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How to Organize Business Expenses for Taxes

By March 8, 2023March 9th, 2023Management & Productivity
person picking out document from folder

How to prepare tax returns for business?

Preparing to do tax returns can sound like a daunting and stressful task. If your business tax returns aren’t well organized, it can be a lot harder to gather all of the proper information and hand them off to an accountant. If you do your business taxes online, paperwork being disorganized can make you feel flustered because you might not know where to begin.

Instead of getting your tax information together right before they are due, it might be helpful to have a separate file cabinet and organize your information throughout the year. Then when you go to file your business’ taxes, everything is organized and in the right spot. This can make tax season less stressful because the organizing has already been done.

How to categorize business receipts for taxes?

Organizing and categorizing business expenses and receipts is a good thing, even if your filing cabinet and file folders are getting a little too full. Saving your receipts throughout the year can benefit your business because most of that money can be deducted from your taxes which puts more money back into the business. Here are some ways that could help categorize and organize receipts, both physically and digitally:

  • Photocopying: Just in case some of the receipts go missing or they are misplaced, use a scanner to photocopy each bill or receipt. You can also save each bill digitally and store it on the computer. This way, there is more than one copy of everything, and if anything happens to the original, there is proof that is still exists.
  • Use a flash drive to store digital receipts: Along with photocopying each bill, scan it as a digital copy to store on your computer. Have a folder on your desktop labeled “business expenses” so that you can find it easily and have an additional way to pull up information. You can further categorize your digital tax folder by making sub-folders and labeling them based on the type of expense.
  • Take notes and write on the bills or receipts. It can be hard to remember why you spent the money, so using a Post-It note or writing directly on the bill might be able to jog your memory. Information such as the reasoning for the expense, who was with you, and what type of expense it was can remind you of the instance and may end up deducted from your taxes. Remember, a business expense can be deducted, but a personal expense cannot be.
  • Organize receipts: Categorizing and organizing receipts based on the type of expense might help save time when you are gathering tax information to be sent out to the accountant. If you do your own taxes, organizing the expenses all year long can reduce stress and make the process as enjoyable as possible. Break down the expenses based on categories that make sense for your business. Expenses such as food, travel, rent, educational/training, office supplies, and marketing can be placed in their own folders, so they are easily accessible.

Why is it important to organize tax information?

Finding a way to organize business expenses and tax information that works for you can be important for business operations. This can be vital when tax season comes along because having everything in a familiar place can make it easier to collect the information and send to your accountant.

What are the benefits in organizing business expenses for taxes?

There can be many benefits that organizing your business expenses can have on the business. Here are a few different examples of how keeping track and organizing your receipts can benefit your business:

  • It can save time: Rummaging through your pile of business expenses mixed in with other paperwork can cause stress, it can waste time, and it can cause you to forget something. Organizing your paperwork and having everything in one place can ensure that you have all of your information ready to go before tax season starts.
  • They can be easily accessible: If you need to pull out a bill or a business expense quickly, having them organized makes it easy to find them. This can be a benefit for the business because it can show strong managerial and organizational skills to employees and those around you.
  • It can put money back into the business: Having everything organized can help when filing business deductions. The more deductions your business has when filing taxes, the more money that can potentially go back into the business.

What are some tips for organizing taxes?

Along with the benefits, there are tips that might be helpful to remember for when tax season comes around. Here are a few tips to keep in mind and to get into the habit of:

  • Have more than one copy of everything: Having a paper and digital copy of receipts and expenses is a great way to ensure that you have the information on hand at all times. Whether you keep them as a photograph on your phone, on a hard drive, or in a file folder, having a combination of records can help if you lose anything.
  • Color code based on category: Keeping your records in file folders or storage cabinets can get messy. Using different colored labels for tracking what kind of expense it is can help you to stay organized. Keep a note of what each color means so that you don’t forget.
  • Open a business credit card: Having a business credit card can help ensure that all of the payments made on the credit card are business related. Scrolling through your bank statement which has a mix of business and personal payments can get confusing and can become hard to keep track of. Open a business credit card to help you stay organized.
  • Get a banker’s box: Purchasing a banker’s box to keep your tax information in can help you to stay organized. With various weight capacities, depths, lengths, and features, your business can be well-prepared this tax season. These are great products for storing different years’ worth of documents because you can separate the documents by their filing year or by type of expense.

How long to keep business tax records?

The timeline for keeping business tax records can depend on the type of business, what kind of tax it is, and what the expense was. Record of income, deductions, and credit are some examples of tax returns you should keep until you can no longer file a claim for a refund or credit with the IRS. If you don’t need your taxes for any other purpose, try not to throw them out or shred them. Keep them in a safe place just in case something comes up. Keeping a separate file folder, staple each year’s finished tax returns together and label them with the correct year so you stay organized. This can help with planning for the future and can give you something to look back on if you need to see expenses that were made in the past.

For most tax returns, a general estimate would be about three years from the filing date or the due date of the tax returns; whichever date comes later. For taxes relating to employee tax returns, keep them for about four years after the due date or file date. If your business underreported gross income by more than 25%, keep those tax returns for about six years. If your business suffered losses of any kind, keep the tax returns for about seven years after the due date or file date. Keep unfiled taxes or fraudulent records forever.

There are certain kinds of tax records to keep indefinitely. These include documents on how the company was started such as ownership records, property records, stock information, and shareholder minute meetings. Holding onto these records forever is important because of liability reasons and for future requests that may come up.

How to Organize Tax Documents

Making sure your tax documents are organized, categorized, and are saved as digital and physical copies can be important. Tax documents are vital pieces of information when it comes to your business. Keeping them strategically organized however you see fit can be helpful for tax season and for the future. Labels, file folders, and other office supplies can be useful and beneficial for when you are organizing your information.



CSI. How to Categorize Receipts For Small Business Taxes. ( Accessed February 8, 2023.

IRS. How Long Should I Keep Records. ( Accessed February 8, 2023.

LegalZoom. How Long Do I Need to Keep Business Tax Records? ( Accessed February 8, 2023.

TurboTax. The Art of Keeping Receipts for Your Taxes. ( Accessed February 7, 2023.

ZenBusiness. How to Organize Your Business’s Receipts for Taxes. ( Accessed February 7, 2023.