Usually, the IRS audits three years worth of records. The general rule of thumb is to keep business receipts for as long as the IRS can audit your records. Storing receipts for longer periods can benefit your business.
How long should you keep business receipts? When it comes to keeping receipts, it’s better to be safe than sorry. And, receipts support the information you list on your small business tax return. Receipts reinforce your transaction history in your accounting books. You can also use business receipts for tax purposes. And, receipt information can help resolve customer issues (e.g., exchanges or returns). They provide customers with proof of purchase and ownership of the item. Receipts play an important role in your business. Likewise, you receive a receipt when you buy items for your business. You provide receipts to customers after they buy something at your business. Typically, receipts show the purchase date, item(s), and price of each item. When a transaction occurs, you either give or take a receipt.
You need to know how long to keep business receipts to avoid complications with your accounting books in the future. And not being able to locate a receipt can be problematic for your business. As a small business owner, keeping receipts is essential for your financial records. If you find yourself tossing receipts left and right, you may want to think again.
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