How-to guide: Saying goodbye to receipts (mostly)
One of the great things about using Finmo is that it drastically reduces the need to hold onto receipts. This is because you’re able to use data from your actual bank account – AKA your transactions – to record your income and expenses.
Say you regularly buy stationary from an office supplies shop for your job as a freelance writer. With Finmo, you won’t need to collect receipts for these purchases, but can simply tag the transactions as ‘Business’ in our app. Better yet, make a rule for that particular shop so Finmo automates this for you. Of course, if you sometimes buy things for personal use from that shop, you’d need to tag transactions individually rather than creating a ‘one-size-fits-all’ rule.
When to hold onto receipts
Although Finmo significantly reduces the need to hold onto receipts, there are some occasions where you’ll still need to. These include:
1. Buying work and personal items from the same shop
If you bought a mixture of personal and work-related supplies from the same shop in one transaction, you’d need to hold onto the receipt to show which items were and weren’t for work.
2. Making a particularly large purchase
If you’re making an unusually large purchase that you want to claim as a business expense, we’d recommend holding onto the receipt for it just in case HMRC has any questions.
Frequently Asked Questions:
What if I lose a receipt, can I still write off the purchase as a business expense?
Yes. However, keep in mind that on the rare occasion you are audited by HMRC and you have no record of the transaction, they may not allow that particular business expense. In this case you would have to pay tax on that amount since you wrote it off previously. As much as you can, try to document the expense.
What about expenses that I don’t get a receipt for?
Yes, you can claim them as long as you have some sort of record that the transaction happened.. Otherwise, refer to the answer to the previous question.
Can I store a picture of a receipt in Finmo?
Yes. In fact, this is a great way of making sure you don’t lose receipts.
What happens if I accidentally claim a purchase as an expense but it’s not actually an expense?
This happens. People make mistakes and that’s okay. If you’re audited, then HMRC will ask you to take that expense off your list and you’ll have to pay tax on it. If you make a whole lot of ‘mistakes’, however, this could end up construed as Tax Evasion. Your Finmo tax expert and Finmo Accountant are here to help minimise your mistakes.
What is HMRC’s criteria for auditing me?
There’s no particular criteria for getting audited and HMRC sometimes does this randomly. Our friends at smallbusiness.co.uk wrote an article on eight reasons you may get audited, which is really useful.