Understanding your financial foothold entails more than just opening your wallet and counting how many Lincolns and Benjamins protrude. After all, it takes more than a single snapshot of any given moment to truly determine the profitability, or lack thereof, of any individual or business. Want to truly understand your money, how it is earned, and how it is spent? Keep track of these small but important documents… your receipts. This is because the value of Keeping Receipts extends beyond mere storage. It’s all about balancing your budget and making sure everyone gets what they’re due.
These digital copies containing your transaction information are frequently portrayed as a bother. They are, however, the foundation of expense management and should not be overlooked.
Here’s what you need to know to keep better records and avoid fines from the IRS.
The significance of receipts Is it true?
A receipt is a document, either in print or digital form, that confirms the completion of a transaction. It is written evidence that a seller received monetary compensation in exchange for delivering a product or service to the buyer/customer. There is no official record of the change in ownership following a purchase, or a request for a refund or exchange, without the business receipt and the information it contains. There is also no clear evidence of how much has been or still needs to be paid if the fee is to be transferred over in installments.
Receipts, in particular, protect both the buyer and seller, as well as their businesses, from unwarranted recourse. They provide the transaction with much-needed transparency.
Business receipts contain the following information for this purpose:
- Names, addresses, phone numbers, and other contact information for buyers and sellers.
- A list of the goods and services that are available
- A breakdown of the fee paid, including prices, discounts, promotional codes or credits, taxes, and so forth.
- The total sum paid
- The payment method utilized
Do you need to keep your receipts?
Saving receipts isn’t just something your grandmother does to make everyone laugh at family gatherings. There are practical, logical, and legal reasons for storing and tracking business and personal receipts.
Should you keep business expense receipts?
Keeping track of your small business’s activities is critical to its survival and success. Record keeping provides insight into your company’s evolution within its industry and market. It assists you in determining which sales and marketing strategies are effective. Furthermore, it indicates which products and services are selling. It explains how customers prefer to pay for your product, among other things. It also sheds light on areas of your business that require assistance. Business receipts also serve as the foundation for preparing financial statements and tax returns. They are the small initial investments that will save you and your small business a lot of money in the long run. So, if you want to stay in the good graces with the IRS, start Keeping Receipts!
Why should you keep personal expense receipts?
Should you also keep receipts from personal purchases? Without a doubt! The receipts you receive after purchasing a product, such as a new oven, or hiring a professional are your ticket to a hassle-free refund or exchange. Many companies will only accept them as proof of purchase if you want to cash in on a warranty. Receipts can also be used for price matching by some businesses. Furthermore, when “that time of year” comes around again, they will assist you in calculating your tax deductions.
The Advantages of Keeping Receipts
Keeping receipts is advantageous to your small business. It’s as simple as that. However, to truly maximize the value of your business receipts, you must go one step further and track them. This will provide you with even more benefits, such as the ability to maximize the expenses you claim. It will also assist you in determining whether you are required to pay taxes, allowing you to make the exact tax payments that you are required to make – not a penny more or less. It may even reduce your tax liabilities. Saving business receipts will also increase efficiency and transparency in the preparation of your accounts and reports at the end of each quarter or year. You’ll be able to secure financing more easily when needed, manage changes in your budgeting, and help your nest egg grow this way.
Are you ready to begin? Use a platform for automated expense management, such as WellyBox. You will be able to scan, store, and record receipts. With WellyBox, you’ll be able to reap these benefits with little effort on your part.
What types of receipts should you keep for tax purposes?
Is it really necessary to keep every receipt for every expenditure for tax purposes? Nope, you don’t. But which receipts should you keep satisfying the IRS? Which can you give up keeping your bookkeeping clear and concise?
Whether you scan paper receipts, store digital receipts, or a combination of the two, it’s critical to understand which receipts should be kept for the short term and which should be kept for long-term, tax-related reasons.
In the short term
These are usually receipts from small or inexpensive personal purchases, such as a new sweater or a night out on the town. You can confidently toss these receipts to the curb once you’ve removed the tags and logged your expenses in your budget management system.
In the long run
The more expensive your transaction, the more likely it is that you will benefit from keeping your receipts for an extended period. This is in case the warranty needs to be implemented (with the receipt serving as proof). However, long-term receipt storage is even more important for business expenses and tax purposes.
Do you own your own company? Unreimbursed work-related transactions, self-employment expenses, donations, and even childcare and medical expenses can all be used to claim tax breaks. Keep all business expense receipts for seven years in case you are audited.
Consult your home country’s tax authorities for more information on taxes and receipt storage.
What’s the bottom line for you?
Now that you understand the significance of keeping receipts, which receipts to keep, and what they should contain, your financial records and bottom line should be more transparent than ever. Even better, by utilizing AI-driven expense management technology, such as Wellybox, you will gain increased seamlessness and organization. This way, your financial documentation, and reporting will benefit your small business and your family the most. The WellyBox system eliminates the need to track down invoices and receipts. WellyBox will instead locate all of your digital receipts and invoices and sync them with popular cloud storage solutions such as Dropbox, Quickbooks, Xero, Freshbooks, and others. The result? You can see instant updates on the status of your expenses (in more than one currency), and the highest level of security means that your sensitive information will never be shared with third-party services.
Read More: What does Due Upon Receipt mean in 2022?
Stay Connected!
