Business Expense Tracking: Best Practices for Tax Deductions

Why Tracking Matters

Every business expense you fail to track is money left on the table. The average small business owner misses $5,000-$10,000 in deductible expenses annually due to poor record keeping.

Essential Records

For each expense, document:

Date of the expense

Amount paid

Business purpose

Category (travel, office, supplies, etc.)

Receipt or proof of payment

Best Practices

Separate business and personal finances with dedicated bank accounts and credit cards

Photograph receipts immediately - paper fades and gets lost

Categorize weekly rather than scrambling at year-end

Track mileage in real time with an app or log

Record meal business purpose including who attended and what was discussed

Save digital receipts including email confirmations and online invoices

Reconcile monthly against bank and credit card statements

IRS Requirements

The IRS requires "adequate records" which means:

Receipts for expenses over $75

Written records for expenses under $75

A contemporaneous mileage log

Documentation of business purpose

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