What is the IRS rule for receipts for business expenses?
The IRS technically doesn’t require receipts for business expenses under $75, with one exception. Lodging expenses always need a receipt regardless of the amount. For anything $75 or more, you need to keep the receipt.
But here’s the catch. Even for expenses under $75, you still need adequate records. The IRS wants documentation showing the amount, date, place of purchase, and business purpose. A receipt covers all of that automatically. Without a receipt, you need some other record that proves the expense was real and business-related.
For meals and entertainment expenses, the documentation requirements are stricter. You need to record who attended, their business relationship to you, and what business was discussed. A restaurant receipt alone doesn’t cover it. You need notes about the meeting itself.
The IRS accepts digital copies of receipts. You don’t need to keep paper originals in a shoebox. Take a photo with your phone or use an app that captures and stores receipt images. The digital version is just as valid as the original and much easier to organize and retrieve later.
Keep your records for at least three years from when you filed the return claiming the deduction. If you underreported income by more than 25%, the IRS can go back six years. Seven years is safer if you want to avoid any questions.
The practical advice is to keep receipts for everything regardless of amount. Trying to remember which purchases hit the $75 threshold creates opportunities for mistakes. It takes less effort to photograph every receipt than to sort through which ones you technically need. Monthly bookkeeping runs smoother when all documentation exists from the start.
What gets business owners in trouble during audits isn’t usually missing receipts for small purchases. It’s missing receipts for the larger expenses combined with no clear business purpose documented anywhere. A $3,000 charge on your credit card statement with no receipt and no notes about what it was for raises questions you don’t want to answer.
If you’re behind on organizing your expense documentation, a Mid-Missouri bookkeeper can help you set up systems that make tracking easier going forward. The goal is capturing receipts and business purpose at the time of purchase, not reconstructing records months later when the details have faded.
Full-Charge Bookkeeping for Mid-Mo's Businesses
The Next Step:
Get Your Quote
Tell us what you're dealing with. We'll listen, ask a few questions, and give you a straightforward price that meets your expectations.
More Questions
At what age do seniors stop paying property taxes in Missouri?
Missouri doesn't have an age where seniors completely stop paying property taxes. However, the Property Tax Credit program provides relief for seniors 65 and older who meet income requirements.
Read answerWhat do I need to process payroll?
You need federal and state employer registrations, completed employee tax forms, a pay schedule, and either payroll software or a service to handle the calculations and tax deposits.
Read answerHow much should I budget for a bookkeeper?
Small business bookkeeping typically costs $200 to $600 monthly for basic services. The actual price depends on transaction volume, industry complexity, and whether you need additional services like payroll and sales tax filing.
Read answerHow much does ADP payroll cost for small businesses?
ADP doesn't publish fixed pricing. You'll need a custom quote. Most small businesses report paying $59-79 per month as a base fee plus $4-6 per employee, but the total depends on which tier and features you choose.
Read answerWhat is one of the most common bookkeeping mistakes that business owners make?
Letting bookkeeping pile up is the most damaging mistake. When transactions sit for months, no one remembers what they were for. The books become guesswork instead of facts.
Read answerHow to catch up on bookkeeping?
Start by gathering bank and credit card statements for the entire period you're behind. Work through reconciliations month by month, categorizing as you go. The timeline depends on how far behind you are and whether the books were correct before the backlog started.
Read answer