Q: We just have a Mom and Pop small business. Do we have to keep every one of our expense receipts to avoid problems if we ever get audited?
A: The official answer to your question is yes, of course you have to keep all of your receipts. But, I have yet to see a small business person that has actually done that. Look, you need to keep receipts on your big purchases. What does that mean? It means that when the IRS does audits they don’t waste their time looking at every little expenditure. The IRS looks at the major expenses that you claim on your tax return. If you are a small business and have expenses for a thousand dollar piece of machinery or ten thousand dollars worth of materials that you use in your business, you had better have proof in the way of receipts for those purchases. If you bought a box of tacks at the drug store nobody really cares about seeing the receipt.