Tax season is here! And you might have a shoebox full of receipts to sort it out. On this post, let’s go over what is the IRS requirement for receipts, how to sort it out and tips – from me – to keep a filing system throughout the year. After all, a new decade asks for new organization tips 😉

Regardless if you do your own taxes, or have a professional helping you out, having an organized system for your receipts helps. A Lot.

The first point we’ll go over is what is required from the IRS. This is very im-paw-tant as they’re the ones dictating the rules.

If you want your business expense to be tax-deductible, you gotta keep that receipt. This helps in case you’re ever audit, you’ll be able to easily prove what that expense was all about. An IRS approved receipt will show the following:

IRS Publication 583, page 13

❗️Caution! Just because you paid, doesn’t mean it’s tax-deductible! It’s important to keep any invoices, itemized receipts or credit card slip.

The IRS also determines how long should you keep those records:

The good news is: IRS does accept electronic copies. So no need to keep all those papers filed.

You can organize your receipts in 3 different ways:

  1. Chronological: Per Year –> Month
  2. Expense type
  3. Vendor

Personally, I like organizing my papers in chronological order – I find it easier to fetch the information I need. To see how I organize it, click here to my filling cabinet pdf.

The main papers you’ll need to get organized for taxes are:

  1. Receipts
  2. Bank and Credit Card statements
  3. Business paperwork + Miscellaneous items
  1. define how you want to organize your papers.

2. Organize your paper receipts:

Next, go over your paper receipts, and separate them based on the filing system you have chosen.

Once they are organized, you can scan them and file them with your electronic receipts. Every receipt you get via email, you can “print as a pdf” and save on your electronic filing cabinet.

If you haven’t organized your electronic receipts yet, now it’s the time to do so.

Pro tip: rename your files with the receipt date, vendor name, invoice number (if applicable) – i.e. if you get an invoice from QuickBooks Online on 01/15/2020 for $70.00, I’d save on my folder: 2020 –> January –> 01.15.2020 – QuickBooks Online – # 20200115

The good news is: IRS does accept electronic copies. So no need to keep all those papers filed.

You can organize your receipts in 3 different ways:

  1. Chronological: Per Year –> Month
  2. Expense type
  3. Vendor

Personally, I like organizing my papers in chronological order – I find it easier to fetch the information I need. To see how I organize it, click here to my filling cabinet pdf.

The main papers you’ll need to get organized for taxes are:

  1. Receipts
  2. Bank and Credit Card statements
  3. Business paperwork + Miscellaneous items
  • Define how you want to organize your papers.

Choose how you’re grouping your papers, and how. If you’re a fan of paper, a folder with 12 separations might be a good idea. You can organize it by month. If you’re a fan of “the cloud”, make a folder on your preferred drive, and start your organization there.

  • Organize your paper receipts:

Next, go over your paper receipts, and separate them based on the filing system you have chosen.

  • Organize your electronic receipts

Once they are organized, you can scan them and file them with your electronic receipts. Every receipt you get via email, you can “print as a pdf” and save on your electronic filing cabinet.

If you haven’t organized your electronic receipts yet, now it’s the time to do so.

Pro tip: rename your files with the receipt date, vendor name, invoice number (if applicable) – i.e. if you get an invoice from QuickBooks Online on 01/15/2020 for $70.00, I’d save on my folder: 2020 –> January –> 01.15.2020 – QuickBooks Online – # 20200115

  • Bank and Credit Card Statements

Print, or save on your filing system, all your bank and credit card statements for the year. This will assist with your bank reconciliation and making sure all expenses are accounted for, and no duplicated are on file.

If you use Stripe, Square or any other merchant services, I recommend downloading the transactions for the year as well.

  • Everything else – Miscellaneous papers

Business registrations, Sales Tax Permit, Payroll Taxes, 1099-Misc, etc. Any other documentation you have for your business, make sure you file and have it secured.

  • How do I do it?

I use Hubdoc for receipt management, it’s a great little software that syncs with QuickBooks Online and Xero, and I can push the information to my accounting system. I’m a fan of backup, so I also have a folder in Dropbox for my receipts and all my business documents. Click here to get my filling cabinet pdf.

I organize in chronological order, it’s easier for me to find what I need and also retrieve any information I need for budgeting or forecasting purposes.

The good thing is that the IRS does accept electronic copies, you can snap a picture of your receipt and leave the box for the cat.

Once you choose and start a filling system, you can simply maintain it every year now. This will make tax season less stressful and help you be “audit-proof” in case the “big man” comes for ya.