From: San Antonio, TX

Dear TaxMama,

My receipts for the first quarter of 2004 are starting to fade.  I wrote in black ink the name of the company, amount, date, and what the receipt was for.  Will my additional handwriting of the data on the faded receipt cover me when the receipt goes completely faded out.

I have over 400 receipts.  That will take a long time to photocopy or to scan into a computer.  I also, have all the data on the receipts put into a database called ACCESS. My access database has all of data including sku numbers, transaction numbers, product numbers.

Will my access database bail me out if the the receipt becomes totally faded out.

Or am I condemned to scan in over 400 receipts one at a time. This will take literally days and days of work.

John

 

 

Good morning John,

Coincidentally, after last week's issue of Ask TaxMama, where we were talking about receipts. Sylvia Earnst of South Texas pointed out that "fading" receipts should be enhanced before some of us "learn the hard way"!

Well, goodness. What kind of place gives your receipts that fade?! First of all, I suggest you only shop in places that don't use thermal printers. That would eliminate this problem altogether.

Sigh, not practical? Oh well.

You might consider scanning several invoices at once, rather than one at a time.

The main receipts you want to have clear copies of? Any major purchases - computers or equipment for $500 or more per unit.

Actually, the truth is, very few of those receipts will fade with time. If ALL of your first quarter receipts really ARE fading, I can't tell you how unusual that is.

Generally, (and I only speak from about 25 years experience, so I don't know everything yet), only those little cash receipts from gas stations or other convenience shops tend to fade. All the rest seem to retain their integrity....as long as you keep them out of direct sun.

Your handwriting over the receipts may be viewed as suspicious or helpful, depending on the auditor.

But your ACCESS database, or a good bookkeeping system where you record each receipt will generally cover you. The amounts will need to reconcile with your bank account or credit card account.

Having the SKU numbers and all may be a little overkill, but...if it's fun and relaxing, go for it.

I urge you to use checks and credit cards for most of your business purchases. Use cash as rarely as you can. After all, the purpose of maintaining records (other than for your own management and decision- making purposes) is to be able to survive audit. The best way to do that is to have objective, independently verifiable documentation - checks and credit card statements are excellent for that purpose.

It sounds like you're doing all right, John.

Just don't obsess.

Best Wishes,
Eva Rosenberg, MBA, EA