Why You Must Keep Receipts?
Whether you are a Limited Liability Company, sole trader or get reimbursements by your employer for food and travel, keeping invoices and receipts handy is essential. Though the task is daunting, you cannot go without it!
Usually, receipts are essential to support your claimed business expenses on the tax return. But this is not the only reason. Here, we bust all the reasons that make it essential to keep a record of all your receipts!
- Proof of Your Travel and Stay
If you travel a lot for your personal business or for a company then keeping a track of it is easier with receipts.
Having receipts in hand confirms your travel and stay as well as support the amount of claim made by you.
- Proof of Expenses
Receipts for any major expense made by you during your official or business travel must be kept as a record. It is essential not only for tax records, but also keeps you safe at the time of cross-checking of your claimed expenses.
It is best to save your receipts to get reimbursements from a company where you work. The accounting department always needs physical proofs to confirm your expenses and reimburse them later.
There is always a possibility of making a mistake in a transaction, for instance, double charge. The receipt serves as a documentation of such mistakes and lets you easily resolve it later.
- Prepare Tax Returns
Paper receipts are the best to document expenses during taxes. They offer easy record-keeping and audit for both an individual as well as a company.
Most probably, your inbox is often overloaded with thousands of archived messages, dating back to years. Also, websites are regularly changing or moving. In such situations, it is easy for a digital receipt to get deleted or lost in the mess.
Paper receipts overcome all such problems. You can place them securely in a file in a systematic manner and they will always be available for use.
A paper receipt is a sure confirmation that a transaction occurred at a specific time, place and sate. It is proof of the amount spent and you can get it hand-signed for further confirmation.
- Check Against the Credit Card
You might be spending money for your business or travel through your credit card, but might not be checking your credit card statements. In this case, your paper receipts are best to check against your credit card transactions.
- Track Your Expenses
In a business operation, things can get busy, which is a good thing but then managing your expenses might be difficult. Keeping a record of all transactions will make sure that you don’t overlook any possible deductions.
- Identify the Source
Last but not least, your business must be involved with multiple vendors and may have different sources of income and expense. Properly labeled receipts will keep separate your taxable and non-taxable income and deductions and let you easily identify the source.
It is best to keep a record of your receipts as long as they are required for administration, accounting, and taxation purposes. If you still have queries related to receipts or bookkeeping, you can reach out to us anytime. We are happy to serve you!