Documenting Expenses

As a business, we can deduct certain expenses from our income, and not pay income taxes on that money. Not all expenses are deductible, however. The ones that are, must have certain documentation in order to qualify for a deductible expense.

For most expenses, a receipt is enough documentation for the IRS. Purchases of merchandise, office supplies, furniture, and other material objects only need a receipt to qualify.

Some expenses need additional documentation. For example hotel, travel, and entertainment expenses require an explanation of why the travel or lunch was necessary to help us to make money in our business. If it doesn’t have a legitimate business purpose, it isn’t deductible.

Hotel and travel expenses also need an actual receipt, as the IRS doesn’t consider the charge slip alone an adequate receipt. A check out bill from a hotel, a ticket stub from an airline, an itinerary from a meeting, is the additional proof needed.

Give Treasury any and all documentation on these expenses.