As a business owner, you are busy making sure that all aspects of your company run well. As you go about your day, it’s easy to let paperwork pile up into a cluttered mess. Once its time to spring clean, you must resist the temptation to toss it all in the trash. You need to keep some of this paperwork around to track your spending and protect your business. Here is a guide to know when to keep your receipts and when to throw them away.

Advertising Expenses

Promotional products or services are crucial to the success of your business. The products include: business cards, magazine advertisements, internet marketing, web hosting. When there are reasonable expenses and directly related to your business, they could be deducted on a business tax return. Keep all payment receipts and submit to your tax preparer.

Traveling Expenses

There are times when you will have to take a business trip to connect with clients, attend trade shows, or meet with suppliers. Keeping the records from the journey will allow you to track the effectiveness of your efforts and explain your tax deductions. Hold on airline tickets, car rental receipts, and accommodation receipts, and restaurant bills.

Operating Supplies

It would be incredibly hard to continue with a business without the necessary tools in place. Paper, pens, and cleaning sprays are tax-deductible when used to run the business rather than creating the product or service. So, after stocking up your office, keep the proof of those purchases.

Company Assets

As your business progresses, you will buy valuable items to keep yourself in operation. You want to be aware of how often you repair these items or the items often disappear and need replacement. Track your spending by holding on to all documents when purchasing equipment as well as how often they need servicing and updating.

Business Inventory

There are different methods you may choose to create the product or services. You may buy wholesale goods and resell them or you may create your goods from start to finish. Keeping the records of payment will alert you to when more orders are necessary. Also, you will notice if you need to be more efficient in your financial habits and production process.

How Long Are The Receipts Needed?

Once you understand what paperwork to keep for your company, you may question how long you should hold on to them. Any papers that are duplicates or do not pertain to your business can be shredded. For the rest, you would enjoy reviewing the IRS website or speaking with a tax preparer to know how long to keep them around. This way, you are already prepared to explain your financial decisions if an audit occurs. Generally, these occur with returns filed within the last three years but can go up to the previous seven years.

Does My Documentation Have To Be In Paper Form?

What can derail many business owners in their record-keeping is the burden of holding on to multiple years’ worth of paperwork. But, these items do not have to be in paper form. You can continue with your spring clean efforts by scanning all your documents to a digital format. The documents are now easier to access and convenient to store.

To reap the benefits of working for yourself, keep the proper paperwork to protect your company. With the receipts that you accumulate on a weekly or monthly basis, you should be cautious rather than hasty. This will avoid situations you will later regret. Also, working with an accountant is a good strategy to help you make the right decisions about your records.