If I own business and one of my primary supplier only accepts cash and doesn’t give receipts, how do I go about claiming the expenses on my taxes since I have no proof?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
If I own business and one of my primary supplier only accepts cash and doesn’t give receipts, how do I go about claiming the expenses on my taxes since I have no proof?
I’m pretty sure he’s avoiding taxes himself. Unfortunately, we’re pretty dependent on this guys product right now and cannot shop elsewhere.
Asked on October 14, 2016 under Business Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
Claiming the expenses and proving them later IF audited are two different things. You can claim them just by claiming them on your tax return--you don't submit proof with the return, after all. You only need it if audited.
If later challenged or audited, then the issue is, how do you prove them. Keep copies of all your orders (submit the orders in writing, even if only by text or email which you later print out--even if you initially order orally, confirm with a text or email); keep any proof of delivery of product (e.g. shipping labels, delivery confirmations, etc.); and when you take out cash to pay, take out specifically for that order, in the exact amount, so withdrawals of that amount appear on your bank statement. When you sell the goods, keep of record of their sale. Try to create a consistent tapestry of documentation showing you ordered $X of goods; receiving goods; paid $X out; selling the goods (which backs up having ordered them in the first place--can't sell what you don't have).
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.