Keeping paper copies of receipts and invoices can be a real problem for small businesses. You need a reliable storage area and a good way to organise paper documents. But are paper copies required according to the laws in the UK and USA?
You can get rid of paper copies of receipts and invoices
Paper copies of business receipts and invoices are not required in the UK or in the USA. The law says that you are free to keep your tax records as you please, be it on paper, electronically, or as part of a bookkeeping software.
As long as your expense documents are accurate, complete, and readable, they’re sufficient in the event of a tax compliance check.
How long to keep tax documents
UK-based self-employed must keep all tax records for 5 years after the 31 January submission deadline. For limited companies, that period lasts 6 years from the end of company financial year they relate to.
In some cases LTD companies must keep their records longer than 6 years. This applies when, for example, the documents relate to transactions that cover more than one year, the company purchased something expected to last more than 6 years (equipment, machinery), or you were late filing your tax return.
Expense and revenue documents that you need to keep include digital or paper copies of receipts for stock and goods, statements from banks, chequebook stubs, sales invoices, till rolls, as well as bank slips.
You need a smart way of keeping digital copies
Even if you decide to keep your tax records in digital format only, you still need a smart way to ensure that you know where everything is in case of a tax compliance check. One way is to use a system of folders categorised based on years and months with separate folders for expenses and sales in each period.
Receipt processing services, such as arbitrue, help to make sure that all your expense documents are stored in a convenient and accessible location. These systems organise your files based on periods and categories. Once the data is extracted from your expense files (PDFs, images, e-mails, etc.), you can easily copy and paste any information you need.