Lose Receipts? 3 Simple Solutions To Pass An Audit

Do you know what being disorganized costs you?

3 Simple Solutions to Pass an audit

You miss tax deductions because…

  • receipts are lost. Even in the digital age, the IRS wants receipts. They may even ask for materials from the conference you attended in that tropical location. It happened to me after I attended a conference in San Diego. Fortunately I could put my hands on what was needed. Audit passed.
  • expenses are not categorized when you download your credit card and/or checking statements. It’s not much good if it isn’t under the right category. And the IRS loves categories, I learned. They don’t want to see things by months as I had been taught. They look at things in terms of categories. (Advertising, insurance, charity, utilities, subscriptions, travel, equipment, etc.)
  • the same credit card is used for business and personal expenses. It makes things much more complicated, and makes the IRS grumpy. Even if the credit card is not under a business name, using separate ones for personal and business makes your life easier, too.

 

Simple solution:

  • Put business receipts in files by category, as mentioned above; then archive when it’s time for a new year.
  • Keep personal receipts in monthly files for one year, then clear out each month’s file as you come to it. Keep anything needed for long term, such as home improvement receipts, which should have their own file. I’m not an accountant, so be sure to check with one.
  • Archive email receipts if you are confident in your finding/search system.

 

Tip: Use a computerized financial program such as Quicken Home & Business or QuickBooks.  It makes it so much easier to look up information, find things, make reports, budgets, and see where you are. (BY the way, don’t assume you need QuickBooks unless your accountant says you do. It can be overkill and add complication when the simpler version would do.

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