Last editedSep 20222 min read
Holding onto old receipts may not seem like the most important thing for a business to be doing, but when it comes to invoicing and keeping track of your finances, there are so many reasons why keeping credit card receipts can be tremendously helpful.
How long to keep customer credit card receipts
The main reason to keep credit card receipts is to protect your business, either from false chargebacks, or from tax fraud claims. For non-profits, things can be different - read about payment processing for non-profits.
Avoiding customer chargebacks
Customers have the right to request a chargeback on credit card transactions in their name. To do so, the customer would have to go through the bank or credit card company, who would investigate the matter. It’s then down to the merchant to prove that the purchase was legitimate and verified by the customer.
If you’re able to show a credit card receipt of the transaction, you’re able to prove that the purchase did indeed take place and that the card was present to make the sale. The bank or credit card company will be able to match the signatures and other info to what they’ve got on file and can then reject the false chargeback requests.
Without a receipt of the transaction, you wouldn’t have much in terms of evidence that the purchase was made, so you run the risk that the credit card company or bank sides with the customer and you end up losing money that’s rightfully yours.
Chargebacks may be requested anywhere between two months (60 days) and 18 months (540 days) of the purchase being made, so to avoid false chargebacks you should be holding onto credit card sale receipts for a year and a half at least.
Avoiding tax issues
While keeping your credit card receipts for a year and a half will help you avoid false chargebacks, there are reasons to hold on to them for even longer. Should you ever find your business being audited by the IRS, credit card record keeping will be a crucial piece of evidence that could clear you from any wrongdoing.
You may be being questioned about transactions that the IRS have deemed suspicious, and without any receipts you would struggle to prove otherwise. You don’t want to be charged with tax fraud simply because you didn’t have the receipts to show where the money came from, so that’s another reason why it helps to keep credit card receipts.
If you have other documentation that shows records of your financial activity, then keeping receipts isn’t absolutely mandatory, but it’s certainly best practice and could be very helpful should the IRS come knocking.
The IRS recommends that you hold onto receipts for at least three years.
Credit card receipt storage
If you’re holding onto receipts for at least three years, you’re going to need a good, secure system to store and manage them. Credit card receipts contain the customer’s private information, so it’s so important to make sure that this information can’t get in the wrong hands. The private information on a receipt must be protected, by law.
Furthermore, you want to have a storage system that allows you to easily find and retrieve a particular receipt from a particular date without having to sift through thousands and thousands of receipts. Paper receipts are also fragile, and you want to make sure they’re protected from damage.
Physical receipts should be stored in a locked room or cabinet that’s ideally protected from water or fire damage. You should limit the number of personnel who have access to this room, making sure to keep any keys and passcodes completely secure and confidential.
If you’re storing receipts digitally, it’s so important to make sure that they’re fully encrypted.
When disposing of physical receipts, they should be shredded or burnt, and for electronic receipts, they must be permanently deleted from the program they’re stored in.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.