Question: What Records Should I Keep on Business Expenses for Tax Deductions?
Answer:
In order to deduct business expenses and reduce your taxes, you must have excellent records on each expense, showing the amount of the expense, the date, and the business purpose for that expense.
Save all of these types of documents to substantiate your business expenses
- Canceled checks
- Cash register tapes
- Account statements
- Credit card sales slips
- Invoices
- Petty cash slips for small cash payments.
If the record does not include a business purpose, and the business purpose is not immediately obvious, be sure to include the purpose. For example, if you have receipts for utilities for your business location, the business purpose is obvious. But if you are paying monthly expenses on a cell phone, note that it is your business cell phone and include a business card or other business document with this cell phone on it.
