Would you invite the IRS over for dinner?

If you’re like most Americans, the answer’s a hard no. A recent survey shows that the majority of United States citizens have a negative view of the IRS.

Why don’t Americans like dealing with the IRS? Perhaps it’s the stress of trying to keep track of IRS receipt requirements or the difficulty of comprehending the ever-changing tax code. After all, the tax code is over 75,000 pages long, and the IRS can make as many changes to it as they want. Between 2001 and 2012 they changed the tax code 4,680 times or more, every single day!

Luckily, you don’t have to become a tax expert to know how to navigate the different IRS requirements. Instead, you just need a solid understanding of what information is expected of you as a business owner, and the best ways to provide it. Read on to learn how to create an efficient and easy record-keeping system.

IRS Receipt Requirements

Your IRS receipt requirements will vary depending on the type of business you have. You can choose whatever type of record-keeping system suits your business as long as you’re clearly showing your income and expenses.

The recordkeeping system you use needs to include a summary of every single business transaction. You can usually keep track of these transactions in a business book such as an accounting journal or ledger.

Gross Receipts

The gross receipts are the income that you receive from your business. Make sure you’re keeping all of the supporting documents that display the totals of each gross receipt. Here’s a list of documents that help with gross receipts:

• Cash register totals
• All invoices
• Credit sales
• Receipt books

If something is bringing in revenue to your company, you’ll need to have a record of it.

Tracking Purchases

On top of recording the money coming in, you’ll also need to keep track of all the money that’s going out. Whenever you purchase your company, make sure you save a copy of the receipt.

You can define purchases as any item that you buy and resell to your customers. Businesses that involve the manufacturing or producing of goods, can list the cost of all raw materials, or parts they use to make the products they sell.

Explaining Expenses

In the business world, your expenses are all of the costs that you take on, excluding your purchases, to keep your company running. You can view here, to get tips on documenting employee expenses.

When it comes to documenting expenses, you can never be too thorough. Keep track of everything that you think you could reasonably list as a business expense. This includes electronic proofs of payment, account statements, receipts, invoices, canceled checks, and more.

Check-In Regularly

Now you know more about IRS receipt requirements. Yet, that doesn’t mean you should wait until the last minute to get things in order.

The most efficient record-keeping system is one that includes regular check-ins. We suggest using color-coded folders to store your receipts and other documents you might need later.

Having a healthy relationship with your finances is a great way to eliminate unnecessary stress from your life. Want to find more ways to feel better? Check out our Health and Fitness section today!