If there are no available receipts, what should you do?

Businesses need auditing from time to time to keep working and maintain their legal status. Many things can hinder this process and cause substantial loss to the business. Among these things is not having or losing receipts. Receipts are an important part of businesses as they both spend and make. They back & justify both of them and facilitate auditing. They facilitate record-making and bookkeeping in the first place and then help with auditing. But all of this is only possible if receipts are available.

On the other hand, if anything happens to them or maybe they are not available in the first place, it can lead to various problems. But as this is a frequent problem, there are guidelines available from the IRS, Moreover, you can contact us to have this problem sorted.

This article will discuss the role of receipts, which receipts are important to keep, problems related to receipts, how to solve such as conditions, and the role of bookkeeping in this.

Role of Receipts for Businesses

No matter the nature of the business, it deals with transactions of both buying and selling. These tractions include a diverse type of transaction as small as a parking fee and as large as the acquisition of a firm. All this requires proof for various reasons. Receipts are these proofs in written form. They help businesses and play vital roles in their work such as record-keeping, calculations, taxation, credits, and others.

While they play all the different roles, their absence can cause problems. This is where the reasons to keep them safe come.

Which Receipts and Why Keep Them Safe

Receipts are important for various roles in business operations. This amounts to all sorts of receipts but mainly buying receipts holds more importance. Whether they be any inventory purchase, repair work, travel expenses, pieces of training, employee incomes, and others.

Keeping them safe is highly important because of all the concerning roles. These roles are hindered in the case they are absent, damaged, lost, or simply unavailable. Thus, to enable these roles, receipts should be kept safe and available or it will lead to problems.

Problems Related to Receipts Unavailability 

Receipts are proofs of transactions and thus should be available. If that is not the case, there will be problems. These include various conditions such as IRS removing your tax credits and deductions. This is possible if the IRS audits some businesses which often occur in certain conditions which prominently include:

  • Business income over-reported or under-reported
  • Suspicious claims for tax credits and deductions
  • Not using exact numbers instead using round numbers
  • Inaccuracy or mistakes in the data and calculation

Then remains the question of what to do with this!

Do When Receipts Not Available

Businesses can face various problems related to auditing when receipt is not available. Thus, they need to manage the condition and avert any possible danger. This can be done through various methods and means. Some of these include:

Track down and ask for duplicate receipts

As you are supposed to have a receipt, so does your supplier or client. Often transactions have receipts for both parties so if a business has lost maybe the other party still has its copy. The business can ask for that copy and produce its duplicate for the transaction. This can solve the problem and avert any possible problems for the business.

Hire accountants and tax professional

After all, there are backdoors and loopholes to problems. Experts in the fields are often familiar with these backdoors and loopholes which can help the business to a great extent. They can find some solution as per the intensity and nature of the problem. Thus, hiring someone is an important method to avert problems arising from receipt unavailability.

Outsource your bookkeeping needs

Another option to not having the experts in-house is to outsource auditing. This can be bookkeeping services from some bookkeeping firm. This can also help you with hiring costs and tools charges for auditing. The outsourced individual and firm can help businesses catch up on the records and file their tax information accurately. It can avert audits from the IRS.

Use Cohan Rule

To tackle missing receipts, a common rule has been in use for a very long time named the Cohan Rule. This rule allows businesses to claim standard expenses even without receipts. In this rule, the IRS estimates a minimum amount instead of the actual amount and lets the business claim it.

Look for digital records

Various digital services keep a digital copy during transactions. These can be the email inbox, credit card transaction history, or bank account statements. Even if the business has lost the actual proof the digital proof can be of great service. It can cover the problem.

Check for calendars and checkbooks

Business calendars and checkbook leaves include a bunch of information that can be put to great use. So, if the actual receipts are missing, the information can help greatly and possibly solve the problem. The calendar can particularly help with remembering certain locations and people to find the actual receipts.

Track digital location through maps

Although location is not the actual proof. However, following the stored location information on phone maps can help to locate the vendor and then duplicate proofs. These can possibly substitute the actual ones and solve the problems.

These are some of the things that businesses can do when receipts are not available.

Conclusion

Auditing is an important need of business for taxation, claims, and other aspects. It has certain requirements which include receipts. These play some vital roles in auditing and overall business’ working mainly in justifying transactions. That is why, all sorts of receipts are kept safely to validate buying and selling claims. If that is not the case, it leads to various problems. To avoid these problems businesses can undertake different tasks.