(415) 418-0020 info@proteafinancial.com
What Receipts Does the IRS Require You to Keep?

What Receipts Does the IRS Require You to Keep?

When you deduct business expenses on your income tax return, you can usually refer to your records to support the expense. However, you must keep records that meet IRS record-keeping standards in case of an audit. We aim to explain what receipts the IRS requires so that you don’t miss anything when filing your taxes.

The IRS will probably ask for a receipt or another expenditure record if you use cash for business expenses other than wages, depreciation, or car expenses. The rules are more lenient if your business is a sole proprietorship, and all its expenses are subject to the personal property deduction. Here are some of the most important receipts you should keep for your business.

 

Receipts for All Business Expenses Over $75

The IRS requires a written record of all business expenses exceeding $75. In most cases, you must have a receipt for these expenses.

  • If you make a payment that does not require a receipt, you should keep a written record of the payment. The written record can include a computer log, a spreadsheet, or a diary. It must show the payment amount, the business reason for the payment, the business name and address (if different from your own), the date of the payment, and the name of the person or company that you made the payment to.
  • Keep records of all expenses relating to your automobile, such as gasoline, oil changes, repairs, insurance, tires, and maintenance. Business miles driven should be kept separate from personal miles driven. If you drive a car that you own, you can deduct the business miles driven and your actual expenses (gasoline, oil changes, repairs, and maintenance). If you drive a car that you lease, the lease payment and business miles are considered a business expense. If you drive a vehicle that you rent, you can deduct only the business miles driven.
  • Keep records of all expenses relating to your home office, such as electricity, heating fuel, cleaning supplies, telephone, internet, and insurance. You can also deduct the cost of a separate telephone line with a business message on your voicemail. If you have a home office, you must determine whether the office is a deductible expense.

 

Travel and Entertainment

The IRS requires receipts for travel and entertainment (T&E) expenses, such as airfare, hotel bills, meals, and car rentals. The rules are different if the T&E is associated with a business event that meets one or more of the IRS’s T&E rules.

You do not need a receipt to support the T&E expense in these cases. Instead, you must keep a log of the expenses and the business reason for the T&E. You must also keep track of the business purpose, who was present at the event, how much each person spent, and how long the event lasted.

Protea Financial Small Business Receipts

Advertising and Marketing

The IRS requires receipts for all advertising and marketing expenses and some research and development costs. Advertising and marketing expenses include the cost of printing, designing, and mailing promotional materials such as brochures, catalogs, and newsletters.

These also include the cost of internet advertising, website design, and fees for public relations and advertising consultants. Research and development costs include the cost of product testing and experimentation to determine if there is a need for new products and the level of customer demand for existing products. They also include the cost of developing prototypes and formulas.

 

Depreciation

Businesses that use an accrual method of accounting must keep all records. Depreciation records must show the date the equipment was placed in service, the equipment’s original cost, and the depreciation amount each year.

If your business owns its assets, you must depreciate them over a certain period. Real estate records must show the date you purchased the property and the amount of any mortgage. You must keep records of the cost of improvements and repairs to the property.

 

Business Gifts

The IRS requires receipts for all business gifts. Keep records on the following:

  • The date and location of the gift
  • The name of the person receiving the gift
  • The value of the gift
  • The name of the person who gave you the gift
  • The business reason for the gift
  • The business relationship with the person giving you the gift

If you receive a gift, keep records of the gift, the business reason for the gift, and the business relationship with the person who gave you the gift. You must report gifts of more than $25 on your income tax return.

 

Computer Equipment and Software

Businesses that use computers to process their financial data or orders of products and services must keep records of the acquisition cost and depreciation. Computer-related expenses that can be deducted from your income tax return include the cost of:

  • Computers
  • Printers
  • Modems
  • Software
  • Internet service
  • Repairs, upgrades
  • Depreciation

These also include monthly payments for a computer and internet service, computer repair fees, and computer rentals for employees who do not have their own computers. For any software titles, it is best to also add a note as to what it was used for and who used it, in case you ever need to know down the line.

