Business Receipts Basics: What You Need to Keep for Tax Seasons?

As a small business owner, you know that you need to keep track of your business’s financial documents for tax purposes. Those documents include business receipts, bank statements, purchase history, credit card statements, online banking records, and a lot more. 

However, staying on top of those documents isn’t as easy as a walk in the park. Which business receipts should you keep? And for how long? And in what form? This article will answer all these burning questions.  

Which receipts do small business owners need to keep?


According to the IRS, keeping good records will help you monitor the progress of your business, prepare your financial statements, and identify sources of income. From that, you can keep track of deductible expenses and prepare your tax returns easier.

On the other hand, the IRS doesn’t explicitly mention the possibility of being in trouble if you don’t keep the right documents. When it comes to keeping receipts for tax preparation, it’s a good idea to be “better safe than sorry” and keep all documents related to your business. It’s even better to consult with a professional accountant about this. However, as a starting point, here are a few types of business receipts that you should absolutely keep:

Inventory

Did you buy inventories to sell to your customers? Or did you sell things made from raw materials? If so, you should definitely hang on to documents that identify the payee, the amount, and proof of payment for the items. Try to get a receipt for all these purchases. However, if you can’t get a receipt, keep the invoice and canceled check (proof that the check has been paid.)

Business assets

The term “business assets” refers to the property you own and use in your business. Furniture, computers, vehicles, or machinery are typical examples of assets. If you’ve ever tried to file assets for taxes on your own, you know that you’ll have to deal with a complicated thing like “depreciation.”

To make tracking depreciation easier, you should keep track of when, where, and how much money you’ve spent on your business assets. For example, you can keep receipts of when you purchase your company’s computers. You’ll also want to keep records of when you sell one of your assets.

Other business-related expenses

Most of your business receipts will likely fall into this category. Though every business is different, here are the most common examples of business-related expenses:

  • Advertising: Advertising expenses include designing and purchasing business cards, online and offline advertising, billboards, web hosting, etc. 
  • Vehicle expenses: Vehicle expenses such as gas and maintenance fees are tax-deductible, so don’t throw away those receipts!
  • Education expenses: This expense applies when you hire a professional or an education service to train yourself or your employee. Don’t forget to keep your invoice or receipt and your bank records to prove that you paid for the education expenses. 
  • Professional services: This expense applies when you hire a lawyer, accountant, bookkeeper, or graphic designer to work for a certain period of time. You will need to keep the invoice and the receipt when you pay the bill. 
  • Entertainment: Entertainment expenses such as taking clients out for lunch can be tax-deductible, but you need to pay close attention. You have to keep both the receipt and records showing that your activities were directly business-related (e.g., an email invitation for a business lunch.)
  • Networking: If you attend a networking event or conference, you’ll need to keep your receipts, bills, and bank records as proof of purchase.
  • Office supplies: Extra office expenses, such as printers, staples, paperclips, scanners, etc., are tax-deductible. So don’t forget to take the receipts every time you visit office supply stores! 
  • Travel expenses: During your work, you may need to visit a client or attend a conference in another state. Though the IRS requires specific qualifications for deductible travel expenses, you can keep certain receipts or bills of your travel expenses to deduct all or part of a trip. You can check out our article on how to manage your business travel expenses effectively.

How long should you keep business receipts?

In general, you should keep business receipts for three years (from the date you file your tax return). In some special circumstances where fraud or severe tax underpayment is suspected, the IRS might require you to keep your receipts for up to six years. For example, if you underpaid your taxes by more than 25 percent, you will need to keep those records on hand. 

How Shoeboxed can help you digitally store your business receipts

Years’ worth of business receipts can result in piles of papers. Fortunately, no one says that you have to keep all your business receipts in their original paper form. So, what’s the best alternative to save all your documents for any potential IRS audit? 

The answer is to digitize them. As the IRS accepts digital receipts, you don’t need to store physical copies of your bank statements, purchase history, or credit card statements. Today, there are many receipt scanning apps that help you digitize paper receipts and save them for years.

Shoeboxed is an all-in-one receipt management app for small business owners and freelance accountants. With an OCR (Optical Character Recognition) engine and human-verified feature, Shoeboxed ensures that your business receipts are precisely scanned, clearly located, and easy to track. You can then create clear and comprehensive expense reports that include images of your receipts, export, share or print all the information you need for easy tax preparation or reimbursement… within a few clicks. 

