Keep a receipt for every business purchase that isn't obvious from the bank statement, keep your records for at least three years after you file, and send receipts to your bookkeeper as you go instead of all at once. A photo on the day you buy something beats a search in April.
Which receipts to keep
The bank statement shows who you paid and how much. It doesn't show what you bought or why. I'd keep a receipt for:
- Anything over $75, which the IRS generally expects documentation for on travel, gifts and certain other costs.
- Equipment, furniture and anything you'll use for more than a year.
- Meals, travel and conferences, with a note on who was there and the business reason.
- Anything bought on a personal card for the practice.
- Anything from a store where you also buy personal items, like a big box or online retailer.
Your CPA may want more. Ask them what they need to support your return.
How long to keep records
The IRS's general rule is to keep records for three years from the date you filed the return. There are longer periods in some cases. Records for employment taxes are generally kept at least four years. If income was underreported by a large amount, the period can be six years. Records about property and equipment are kept until the period for the year you sell or dispose of it runs out. And if a return was never filed or was fraudulent, there's no limit.
Many owners keep everything for seven years to be safe. Your CPA can tell you what fits your situation and your state.
Photos count
A clear photo or scan of a receipt generally works as well as the paper, as long as it's readable and complete. Store them somewhere backed up, not only on your phone.
The easiest way to send them
- Snap a photo the day you buy something.
- Write the reason on it, or in the file name, if it isn't obvious.
- Send it to your bookkeeper the same week, through whatever upload link or app they use.
- For things like software, have invoices emailed to one practice email address and forward them monthly.
In a made-up example, an owner buys $2,400 of exam room furniture on a personal card in March and hands over the receipt in January. By then nobody remembers what it was, and it may get recorded wrong or not at all. A photo sent that week would have taken a minute.
Paying for practice costs with a practice card helps too. Here's why that matters.
What I'd do this week
- Make a receipts folder on your phone and in a backed-up cloud folder.
- Gather any receipts for this year you haven't sent yet.
- Ask your bookkeeper for their preferred way to receive them.
Common questions
Do I need a receipt for every purchase?
Not for everything. Recurring bills with clear invoices, like rent or software, are well documented already. Keep receipts for anything that isn't clear from the statement.
Is a bank statement enough proof?
Usually not on its own. It shows payment, not what you bought. Your CPA can tell you what they need.
Can I throw away paper once I've scanned it?
Generally, yes, if the scan is clear and complete and stored safely. Ask your CPA if anything should be kept in paper.
Want receipts handled without the shoebox?
We give you a simple way to send receipts as you go and attach them during every monthly close, so year end isn't a scramble. If that's what you need, apply to work with us.