether you are a Limited Liability Company, sole trader, or get reimbursements from your employer for food and travel. Though the task is daunting, you cannot go without it! So, the necessity to keep the receipts can be felt in different channels of a business; whether that's a hotel receipt, rent receipt or a grocery store receipt, the importance is paramount in each case.
Usually, receipts are essential to support your claimed business expenses on the tax return. But this is not the only reason. Here, we bust all the reasons that make it essential to keep receipts records!
- Proof of Your Travel and Stay
- Proof of Expenses
- Prepare Tax Returns
Most probably, your inbox is often overloaded with thousands of archived messages, dating back years. Also, websites are regularly changing or moving. In such situations, it is easy for a digital receipt to get deleted or lost in the mess.
Paper receipts overcome all such problems. You can place them securely in a file in a systematic manner and they will always be available for use.
A paper receipt is a sure confirmation that a transaction occurred at a specific time, place, and state. It is proof of the amount spent and you can get it hand-signed for further confirmation.
- Check Against the Credit Card
You might be spending money for your business or travel through your credit card, but might not be checking your credit card statements. In this case, your paper receipts are best to check against your credit card transactions.
- Track Your Expenses
In a business operation, things can get busy, which is a good thing but then managing your expenses might be difficult. Keeping a record of all transactions will ensure that you don’t overlook any possible deductions. Apart from your business expenses, it would be best to keep receipts for your personal expenses, such as grocery or medical expenses. In those cases, keeping a Walgreens pharmacy receipt or grocery receipt helps you keep up with your monthly calculation.
- Identify the Source
Last but not least, your business must be involved with multiple vendors and may have different sources of income and expense. Properly labeled receipts will separate your taxable and non-taxable income and deductions and let you easily identify the source.
It is best to keep a record of your receipts as long as they are required for administration, accounting, and taxation purposes. If you still have queries related to receipts or bookkeeping, you can reach out to us anytime. We are happy to serve you!
Suppose you are on a business trip, hired a taxi and had to pay on your own. Having receipts in hand confirms your travel and stay and supports the amount of claim made by you. Taxi services nowadays can generate Lyft style receipts or Uber receipts which is a win-win for both parties. Same goes for restaurant receipts .
Receipts for any major expense made by you during your official or business travel must be kept as a record. It is essential not only for tax records but also to keep you safe at the time of cross-checking of your claimed expenses.
It is best to save your receipts to get reimbursements from the company where you work. The accounting department always needs physical proofs to confirm your expenses and reimburse them later.
There is always a possibility of making a mistake in a transaction, for instance, double charge. The receipt serves as documentation of such mistakes and lets you easily resolve them later.
Paper receipts are the best to document expenses during taxes. They offer easy record-keeping and audit for both an individual as well as a company.