Saving receipts for business expenses is crucial for all business owners. In an article published by Entrepreneur Magazine, 7 Tips for Keeping Receipts Organized for Tax Time, author Mark J. Kohler explains how one real estate broker learned this lesson the hard way and found herself in tax court. In the case of Ong v. the Internal Revenue Service, Betty Ong was unable to produce receipts for thousands of dollars worth of deductions. Regardless of whether the transactions were legitimate, Ong had no leg to stand on without the receipts, and the IRS won easily.
Don’t let this happen to you. Keep all of your receipts, and include a note on the back of the receipt for the business purpose. Scan the receipts and hold onto them for at least six years, and never solely rely on credit card statements or canceled checks. It pays to be organized – especially at tax time.
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