Updated
A small business makes paper. Card statements, bank statements, supplier invoices, the receipt from the hardware store, the airline confirmation in an inbox.
Getting it into shape for tax season means evenings at the kitchen table, or a bill for someone else to sort it.
Paperwork is a second job nobody hired you for.
Keeping track of business expenses through the year
The records that matter show what you paid and that it was for the business: receipts, supplier invoices, and the bank and card statements behind each payment. A statement line proves you paid. On its own it does not show what you bought or why, and IRS Publication 583 says proof of payment alone does not establish a deduction. Keep the receipt or invoice for each business charge, with a note of its purpose.
Travel, meals and vehicle costs need more detail: the date, the place, the business reason and, for a meal, who was there.
Keep business and personal spending apart. A separate business account and card make the year easier to read back and easier for your accountant to check. Where a cost is shared, such as a phone or a car, note the business share as you go.
Once a month, put that month's receipts and statements in one place. See how to organize receipts for taxes and the IRS receipt requirements.
Amy reads every statement together.
Send her the statements and receipts you already have, by email, by text or on the web. There is no app to download and no bank login.
Amy finds your likely business expenses across all of them, tells you which records are missing, and asks you only about the charges she can't place.
Your accountant makes the call.
You review and confirm. Your accountant sees the source behind every line and decides.
Your CPA will still ask for income records, asset purchases and last year's return. Our small business tax prep checklist lists everything, and the small business tax deductions checklist helps you check you have not missed a category.
Behind on your books? Read catch-up bookkeeping before tax season and do I need a bookkeeper?
