Balance Pro Staff
October 9, 2022
Receipts are proof of a sales transactions and it is important that you hang on to these receipts just in case you need to provide proof to the IRS or other entities, customers, etc. Two of the more common reasons to keep receipts are:
Keep records for: 3-7 years
If the IRS decides to audit your business, it is likely that you will be required to provide proof of any suspect transactions. The requirements of the IRS may vary depending on where you are located and local tax laws. However, it is a good idea to keep the signed receipts for at least three years. In some cases, the IRS suggests keeping certain receipts for 7 years:
Imagine that you have been audited, but there aren't any receipts. It becomes very difficult to justify income from certain transactions and any information they have, as well as the tax return. You are dealing with tax fraud in the worst-case scenario.
Keep records for: About 18 months
Customers can request chargebacks from banks. Merchants should also be aware that chargebacks can take place between 60 and 540 days, depending on the credit card company or issuing bank.
The signed receipts will prove that the customer has agreed to purchase in such a dispute. The receipt is proof that you were given the card with which you entered the customer's personal information at the POS terminals. The funds were then transferred to the merchant account. The bank can match the signatures on the receipt to those on file for customers. It serves as proof that the cardholder knew the purchase was being made.
These facts result in false chargeback requests being denied, ending the dispute.
Now that you are aware of the importance of keeping receipts, here are some helpful tips on how to keep your receipts stored safely and organized.
These receipts are more than a proof of sale. Receipts contain sensitive customer information, such as the customer's name with personal data, bank name, card number, signature etc. This private information must be protected by law.
In addition to privacy concerns, poor receipt storage could lead to financial information being shared with unintended recipients. Customers could be exposed to financial theft, which can lead to reputational damage and long-lasting lawsuits for the merchant. It can even result in the closure of a small business that doesn't have the resources or means to defend such claims.
Receipts can contain financial and personal information. Federal regulations govern how receipts should be stored and destroyed.
Receipts are difficult to store due to their fragile nature and sheer volume. The receipts should be locked in a safe place such as a cupboard or room by a merchant. These records can only be accessed by authorized personnel. You must also ensure that your credit card receipts are not damaged by fire, water, or other causes.
Businesses can either burn or completely destroy receipts to get rid of them. Although it may sound simple, it can be difficult for small businesses to devote such resources to monitoring one type of transaction. These are important points to remember when deciding on how to store receipts.
Businesses must ensure that receipts are encrypted for digital storage. Access to these files, just like physical storage, must also be restricted. Balance Pro, a specialized platform that securely stores all receipts digitally, can be used to store them for many years.
The sales process is made much easier by cards. Businesses often fail to recognize the importance of managing receipts, which is an equally important part of the payment system. You expose your business to many risks, such as loss of revenue, breach of business information, legal battles, reputation damage, and much more.
All your receipts can be stored in one place. You do not have to worry about data security. Past receipts can be instantly printed, disputes resolved quickly, and destroyed at the touch of an icon.
Payments will only increase in frequency as well as volume over time. You have two options: either store your receipts in a larger place or use a simpler, less hassle solution.
This post is for informational uses only and is not legal, business, or tax advice. Please consult with an attorney, business advisor, or accountant with concepts and ideas referenced in this post. Balance Pro assumes no liability for actions taken in reliance upon the information contained in this article.
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