Credit Card receipts and reporting is important because it keeps you compliant with the IRS and auditors. Fraud and misuse can occur without proper supervision. Business expense can be easily minimized or maximized if controls are not exercised. Read this article to learn more about credit card receipts and reporting requirements.
The basic requirements in credit card receipts and reporting are to provide a receipt for any transaction over $75. If the transaction is under $75 all the information regarding the transaction such as date, time, name, purpose are still needed. Receipts of $75 or less per day are deemed appropriate (except lodging). IRS Publication 1542- per Diem rates lays out the acceptable expenses for various geographic regions.
50 Percent Rule
Depending on the nature and reason for the food, entertainment, or gift expense typically only 50% of the total expense can be written off.
Business Entertainment Expenses
Entertainment expenses that are both ordinary and necessary in carrying on a trade or business may be deductible if they meet one of the two tests: The directly-related test, or the associated test. You must have records to prove the business purpose (under the applicable test) and the amount of each expense, the date and place of the entertainment, and the business relationship of the persons entertained. Generally, only 50% of food and beverage ("meal") and entertainment expenses are allowed as a deduction.
Dos and Don’ts in Using Purchasing Cards: The dos and don’ts in periodic audits of program and usage include audits like do all cardholders need a card? Do you have no name cards?, Where are your issues? Address them. Use velocity limits and MCC restrictions, the back of receipts are blank, write on them. Make sure no one person has too much control of the process.