Why, oh why is it so important to keep all receipts? On the off chance that your practice is audited by the IRS, wouldn’t you be able to argue "the Cohen Rule," which states that you can use "other credible evidence" to show that a purchase is business related, or rely on IRS Publication 463 which says that you don't need to keep receipts for expenses under $75?
Do you know what the IRS’s response is to small business owner’s that try to make those arguments when failing to keep the strict verification requirements that the IRS needs? That the evidence that the small-business is providing is broad self-serving testimony and uncorroborated notes. In other words, FAIL! This is why receipts are so important.
Receipts are audit protection! Here are 7 simple, easy to follow tips for making sure your practice’s books are audit-proof.
1. Keep EVERY, single, tiny receipt
2. Make notes on receipts about business purpose
3. Scan receipts or take photo of them
4. Keep receipts for at least 6 years
5. Don’t rely on bank statements or cancelled checks
6. Avoid using cash, whenever possible
And finally, my best piece of advice…
7. Store your receipts on the cloud
As a bookkeeper, it’s so important to me that my client’s books be as audit-proof as possible. So important in fact that I provide my clients with their very own Hubdoc account, free of charge. Hubdoc is a cloud-based document storage software that automatically pulls your bills and statements into one secure hub.
Learn more about the power of Hubdoc by watching this video. Storing your receipts can be a simple process that saves you thousands of dollars and will leave you a happier, relaxed practice owner knowing your books are in great shape.
If you're interested in having audit-proof books, send me an email at email@example.com.