What receipts to keep for taxes: the IRS asks for records that show the amount, the date, the place, and the business purpose of every expense you deduct. For most small business spending that means the receipt or invoice plus the bank or card record. Keep them for at least three years after the return is filed, four years for anything tied to payroll, and longer for property. The $75 exception people quote is narrow and does not apply to most expenses.
This guide is for owners who do their own books, or hand them to a bookkeeper, and want a clear rule for what to save, what to let go, and how long. It covers the federal baseline from the IRS, the California additions, and the way to store receipts so they are never a project. The rules on which expenses are deductible, and how, belong with your CPA; Books LA does not advise on income tax. What we do is keep the records that make the CPA’s answer defensible.
What receipts to keep for taxes: the four things every record must show
The IRS does not care about paper. It cares about proof. The IRS recordkeeping page describes supporting documents as the records that show the amount, date, and nature of a transaction. For deductions, add the business purpose. A receipt proves amount and date, while a card statement proves payment. Neither one alone proves what the purchase was for. So the attachment and the memo together are the record, not either by itself.
| Expense type | Keep | Why |
|---|---|---|
| Purchases from vendors | Invoice or receipt showing what was bought, plus the payment record | The statement shows “Amazon $212”; the receipt shows a printer, not a gift |
| Meals | Itemized receipt, who attended, business purpose | The business purpose is the part the statement never shows |
| Travel | Receipts for lodging always; airfare and ground transport; dates and destination; purpose | IRS Publication 463 treats travel as substantiated only with these elements |
| Vehicle | Mileage log with date, miles, destination, purpose; or actual expense receipts | Mileage without a log is the most commonly disallowed deduction |
| Equipment and property | Purchase invoice, financing documents, later sale or disposal records | Needed for depreciation now and for gain or loss when sold, years later |
| Contractors | W-9, invoices, proof of payment, the 1099 filed | Ties the deduction to the form the IRS already has |
| Payroll | Provider reports, filed returns, deposit confirmations, timesheets | Employment tax records have their own four-year rule |
| Income | Invoices, POS and processor reports, deposit records, 1099-K and 1099-NEC received | The IRS matches reported income against the forms it receives |
The $75 rule, and what it actually covers
IRS Publication 463 covers travel, gift, and transportation expenses. For those, it says documentary evidence such as a receipt is generally not required under $75. Lodging is the exception and always needs a receipt. Two cautions. First, the rule sits inside the travel and transportation chapter. It was never a general license to skip receipts for supplies, software, or meals at the office. Second, even where it applies, the record of amount, date, place, and purpose is still required. A $40 taxi with no note of where you went and why is not substantiated by the $75 rule. Our practical advice: capture everything. The phone makes it free, and the exception is narrower than it sounds. Your CPA is the right person to say where it applies to your return.
How long to keep business records
The IRS page on how long to keep records sets the periods, and they are longer than most owners assume.
- Three years from the filing date is the general rule, when none of the longer periods applies.
- Six years if income was underreported by more than 25 percent of the gross income on the return.
- Seven years for a claim of loss from worthless securities or a bad debt deduction.
- Four years for employment tax records, from the date the tax was due or paid, whichever is later.
- Indefinitely if no return was filed, or if a return was fraudulent.
- Property records until the limitation period ends for the year you dispose of the property, because they set depreciation and the gain or loss on sale.
California adds its own. The CDTFA expects sales and use tax records to be kept at least four years, and longer while an audit or refund claim is open; our sales tax bookkeeping guide covers the list. The practical rule we give clients is seven years for everything, forever for property and entity documents. After all, storage is cheap and the exceptions are expensive.
Where to keep them so they are never a project
Attached to the transaction. QuickBooks Online and Xero both let you attach a receipt image to the expense, and both have mobile apps that capture one in seconds. A receipt attached to a $212 Amazon charge, with a memo that says “printer for the front desk,” satisfies the test in one place. It survives every future question. A folder of PDFs named by date does not. Nobody can connect it to the ledger two years later. The DIY bookkeeping checklist has “receipt attached” as part of the monthly review for exactly this reason.
Three habits make it stick. Capture at the moment of purchase, not at month-end. Forward email receipts to the software’s receipt inbox so subscriptions and online orders file themselves. Then export the year’s attachments with the books at year-end. That way the record does not depend on one software subscription staying active for seven years.
What you can let go
Paper, once it is captured and attached. The exception is original signed documents: contracts, leases, loan agreements, and anything with a signature or a seal. Duplicate statements the bank still holds online, as long as you download each year’s set at year-end. And the personal receipts mixed into the business pile, which never belonged in the business books. The what does a bookkeeper do post explains why commingling costs more than the receipts are worth.
Local records for Los Angeles businesses
Two local records belong in the same system. Your City of Los Angeles business tax renewal is based on gross receipts, and the city can ask for the records behind the figure. So keep the filed renewal and the report it came from. Westside cities with their own licenses can audit the same number, and Santa Monica’s municipal code says so explicitly. The Los Angeles business tax guide and the Westside license guide cover both.
How Books LA handles this
We attach the receipt or invoice to every transaction over a threshold we agree with the client. We chase the missing ones monthly rather than in April. Then we export the year’s records with the year-end package. When the CPA or an agency asks for support, it is a filter on the ledger, not a search. Our Los Angeles bookkeeping services guide explains where this sits in the monthly service.
Frequently asked questions
Does the IRS require receipts for every expense?
It requires records that prove the amount, date, place, and business purpose. A receipt is the usual proof of amount and date. Then the bank or card record proves payment, and a memo proves purpose. For most expenses the safest practice is a receipt attached to the transaction, because the $75 exception is narrow.
What is the IRS $75 receipt rule?
A provision in Publication 463 that says documentary evidence is generally not needed for travel, gift, and transportation expenses under $75, except lodging. It does not cover ordinary business purchases. It still requires a record of amount, date, place, and purpose. Ask your CPA where it applies to you.
How long should a small business keep receipts?
At least three years from the filing date under the general IRS rule. Four years for payroll records, six or seven in specific cases, and indefinitely if no return was filed. California sales tax records need four years. A seven-year default covers nearly everything except property records, which last longer.
Are credit card statements enough for the IRS?
Not alone. A statement proves that a payment happened, not what was bought or why. Paired with the receipt or invoice and a note of the business purpose, however, the two together make a complete record. For meals and travel, the statement never carries the purpose.
Can I keep digital copies instead of paper?
Yes. Digital images attached to the transaction in QuickBooks Online or Xero are standard practice, as long as they are legible and complete. Keep originals of signed documents. Export the attachments with the books each year so the archive does not depend on one subscription.
What records do I need for mileage?
A log showing the date, miles driven, destination, and business purpose for each trip, kept at the time. Add the year’s total miles. Apps do this automatically, of course. Without the log, mileage is the deduction most often disallowed. Which method to use, standard mileage or actual, is a question for your CPA.
What happens if I lose a receipt?
Reconstruct the record. The card line proves amount and date, the vendor can often resend an invoice, and a note made at the time establishes the purpose. One missing receipt among complete records is a small problem, though. A year with no receipts attached to anything is a different conversation with your CPA.
If your receipts live in a drawer and your books live in the cloud, book a short call and we will set up the capture so the two meet.
This post is general information with figures cited from IRS.gov and the CDTFA. Which expenses are deductible, and how, is an income tax question for your CPA or enrolled agent. Books LA provides bookkeeping services and does not advise on income tax.
