Should Your Business Keep Its Receipts?
The answer is, absolutely. Here’s why your business should keep its receipts.
Many, if not most of our financial tasks are done online these days. So when the cashier asks if you would like your copy of the receipt, you might instantly think, “Why would I want another piece of paper to get lost in the abyss of my vehicle?” Won’t it just end up in the trash anyway? It’s easier just to say no and be done with it; after all, the transaction will be on your bank statement.
Yes, these things are all true, but if you're not keeping your business receipts is it possible your missing something? The answer is, yes. Here’s why your business should keep its receipts.
1. Financial Record Keeping:
Receipts are more than just a piece of paper, they are important pieces of evidence that provide proof of purchase or sale. If that was all you needed then by all means, just use your bank statement. However, receipts offer us more details that are extremely helpful and sometimes essential for accountants to effectively do your bookkeeping and taxes. Receipts detail the dollar amount, including GST and PST, the date the purchase was made, and each item included. Keeping receipts keeps your financial records accurate. This is crucial for bookkeeping, budgeting, and tax purposes. If all of these things are in order, you’re setting your business up for success!
2. Tax Compliance:
We all want to be in good standing when it comes to our business taxes right? Well, receipts are essential for this. Receipts are important for documenting business expenses and deductions when filing tax returns, they provide evidence of legitimate business expenses, allowing you to claim deductions and reduce your taxable income and they are also extremely helpful In case of an audit. Having organized receipts can help prove your claims and ensure compliance with tax regulations.
3. Expense Tracking and Budgeting:
We’ve all heard of the importance of having a budget (hopefully), but does your business actually follow one? Organizing and analyzing receipts provide a detailed breakdown of your business's expenditures. By organizing and analyzing receipts, companies can track their spending patterns, identify areas of excessive spending, and make informed decisions to manage their budget more effectively. Receipts can also help reconcile accounts and detect any discrepancies or errors.
4. Warranty Claims and Returns:
As we said above, receipts provide proof of purchase which allows your business to submit warranty claims or even return defective and unwanted items. Without receipts, it will be quite a challenge to accomplish these inconvenient yet inevitable tasks for your business.
5. Insurance Purposes:
As much as we hope nothing damaging will happen to your business, it is something you must be prepared for. Keeping receipts can help your business in the event of property damage, loss, theft etc. They will provide evidence of the value and ownership of assets, helping your business recover losses and obtain the correct compensation from insurance providers.
6. Audit and Legal Requirements:
Audit may be a dreaded word, but it doesn’t have to be if you are organized and prepared. Having well-kept organized receipts will show compliance with regulations and provide a solid foundation for any necessary audits or legal proceedings.
7. Financial Analysis and Decision Making:
Keeping and reviewing your receipts will help your business gain insight into your spending habits, identify ways to cut your costs, and make future financial decisions.
Overall, keeping receipts WILL help your business on its journey to success. So, what do you think? Have these stress-reducing reasons convinced you to keep your business’s receipts (if you’re not already)?
