S Corp record keeping/book keeping (pay, credit, account, business)

[JayAoki]

I do my own record keeping for my 1st year S-Corp. I use credit cards (which I pay off) to purchase most things so that I can track what I've bought.

For example, let's say I go to Office Depot and buy pens, pencils and other office supplies. I'm using the credit card statement as my paper trail incase I ever get audited. I don't keep itemized receipts. I know it would be wise to do so but I haven't for the past year.

Does the IRS consider the CC statement as sufficient recordkeeping? If ever audited, would they disregard these deductible expenses because I only have the CC statement to prove I spent the money?

[ruggy]

Yes and no. I hear it depends on two things. How good your rep. against them is, and if they want to be a ball buster (most are). Therefore, according to the KGB handbook. You need two things to prove a deduction. One, an invoice or receipt. Two, proof of payment for said deduction. I keep both. Furthermore, I keep a digitized copy of my return, bank statements, credit card statements, invoices, etc. as well as a hard copy. After completing my return, I load all documents in my handy dandy Neat Machine and scan away. It's then stored on a separate drive for backups. I also keep all the files in a folder in my filing cabinet.

[mclarlm]

You need to establish two things: 1) You've incurred the expense (proof of payment) and 2) The expense is a deductible business expense.

A credit card statement supports the first item and not the second. Office Depot sells many items, including tablets, backpacks, school supplies, PC games, TVs, and other items that may or may not be tax deductible.

If you are audited, the IRS will ask for a receipt, packing slip, or some other document to see what you've purchased.

If you're missing a few receipts, you should be okay. But for big ticket items, I'd keep very detailed records. You'd probably keep the receipt for warranty purposes anyway.

[Malloric]

No, a credit card statement is almost never sufficient proof. It might work for a parking garage. Sign up for an account with your office store and they'll generally email you receipts or even store them electronically for you. Live and learn.

[petch751]

When I started my business I was like you and tried to keep my books. I finally changed that. I am now paying a bookkeeper and established a good relationship with my CPA who I can ask these types of questions. This is the best money I spend. I can't do it all perfectly and it's always best to pay a professional.