The IRS requires receipts for any expense over $75 and for all lodging expenses regardless of amount. Below $75, other documentation like bank statements can support your deduction, but having the actual receipt is always stronger proof if you’re audited.

For a receipt to count as adequate documentation, it needs to show the amount, the date, the place of purchase, and what you bought. For meals and entertainment, you also need to document the business purpose and who attended. Writing a quick note on the receipt right after the meal takes five seconds and prevents problems later.

Bank and credit card statements prove a transaction happened, but they don’t show what you purchased. A $150 charge at a restaurant could be a client dinner or your anniversary. The receipt plus a note about the business purpose tells the complete story. This is where small business bookkeeping habits matter most. Getting expense documentation right throughout the year is far easier than reconstructing it at tax time.

Some expenses need extra documentation beyond a receipt. Vehicle mileage requires a log showing the date, destination, business purpose, and miles driven for each trip. Home office deduction requires the square footage of your dedicated office space and your total home square footage. Equipment purchases over $2,500 need records showing the purchase date and how the asset is used in your business.

Keep receipts and tax records for at least three years from when you filed the return. If you have employees, keep payroll records for four years. If you claimed a loss from worthless securities or have capital assets being depreciated, keep those records for seven years. When in doubt, keep it longer.

The easiest approach is capturing receipts digitally as they happen. Apps like Dext or Hubdoc work well, or even your phone’s camera can do the job. The important thing is having a system you’ll actually use. Shoeboxes full of paper receipts that you plan to organize “later” rarely get organized. If staying on top of this feels overwhelming, full-service bookkeeping takes expense categorization and documentation off your plate entirely so you’re always ready when tax season arrives.