Every April, millions of freelancers and small business owners hand their accountants a shoebox. Or a folder of screenshots. Or a list of transactions they half-remember.
This is not a good way to do taxes.
The IRS doesn't care that you think you spent $340 on client dinners in October. They want a receipt with the date, the vendor, and an amount. If you can't produce it, the deduction doesn't exist — and you pay tax on money you already spent.
The fix isn't complicated. It's a 10-minute weekly habit that keeps your records current so you never have the shoebox problem in the first place.
Why receipts disappear (and why it costs real money)
Physical receipts are designed to be temporary. Thermal paper — the slick kind used by most point-of-sale systems — fades. A receipt that's readable today may be mostly blank in 8 months. If you're keeping paper receipts in a folder or drawer, some percentage of them will become unusable.
Email receipts are a different problem. They don't fade, but they get buried. A receipt from DoorDash for a client lunch is sitting somewhere in your inbox between a newsletter and a Slack notification. Good luck finding it in February.
The real issue is deferred processing. Most people intend to "deal with receipts later." Later becomes next week. Next week becomes end of month. End of month becomes tax season, when you're looking at 12 months of receipts all at once.
At that point, some are faded. Some are lost. Some were never saved in the first place. And each missing receipt is a deduction you can't claim.
For most deductions, the IRS requires records that show the amount, date, business purpose, and who was involved (for meals and entertainment). A credit card statement showing the amount and date is not enough on its own — you need a receipt or invoice showing what was purchased.
The four columns you need
You don't need a complex system. A spreadsheet with four columns covers everything:
Date. When the purchase happened. This should match the receipt exactly.
Vendor. Who you paid. "Marriott Chicago" is better than "hotel." Specifics help if you're ever questioned.
Amount. The total including tax. Don't try to separate out the tax at this stage — log the full amount, note the tax if it's useful.
Category. What kind of expense it was. This is what lets you filter and summarize at year-end.
That's the minimum. Add a fifth column — Business Purpose — and you've covered what the IRS specifically wants for meals, travel, and entertainment.
The fastest way to fill in those columns? Photograph each receipt and let Receipt Converter extract the data automatically. Vendor, date, items, and total in about 20 seconds per receipt. No typing.
Learn how the scanning process works if you want the full walkthrough.
Drop any receipt photo below. Results in a few seconds, free.
Categories that actually matter
Use consistent names across your spreadsheet so you can filter and sum by type at year-end. These are the ones that matter most:
Software and subscriptions. Every SaaS tool, app, or service used for your business. This is often the most undertracked category for freelancers — Adobe, Notion, Zoom, Figma, your accounting tool, your domain hosting, everything. Fully deductible if it's for business.
Meals. 50% deductible when the primary purpose is business. You need to note the date, restaurant, and who you met with. "Lunch with client" isn't enough — you need a name.
Home office. A space used regularly and exclusively for work — the IRS is strict about "exclusively." Deductible as a percentage of your rent or mortgage, utilities, and internet.
Travel. Flights, hotels, rental cars, taxis for business trips. Fully deductible for legitimate business travel. Parking and tolls count too.
Equipment. Computers, monitors, external drives, cameras, phones (percentage of business use). If you bought a laptop this year, that's a deduction.
Professional development. Courses, books, conferences, certifications directly related to your business. Fully deductible.
Professional services. Your accountant, lawyer, business consultant. Yes, the accountant who helps you file taxes is a deductible expense.
Marketing. Ads, website hosting, domain name, design tools, any freelancers you hire for your own business.
If you're unsure whether something is deductible, log it with a note and let your accountant decide. It's far better to have a record of an expense that turns out not to be deductible than to miss a legitimate deduction because you didn't track it.
The 10-minute weekly habit
The key insight: weekly maintenance takes 10 minutes. Catching up for a full month takes 45 minutes and is exhausting. Catching up for a year is a multi-day project.
Pick a day — Friday afternoon, Sunday morning, whatever fits your schedule — and spend 10 minutes:
-
Collect. Go through your wallet and any physical spots where receipts land. Find everything from the past week.
-
Digitize. Photograph each receipt or use a tool like Receipt Converter to extract the data. For email receipts, forward them to a dedicated folder or save them as PDF.
-
Categorize. Add a category to each entry. Two seconds per receipt if you've been consistent with your category names.
-
File. Physical receipts go into a monthly folder (a simple accordion folder works fine). Digital receipts go into cloud storage organized by year and month.
That's it. 10 minutes, records current, done.
Separate business and personal finances
One change that makes everything easier: a dedicated business checking account and credit card.
When all business expenses run through one account, your monthly statement is almost a complete expense record. You stop trying to remember which card charges were business versus personal. Your accountant spends less time sorting your records.
You're not legally required to do this as a sole proprietor. But the freelancers who do it consistently save 2-3 hours per tax season and miss far fewer deductions. The ones who don't are the ones with the shoebox.
What counts as proof
You do not need to keep physical receipts. The IRS accepts digital records — a photo, a scan, a PDF, a screenshot. What they care about is legibility and completeness: can you read the vendor, date, and amount?
Store digital receipts in a cloud folder organized by year. Google Drive, Dropbox, iCloud — any of them work. The point is that they're backed up, organized, and findable if you ever need them.
Keep records for 3 years after the filing date. If you significantly underreported income, the window extends to 6 years. When in doubt, keep them for 6 years and don't think about it.
You want tax season to feel like a routine task, not a crisis. The system above — weekly 10-minute maintenance, digital receipts, separate accounts — turns April into two hours of work instead of two days. The receipts are already organized. All you're doing is handing them to your accountant.
Once you have a system for tracking, the fastest way to get receipt data into your spreadsheet is to scan it in directly. Read the full walkthrough on how to scan receipts into Excel — it covers the 20-second process from photo to spreadsheet.
Start today with your most recent receipt. Try Receipt Converter free. No account needed.