Everywhere you turn, there is a business receipt – stuffed into your car cup holders, wallet, desk, and anywhere else within arm’s reach. You know it’s important to keep receipts, but if you ever needed to locate one in particular, you’d spend hours pouring through nooks and crannies to find the right one. Does this sound familiar?
Good news!- The IRS accepts electronic copies of all receipts, that’s right – all receipts, according to Revenue Proclamation 97-22. For those of you lacking a passion for IRS lingo, RP 97-22 explains that an electronic receipt is proof of purchase as long as it matches the original and contains all legible, pertinent information (such as vendor, date, item, amount, and tax if applicable).
Today’s technology provides a simple, on-the-go solution to electronic storage. As a small business owner you have enough on your plate! Stop worrying about paper receipts getting lost or faded and have comfort in an organized, easily accessible receipt management system. Accountingprose supplies all of our small business accounting clients with a Hubdoc subscription for this very purpose.
What is Hubdoc? Hubdoc is an electronic receipt management system that reads the main information on your receipt (Vendor Name, Date, Amount) and auto-names and files the receipt. That’s right, it does the dirty work for you! Even greater, Hubdoc syncs with all major accounting systems (like Xero!) and storage systems like Box. This provides an extra back-up of the information to have you feeling secure about ditching the paper.
Hubdoc allows three methods of receipt upload (and one other magical option):
You may remember to scan a receipt for that $500 plumbing bill (ouch!), but what about that trip to Dunkin’ Donuts for the weekly office meeting? Here are some receipt categories you want to make sure don’t slip through the cracks:
Whether it’s donuts for the t
Pro Tip: Be sure to snap the photo AFTER you write in any tips. This will help to match your records when that $20 purchase comes through the bank as $25 with the tip included.
Snapping a pic of the receipt will allow us to match the bank debit to the receipt when we reconcile your bank account in Xero, without having to go back through purchases at the end of the month, and wondering why there are receipts with no matching expense. This saves us from having to email questions back and forth about mystery expenses, giving you more time to do what you love.
Did you buy equipment for your gym? Maybe you bought a truck to deliver goods to your clients? Save receipts for those big purchases, saves time and frustration come tax time. Your CPA will need the proof of purchase to expense these big ticket items over the course of multiple years. Keeping adequate records will help you prove up the expense, keeping you out of hot water with your CPA and the IRS.
Pro Tip: Jot “Personal Card” on the receipt before snapping the photo. When you are looking for this transaction years later, it will jog your memory to look outside of your normal business checking account.
This will give your bookkeeper a heads up to record the expense against your equity account, without having to clarify who and where this purchase came from. We’ll be able to attach the receipt straight to our record so your CPA knows exactly why we added in these expenses. Jotting notes on receipts in general is a great way to remind yourself and your bookkeeper what expenses were for – another idea is to include a memo for expenses needing tracking categories such as event names or sales regions.
With proper receipt documentation, you can sit back and relax, knowing you have all the information you need at your fingertips. Taking a few seconds to snap photos at time of purchase can save you hours of headaches and thousands of dollars when the IRS or your state’s Department of Revenue knocks on your door (or email inbox).
Need help implementing receipt management and better documenting your books? Schedule a Free Consultation - we’ll help you beat the heat and manage your receipts!