In business, it is important to have good records. However, in the day-to-day dealings of running a business, some smaller things, like receipts for expenses, seem to move to the bottom of the list. Here are a few reasons you may want to reconsider trashing your receipts.
Receipts have details about your purchases that can assist when coding your expenses. Think about how many items are you able to purchase at a gas station. If you have a charge that you categorize as fuel expense, you will need the receipt as backup to show you purchased gas and didn’t purchase something else like a meal, supplies, or drinks for an office meeting.
Identifying Charges Made in Error
If you have multiple employees with access to the credit card, maintaining receipts will help you determine if there are any discrepancies in purchases. It is easy to mix up your cards in your wallet or in an online account like Amazon. If you have a receipt and no charge, you can follow up with the employee or vendor to determine if there was an issue with the purchase or the amount needs to be reimbursed to the employee. The opposite applies as well. If you have a charge and no receipt, this will trigger you to ask what the charge is for and determine if it is a business expense or not. Employees accidental purchases on company cards can seem small as individual amounts come through, but can add up to a significant hit to the bottom line if left undetected.
Being Prepared for an Audit
Having organized and accurate receipts will help you if/when you are audited or going through a financial review. Though an IRS audit is not a common occurrence for most businesses, if it does happen, you will make your auditor’s job easier by providing detailed business records (and if their job is made easier, so will be your life!).
Taking a small amount of time now to properly review and capture receipts will save you time and headache in the long run.
Erin Ryan, Controller