Receipts: Yes, You Actually Need to Keep Them (No, Your Glovebox Doesn’t Count)

Receipts have a magical way of disappearing just when you need them most. It’s as if they have a secret life of their own, sneaking out of your wallet, slipping between car seats, or vanishing into the depths of that one junk drawer we all have. But come tax season, you’ll wish you had every single one. So, let’s talk about why keeping receipts is crucial, how to organize them without losing your sanity, and what the IRS actually wants to see.

Why You Need to Keep Your Receipts

1. They Help You Claim Every Deduction Possible

When it comes to taxes, the IRS isn’t going to take your word for it that you spent $5,000 on office supplies last year. They want proof. Receipts help you claim legitimate business expenses and maximize deductions without risking an audit.

Without proper records, you might miss out on deductions like:

• Office supplies
• Business meals (within IRS limits, of course!)
• Travel expenses
• Equipment purchases
• Software subscriptions

Keeping your receipts ensures that you can back up every expense and keep more money in your pocket.

2. It Protects You in Case of an Audit

No one wants?to be audited, but it happens. And if it does, the IRS will expect clear documentation of your business expenses. If you can’t provide receipts, you could end up owing more in taxes (plus penalties and interest). Having well-organized receipts proves that your claims are legitimate and keeps the IRS happy.

3. It Helps You Track Business Spending

Beyond taxes, keeping receipts helps you understand where your money is going. It’s easy to forget small expenses, but over time, they add up. Keeping track of receipts allows you to:

• Monitor spending habits
• Cut unnecessary costs
• Budget better for the future

Common (and Terrible) Receipt Storage Methods

If any of these sound like you, it’s time for a new system:

?? The Glovebox Method:?Stuffing receipts into your car’s glovebox, only to forget about them until tax season panic sets in.

??? The “It’s Somewhere in My House” Strategy:?Throwing receipts into drawers, pockets, or random piles, hoping they’ll magically organize themselves.

?? The “Snap a Photo and Forget It” Plan:?Taking pictures of receipts but never saving them in a dedicated folder or system.

?? The Shoebox Disaster:?Dumping all your receipts into a shoebox and vowing to “deal with it later.” Spoiler: Later never comes.

If any of these sound familiar, don’t worry—we’re going to fix it.

How to Organize Your Receipts (Without Losing Your Mind)

1. Go Digital (It’s Not 1995 Anymore)

The best way to store receipts is electronically. There are plenty of apps designed to help small businesses track expenses, including:

• QuickBooks?(syncs with your bookkeeping software)
• Expensify?(great for tracking travel expenses)
• Shoeboxed?(turns paper receipts into digital records)
• Wave?(free accounting software with receipt scanning)

Simply snap a photo of your receipt, categorize it, and let the app do the rest. No more crumpled paper piles!

2. Set Up a Filing System (Digital or Physical)

If you prefer keeping paper receipts, get a simple filing system:

• Use labeled folders (e.g., “Office Expenses,” “Travel,” “Meals & Entertainment”).
• Sort receipts monthly to keep things manageable.
• Keep everything in one place—no more hunting through drawers!

For digital storage:

• Create a dedicated folder on your computer or cloud storage (Google Drive, Dropbox, etc.).
• Name files clearly (e.g., “Office_Supplies_January2024”).
• Backup your files in case of tech failure.

3. Make Receipt-Keeping a Habit

Consistency is key. Try setting aside 10 minutes a week?to organize receipts. Treat it like brushing your teeth—necessary and non-negotiable.

Other tips:

• Take a photo of receipts immediately?after purchase.
• Keep digital and physical copies in sync.
• Review receipts monthly to catch errors and track spending.

What the IRS Actually Wants to See

The IRS doesn’t just want a blurry photo of a receipt with no context. Here’s what should be included:

? Date of purchase? Amount spent? Vendor name? Itemized list of what was purchased? Business purpose (why it’s deductible)

If your receipt doesn’t include some of this information, make a note on it before filing.

What About Credit Card Statements?

A credit card statement showing the purchase isn’t always enough for the IRS. While it proves you spent the money, it doesn’t show what was purchased or its business purpose.

Always keep the original receipt for backup.

Final Thoughts: Keep Your Receipts, Keep Your Sanity

Tracking receipts isn’t the most exciting part of running a business, but it’s one of the most important. A little organization now can save you hours?of stress (and potentially thousands of dollars) down the road.

If you need help setting up a system that actually works—or if your bookkeeping already feels like a disaster—give me a call at 406-404-8955. I’ll help you get your records in order before tax season sneaks up on you!

Your future, stress-free self will thank you.