Moreover, Shoeboxed‘s mileage tracking and business card storing features make it a one-touch app to store and access all your business’s important information. 
Sign up and go paperless with Shoeboxed today!

What Is a Purchase Receipt and How to Make One?

As a business owner, you have to deal with numerous receipts every day. While it’s important to store and keep your receipts organized for accounting and tax purposes, many often neglect or find it difficult to systemize hundreds of documents. However, you can easily get your receipts categorized and neatly stored with some effort and the right knowledge.  For example, you might want to try sorting receipts by type such as sales receipts, travel receipts, bank receipts, etc. This article will look in detail at a very common type of receipt — the purchase receipt. 

Once you know the features of a purchase receipt, you’ll be able to distinguish them from other types of receipts, ensuring a smooth and orderly system of storing your receipts. On top of that, you will also find useful tips on how to create a purchase receipt if you are a supplier as well. 

What is a purchase receipt?

When you receive materials, goods, and services from a supplier, they will issue you a purchase receipt. This is normally done against a purchase order. However, some suppliers still give you purchase receipts without one. Purchase receipts can be printed directly from a cash register or handwritten.

What is the purpose of a Purchase Receipt?

A purchase receipt mainly serves as proof of ownership. This receipt is issued when you accept and pay for goods and services from your suppliers or from you to your customers when they buy your products.

Generally, this document includes details of a specific purchase of a service or product. It also clarifies the contract between you and your suppliers – what, how many, and how much you buy. 

Purchase receipts are also kept and recorded for accounting purposes. You can always go back to examine and double-check if the details of transactions tally. By being able to do so, you will keep track of your expenses more accurately and timely and ensure your accounting system runs more efficiently, which leads to better business results. 

See also:

What information is on a purchase receipt?

Though it varies between businesses, a purchase receipt normally includes the following information:

  • Date and time the transaction occurred
  • Customer information: company name, possibly a contact person, address, phone number, and email address.
  • Purchase description: date, purchase order number, quantity, a brief description of each purchased item with prices
  • Payment information: payment method 
  • Additional charges: shipping fee, delivery cost, and taxes
  • Return policy. Detailed explanation on how the customer may return, exchange, and/or receive a refund for a purchase

What does a Purchase Receipt look like?

Below is a basic template of a purchase receipt:

Example of a purchase receipt
Source: Templatelab.com 

A purchase receipt is fairly straightforward, so you can easily customize a template for your business using Microsoft Excel. Many websites on the Internet also have free downloadable templates for purchase receipts. If you need a free Purchase Receipt template, check out these links below:

Another way to issue purchase receipts is to use paper receipt books. They are widely available online and easily found on Amazon. 

How do you write a Purchase Receipt?

There are two main ways to create a purchase receipt: manually (by hand) and digitally. 

Write it manually 

Make sure you have a printed template ready or a receipt book that looks professional. It’s fairly easy to create a purchase receipt this way as you only need to fill in the blanks with the relevant specific details. Keep your handwriting neat and tidy to avoid any unnecessary misunderstandings. Also, don’t forget to double-check your calculations!

Write it digitally  

If you already have a good template prepared, just type in the transaction information whenever you get a new order from your customers and have the receipt printed out. A great tip is to save your regular customer’s basic information in the template, like their company’s name, address, and contact information. Then, you won’t have to spend time typing that information all over again the next time they buy from you. 

Alternatively, you can download and use specialized accounting software like Quickbooks, Xero, etc., to create purchase receipts. It may be difficult to get the hang of it at first, but once you get used to it, you will enjoy the convenience and effectiveness it brings.  

What is the difference between an invoice and a receipt?

A receipt indicates payment of the items and that the sale is complete, while an invoice serves as a payment request. They both include details of the products ordered, prices, taxing information, contact details, and credits. 

What’s Shoeboxed? 

Are you tired of seeing paper receipts laying everywhere in the office? 

Shoeboxed can help you. 

