How Long Should a Business Keep Credit Card Receipts?

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How long businesses should keep certain documents is a very common question. Retain documents too long, and filing becomes a nightmare. Failing to retain them long enough could create problems for your firm, especially if you operate a small business.

Why to Keep Receipts

There are two main reasons that businesses need to keep credit card receipts.
One reason involves chargebacks, when your customer's bank forcibly initiates the return of money from you to the customer. Chargebacks occur for a number of reasons, including insufficient funds in the customer's account, a customer claiming non-receipt of goods, or fraud/identity theft. In order to dispute a chargeback, you will need the credit card receipt signed by the customer.

Taxes are the other reason to keep charge card receipts. You will need to show the U.S. Internal Revenue Service or other taxing agencies credit card receipts for any items you are claiming as a tax deduction in case of a tax audit.

How Long to Keep Receipts

An 18-month retention period is usually sufficient to cover the statute of limitations on chargebacks. For tax purposes, the usual retention period is 7 to 10 years, depending on the jurisdiction you live in.

Who to Ask

Your accountant or tax lawyer can tell you how long to retain receipts. Contact them first with any questions.If you don't currently have a tax professional, you can contact the state entity which collects business taxes, such as the federal Internal Revenue Service and your state's taxation departments in the United States, or HM Revenue & Customs in the United Kingdom. Their service department should have a recommendation.

Receipt Format

In most jurisdictions, electronic copies of credit card receipts are sufficient. Your tax professional can tell you whether your jurisdiction requires physical copies of receipts.

Source:

IRS Publication 583

Bankrate

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