It’s the 21st century. We live in a digital world. No one wants to keep hundreds of little scraps of paper throughout the year! So is it really necessary to keep that tiny receipt documenting the stamps you just bought at the post-office?

If you’re a business owner, freelancer, or anyone who is doing any type of side hustle, the answer is… probably. But there are a few exceptions, per Publication 463, when a receipt isn’t required.

The IRS does not require a receipt if your travel expense, other than lodging, is under $75.

However, this only applies to payments made via credit card, debit card, Paypal, etc. This is because even without the receipt, you can still show proof of purchase at a specific location at a specific time. You should keep the receipts for all purchases paid in cash.

And it’s never a bad habit to just keep all receipts. Especially now when apps and technology make saving receipts so easy…

When it comes to keeping the receipts, there are better solutions than just shoving a crinkled piece of paper in your purse or wallet. Many stores will email you your receipt that you can save. There are also apps available, like Smart Receipts, that allow you to take a picture of a paper receipt and store it digitally so you don’t have to store it physically.

Pro Tip: Just snap a picture of your receipt on your phone and save it in a “receipts” album on your phone!

However, at the end of the day, none of this matters unless you are properly recording these expenses throughout the year. This means you need to be utilizing some type of bookkeeping system. It can be a simple spreadsheet, an accounting software like Quickbooks, or outsourcing your bookkeeping to a professional. With this crucial practice alone, you’ll ensure you don’t miss any critical tax deductions and have the documentation to support your business in the unlikely event of an IRS audit!

If you are looking for more DIY bookkeeping and tax help, be sure to check out the FEARLESS FINANCES WORKSHOP!