 

Office Supplies

Keep records of the purchase price of all office supplies that you deduct on your income tax return. These include paper, pens, pencils, notebooks, file folders, cleaning supplies, toner for printers, pens, pencils, paper clips, and computer paper and toner.

Warranties for office equipment such as computers and printers are also deductible. You can also deduct the cost of copying and printing services.

Protea Financial Small Business Office Supplies

Mileage and Vehicle Maintenance

Keep records of all vehicle-related business expenses, such as gasoline, new tires, oil changes, necessary repairs, insurance, and all vehicle maintenance. Also, keep records of the business miles driven.

You must keep a mileage log for each business trip and every business-related trip from home. You must report all business miles driven on your income tax return.

 

Outsourced Assistance for Your Business

The IRS requires receipts or written records for all out-of-pocket expenses. You also must keep records of any payments made to independent contractors or outsourced service providers.

In addition to written records, you must maintain a written contract with any individual or company that you hire to perform any part of your business. Keep these records also to protect yourself should an issue come up with those contractors or providers in the future.

 

Let Protea Financial Help You Determine Which Receipts Are Best to Keep for Your Business

The IRS will examine your business expenses if you claim them on your income tax return. You must keep records of all business expenses to prove that they were legitimate business expenses.

Keep records in a way that makes sense to you so that you can quickly identify and locate the information when you need it. This will make tax time much easier.

You should keep these records for as long as you own the business. If you sell your business, you must keep the records for at least three years after the date you sell it.

Are you looking for more information? Contact Protea Financial today and let us help you organize your finances, straighten out your receipts, and be ready ahead of the next tax deadline.

Protea Financial Can Help You Keep the Right Receipts for the IRS

When you contact Protea Financial, you get a team of professionals who can help you with many aspects of your financial record keeping, including knowing which receipts are best for you to keep for tax time. Call now – we are here to help!

The Pros and Cons Of Bookkeeping in QuickBooks Online For Small Businesses

The Pros and Cons Of Bookkeeping in QuickBooks Online For Small Businesses

Are you thinking of using QuickBooks Online to manage your business’s bookkeeping? If so, you’re not alone. In today’s fast-paced digital world, no business can afford to lag behind, making software an essential component of success. Small businesses, in particular, must be agile to succeed. Fortunately, technology makes it easier than ever for small businesses to connect with potential customers and streamline operations.

Many businesses use QuickBooks Online for their accounting and bookkeeping needs for good reason. It can be an excellent program for managing financial information, streamlining processes, and reporting on performance.

However, there are pros and cons to using QuickBooks Online as your business’s bookkeeping solution. Let’s discuss the advantages and disadvantages you should consider before deciding to use QuickBooks Online for your company’s bookkeeping needs.

 

The Pros of Bookkeeping in QuickBooks Online

There are many advantages to using QuickBooks Online as your financial platform. Here are just a few of the biggest pros to using QuickBooks Online:

  • Easy setup – QuickBooks Online has a simple setup process that can be completed in a matter of hours. You should spend plenty of time setting up the system so that it is optimized for your business. The process is straightforward, and plenty of resources are available to help you make the most of your setup.
  • Excellent user interface – One of the best parts of QuickBooks Online is its user interface. It makes using QuickBooks Online easier and more intuitive.
  • Powerful reporting tools – A good accounting solution should allow you to view your financial situation, as well as that of your customers. This can be especially important if you have a subscription-based business model. QuickBooks Online reporting tools allow you to view critical information quickly and easily, allowing you to make smart decisions quickly.
  • Data security – Unfortunately, data breaches are a real problem in today’s business world. QuickBooks Online provides plenty of security features to protect your data. This can help you sleep better, knowing your data is safe from malicious actors.
  • Affordability – QuickBooks Online is one of the more affordable options on the market. If you want to be able to use bookkeeping software that is not going to cause your finances to struggle, this is likely the best option for you.