Shoeboxed is an online application that helps you clear your piles of documents by creating digital copies in just a click. This app automatically extracts and categorizes important data from your receipts, which then gets approved by a team of data experts. You can scan their receipts, manage expenses, store business cards, and track business mileage easily, helping you boost productivity and bring in more revenue. 

Quick, reliable, and trustworthy, Shoeboxed guarantees it will organize your receipts in the best way possible! 

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What Are Receipt Books and How Do You Use Them?

Are you looking for a quick guide on receipt books? If yes, you’ve come to the right place! Read on to find out exactly what a receipt book is and how to fill it in correctly. 

Let’s go! 

What is a receipt book? 

As the name suggests, a receipt book consists of multiple detachable forms of receipt that serve as proof of payment. These booklets are usually pre-numbered chronologically and have the receipt headings in place. You can easily print off a receipt book template online or buy it at any office supply store.

A receipt book is a critical document because it helps you keep track of your financial transactions and serves as solid evidence for tax purposes

The number of individual receipts in a book can vary from 50 to 200 sets. Commonly, one set of receipts contains two different colored receipts: white and yellow. The white receipt is called the original receipt, which is usually on top and to be given to your customers. Meanwhile, the yellow receipt is a duplicate or carbon copy of the white receipt that the business keeps for documentation. 

Source: Amazon 

You can also find sets containing up to 4 different colored receipts on the market. This type of receipt book comes in really handy if your business has many departments involved in the sales process. For example, your business may want to give the white copy to the client, the yellow one to the sales department, the pink one to the finance department, and the blue one remains in the receipt book.

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How to fill in a receipt?  

While it depends on the template you use for your receipts, there are some essential parts that you see on almost every receipt. Below is a detailed guide on how to fill in those crucial parts:

  • Date: Write the exact date at the top page of your receipt when the transaction occurs. It can be the date when you receive payments or when your client receives your products or services. 
  • Company name and contact information: Most businesses have customized receipt books that have all this information pre-printed at the top left-hand corner of the receipt page. If you don’t have a customized receipt book, you will have to write down your company phone number/hotline and address under the company name.

Feel free to include other details like your website address, social media accounts, or operating hours. On a side note, if you don’t have a company name, it’s recommended to write your own full name instead. 

For example:

Russell Campbell

1234 Everett Way

Arvada, CO 80005

United States

? +123456789

? runningforlife.com

  • Product details: Write the name of your product on the left-hand side of the receipt. Make sure you also enter a specific description of the product like the size, quantity, color, etc.  

If you sell more than one item, list each product individually on one single row or line and leave a good space between each product. This allows you to change or add more information when needed.

For example:

      Product Size Color Quantity 
Running T-shirts LYellow 2
Knitted scarf Gray1
Motivational mug1
  • Price: For each item, write down its corresponding price at the end of the row or line. Always remember to multiply the single product’s price by its quantity first if you sell more than one unit of that product. 

For example:

      Product Size Color Quantity Price ($)
Running T-shirts LYellow 250
Knitted scarf Gray120
Motivational mug115

In this example, a running T-shirt costs $25. This customer is buying two, so you would need to write the total value of two T-shirts, which is $25 x 2 = $50.  

  • Subtotal amount: the subtotal is the summation of all the items before taxes and/or any additional fees. Add up the cost of each line and write the total number under the list of products on the price column. 

For example: 

      Product Size Color Quantity Price ($)
Running T-shirts LYellow 250
Knitted scarf Gray120
Motivational mug115
Subtotal 85 
  • Taxes, additional charges, and grand total: Include any applicable taxes by multiplying the subtotal figure with the tax percentage. Also, add any other additional charges such as delivery fees. List the name of your taxes and other fees on the left side under the subtotal and their cost on the price column. 

Now, add all the numbers to get the grand total, or the amount that your customer has to pay. Write the figure you get at the bottom of the receipt. You will always see a designated line to write your totals.

For example: 

So, there you go, that’s how to fill in a receipt! 

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What’s Shoeboxed? 

Shoeboxed is an application that lets you digitize all paper receipts in just a few seconds. Shoeboxed automatically extracts and categorizes important data from your receipts with human verification. Quick, reliable, and trustworthy, Shoeboxed promises to organize your piles of documents in the best way possible!

Digitize and organize your receipt books with Shoeboxed

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