How to keep receipts for your business

Each expense entry needs a document behind it, and for purchases made at a counter, online or on a card, that document is usually the receipt. business.gov.au's list of the records a business must keep includes records of all its expenses, with cash purchases specifically named.

A bank or card statement covers only part of what a record needs. It shows the date, who was paid and the amount, but the ATO says a record generally needs a description of the transaction and its purpose as well, and, where it matters, how the parties are related. The receipt supplies what was bought, and a short note from you supplies why.

Cash purchases leave no line on a bank statement, so the receipt may be the only evidence that they happened.

business.gov.au says every receipt must carry the seller's business name and an ABN or ACN, the sale date, a description of the goods or services, and the price. A receipt can come from a cash register, be written by hand or be sent digitally.

Receipts and invoices do different jobs. As business.gov.au explains, an invoice comes before payment and sets out what the customer owes, and a receipt comes after the sale and shows what they paid for. In most shop and online sales one document serves as both, because payment is made on the spot. When a supplier bills you first and you pay later, keep the bill and the record of your payment together.

Check each receipt when you get it, while the purchase is fresh in your mind:

Under the Australian Consumer Law there are times a business must give a receipt, business.gov.au explains, and it calls offering one with every sale, whatever the amount, good practice. When your business is the buyer, make asking for one a habit, small purchases included.

• In shops: take the receipt, or ask for it to be emailed, before you leave the counter.
• Online: keep the emailed receipt or paid order confirmation, and download a copy if the supplier only keeps it in your account on its website.
• For services: if a bill doesn't show how the price was worked out, ask for an itemised one. business.gov.au's guidance for businesses says their customers can ask for an itemised bill for up to 30 days after receiving a bill for a service, and the business must supply it free within 7 days.
• For regular automatic payments: where the supplier emails a receipt or bill, have it sent to the address you use for business records.

If a receipt goes missing, ask the supplier for a copy or a reprint. If you can't get one, write down the date, the supplier, the amount, what was bought and why, and keep that note with the bank or card line.

A receipt you can't find when you need it is little better than none. Choose one way of storing them and use it every time:

• Capture paper receipts on the day you get them, by scanning or photographing them before the print has a chance to fade.
• Make sure each image is sharp and complete. An electronic image of a paper record is accepted by the ATO, business.gov.au says, if it faithfully and clearly reproduces the original and meets the record-keeping rules, after which the paper itself can go unless a particular law or rule says it must be kept.
• Keep digital receipts together, in one folder or attached to the entries in your books, rather than spread across inboxes and phone apps.
• Use one naming pattern for every file, such as date, supplier and amount, so each receipt is easy to find again.
• Store them so they can't be altered or damaged, which business.gov.au says applies to all records, and back up the digital ones.

Keep receipts for as long as the rules require. Most business records, business.gov.au says, must be held for 5 years, starting from the later of when you obtained the record and when the transaction was completed. Companies have a longer period: the Corporations Act 2001 names receipts among a company's financial records, and requires those records to be retained for 7 years after the transactions they record are completed.

Matching is how you find out which receipts are missing while there is still time to get copies. Do it weekly or monthly, working from your bank and card statements:

1. Work through the statement for the period line by line, or the bank transactions in your bookkeeping software.
2. For each business purchase, find the receipt and attach it to the entry, or note where it is filed.
3. Check that the amounts agree. A difference can mean a partial refund, a card surcharge, a charge in another currency, or more than one purchase on the same receipt.
4. List any line with no receipt and ask the supplier for a copy straight away.
5. Enter cash purchases from their receipts, since they won't appear on the statement, and make sure each one is entered only once.
6. Mark any personal purchase that ended up on a business card, so it is kept out of the business's expenses.

The ATO's record-keeping tips call for accurate records of cash and electronic transactions alike, and for a closer look whenever the figures don't add up. A receipt that matches nothing on the statement, or a statement line with no receipt, is the kind of difference to look into.

Sometimes one receipt covers both, such as a grocery shop that includes cleaning products for the office. Mark the business items on the receipt or in a note, and record only those as a business expense. If the whole amount came out of the business account, record the personal part apart from the business's expenses and ask your accountant how it should be treated.

For mixed purchases like this, the ATO's rules call for clear documents that show which part was for the business. A marked-up receipt, kept with the entry, shows how you made the split.

• Keeping receipts but never matching them, so a missing one is only noticed months later.
• Treating an email inbox as the filing system, with receipts mixed in among everything else.
• Recording what was bought but not what it was for.
• Photographing a receipt with part of it, such as the total or the date, cut off or blurred.
• Filing a quote in place of the receipt, when the items or the final price changed.