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The area where we would like some help, is in the collection and recording of the expense receipts. With her time always being the problem, she has gone from paying $15 an hour to an accountant who charges $50/hr. With the latter rate it costs her more then the CPA to complete the package.

Any comments on improving the record keeping process would be helpful. The problem with a helper doing this task, is that the receipts must be placed in proper category, and be identified as entertainment, travel,and meals etc, so a good part of the work is this marking of the receipts. Even then it has been necessary to review all the recording done by the clerical help before final submittal to CPA. (This marking of the receipts becomes necessary since many are little thermal receipts that fade over time to point they can't be read. How would one answer to an audit with such receipts?)

I will repeat my earlier recommendation. Look for a credit card that provides a year-end history of charges. This report will list each charge by date, vendor, and amount. You can easily markup the transaction list if you have to recategorize them or if some are personal.

You can save the original transactions without sorting them (just keep them for backup in case audited) and use the report for completing your tax return.

It isn't absolutely essential to keep the original receipts. Provided you have excellent records with sufficient detail (travel log, diary, etc.) along with the history report, most auditors will accept your documentation. The key point is that the substitute documentation you provide must be as thorough and complete as possible. You can't just say, "the receipts all faded, but here's the total of what I remember spending."


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