What documentation can I use 4 business expenses- water 4 customers and cleaning supplies ? Can I highlight purchases on a bank statement or use a spreadsheet with date

[ulfsaxa12]

- I created a spreadsheet for uber with the item purchased amount and date . Is this enough ? I am bad at keeping  receipts

[RayW7]

For self-employed individuals, it is often helpful to save receipts from every purchase you make that is related to your business and to keep track of all of your utility bills, rent, and mortgage information for consideration at tax time.  In my opinion, creating a spreadsheet is not sufficient in itself without receipts to verify.

When you are self-employed, many of the expenses you pay for materials, supplies, marketing, office expenses, insurance, and travel can be deducted when you file your income taxes. Certain utilities and expenses for operating a business from your home may also qualify.

[ulfsaxa12]

So if I got audited would they really want me to send in a million receipts ? Is it okay to save receipts for the upcoming tax season and pitch old ones since they take up a lot of room ? What if I used a spreadsheet to write down my purchases and didn’t keep the receipts 😕 

[GloriaL]

It depends, they may want to review your receipts. The IRS requires you keep all your records that you used to prepare your taxes for the last three years from the date you filed the return. The IRS is allowed to audit you within the last three tax years. If they find a large error, they may dig deeper and may request substantiation even further back. It is advisable to save your records for the last seven years for both your personal and business taxes.

For receipt record keeping, the IRS states that you need a record and proof of payment. Essentially, your record needs to show what you bought, when you bought it, and how much you spent. The IRS accepts receipts, canceled checks, copies of bills, and bank statements to verify expenses.

For additional information: IRS: What Record Should I Keep

@ulfsaxa12