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.
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 you pay cash or when the transaction is over $75. The IRS allows you to use your bank statement for purchases under $75.
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!
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BUT THAT LEADS TO...
💰Getting hit with hefty penalties and interest
⌛️Wasting your valuable time
🤯Stressing out over handling the mishap
🥴Lacking insight on how your business is doing and thus making poor business decisions.