Protea Financial Bookkeeper with QuickBooks Experience

The Cons of Bookkeeping in QuickBooks Online

Despite the advantages of QuickBooks Online, it isn’t the perfect solution for every business. There are drawbacks to using QuickBooks Online for bookkeeping. Here are a few of the cons to using QuickBooks Online:

  • It is not always the best for growing businesses – While QuickBooks Online is a great solution for small businesses, it may not be the best choice for growing ones. You may need to upgrade your accounting solution as your business grows and expands.
  • Data limitations – While QuickBooks Online has robust reporting, you cannot always use all of it. You cannot use certain features if you have customers governed by specific data laws.
  • Feature limitations – Some small businesses will find that QuickBooks Online lacks features. For example, if your business relies on eCommerce, some features that can help you track purchases may be missing.
  • It doesn’t integrate with everything – Not all software integrates with QuickBooks Online. Some services you may want to use won’t work well with QuickBooks Online, which can create issues for some small businesses.

 

Should You Use QuickBooks Online for Small Business Bookkeeping?

If you are still on the fence about whether QuickBooks Online is the right solution for your business, here are a few factors to consider. Accountants recommend that companies keep their books for at least seven years. If your business is new, it has no history to report, making a new software title a viable option.

If your business is growing, you may need a better solution than QuickBooks Online. If you are unsure if QuickBooks Online is right for your size business, consider reaching out to a bookkeeping specialist here at Protea Financial. Our experts can help you decide whether QuickBooks Online is the right solution for your business today and in the future.

Turning to an experienced bookkeeper can get guidance on reading the different reports and accessing the various financial reports QuickBooks Online offers. Should you decide to use the QuickBooks Online platform, you can either go through the process of setting it up yourself or turn to an outsourced bookkeeper with QuickBooks Online experience for help.

Protea Financial QuickBooks Online

Tips for Deciding if QuickBooks Online is Right for Your Small Business

Here are a few tips to help you decide if QuickBooks Online is the right solution for your business.

  1. Do your research – When you decide to use a new accounting solution, you put a lot of trust in that solution. You want to make sure you’re putting your trust in the right place. Make sure you do plenty of research before settling on QuickBooks Online.
  2. Ask questions – If you are in the process of deciding whether or not QuickBooks Online is the right solution for your business, don’t be afraid to ask questions. You can’t make an informed decision unless you have all the necessary information. Be sure to ask any question you may have to make sure you have all the information you need.
  3. Pick the best option – There are many variations in bookkeeping software, including QuickBooks Online. If you are unsure if the one you are looking at will fit, explore the possibilities. Look at each feature and add-on before deciding on any software title.

You can do a few things to ensure success if you choose to go with QuickBooks Online for your company’s bookkeeping needs.

  • Make sure the data you input is accurate. This can help you make intelligent financial decisions faster.
  • Make sure everyone who needs access to the system has access. This can help reduce the time spent managing the system and allow you to focus on more important things.
  • Make sure QuickBooks Online is integrated with as many services as possible. This will help reduce headaches and keep things running smoothly.

There are many valuable tools within QuickBooks Online. Make sure you take the time to explore it properly to get the most value for your money.

 

Let Protea Financial Help Your Small Business Succeed

Deciding on one specific software for your business can be a daunting task. Thankfully, you do not have to make the decision alone. Turn to the financial experts here at Protea Financial today. We can help guide you toward the best possible bookkeeping software for your business.

You can also turn to us as virtual bookkeepers so you can focus on your business while we track your financial information for you. Put our years of experience to the test. Contact Protea Financial today so you can get your business on the right track.

Protea Financial Can Help You Learn QuickBooks Online for Small Businesses

Here at Protea Financial, we understand that finding the right software solutions is not always easy. If you are considering QuickBooks Online for small businesses, then reach out. We can help!