Should I keep the receipts after inputting them into the accounting software?

The Importance of Retaining Receipts Even After Digital Entry

In the world of small business Accounting, the management of receipts can sometimes be a nuanced topic. As someone who has recently taken on the responsibility of collecting receipts for a small company with just six employees, you may be wondering whether it’s essential to retain physical copies after you’ve entered them into your Accounting Software.

Your instinct to keep these receipts is indeed a wise one, as several factors support this approach.

Why Retain Receipts?

1. Verification Purposes: Keeping the original receipts allows for easy verification should any discrepancies arise in your financial records. If an expense comes into question—be it for an Audit, tax preparation, or even internal review—having the raw documentation on hand can provide clarity and support your claims.

2. Tax Compliance: For tax-related inquiries, retaining receipts is crucial. The IRS and similar financial authorities often require evidence of expenses. Without it, you could face issues should you be audited.

3. Financial Transparency: Clear and organized record-keeping enhances financial transparency. Stakeholders or investors reviewing a company’s expenditures will expect thorough documentation, which reinforces trust in your business practices.

4. Potential Disputes: In case of disputes over transactions—whether with vendors or clients—having the receipt readily available can help resolve issues quickly and assertively.

Best Practices for Storing Receipts

• Digital and Physical Copies: Consider scanning receipts or taking clear photographs to create digital copies while also holding onto the originals. This dual-layer of storage can serve as a robust backup system.

• Organized Filing System: Set up an organized filing system, both digitally and physically. Categorize by date or type of expense to ensure easy retrieval when necessary.

• Retention Period: Familiarize yourself with your local regulations regarding the retention of financial documents. Generally, keeping receipts for at least three to seven years is advisable, depending on your jurisdiction and specific financial circumstances.

In conclusion, while inputting receipts into your Accounting Software may seem like the final step, maintaining a habit of retaining them is an integral part of sound financial practices. This diligent approach can protect your company’s interests and provide peace of mind in your accounting responsibilities. Remember, the integrity of your financial records is something that deserves meticulous attention, so it’s worth upholding these best practices for the future stability of your business.