Both non-profit and profit organisations have to provide evidence of all of their expenses in their tax return.
Many organisations are under the illusion that a receipt is enough evidence of the fairness and reasonableness of an expense. However, receipts do not always include all the information the IRS requires.
Listed below is a summary of what information should be kept:
- Travel – Records should be maintained that support the cost of each separate expense for travel, lodging, and meals. The dates persons left and returned from each trip should be documented along with the number of days spent on business. The name of the city or town traveled to should also be documented. Lastly, the business purpose of the expense, or the business benefit gained or expected to be gained, should be documented.
- Entertainment and Meals (when not traveling) – The cost of each separate expense should be maintained. The name and address of the location should be documented along with the type of entertainment, if not apparent by the name of the location. The business purpose of the expense or the business benefit gained or expected to be gained should also be documented. In addition, for entertainment, the following should be documented.
- Gifts – The cost of the gift along with the date and description of the gift should be maintained. In addition, the business purpose of the gift should be documented.
- Transportation – The cost of each separate expense should be maintained. The date of the expense should also be documented. Lastly, the mileage for each business use should be maintained along with the name of the business destination and its business purpose.
Excerpt from IRS Publication 463, Travel, Entertainment, Gift and Car
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