Spoken like someone who hasn't undergone an IRS audit.
While I agree with David for the most part, his cavalier attitude of "Well, if we get audited it will be cheaper than the cost of tracking shit" is naive. Once he goes through an IRS audit, where they turn everything upside down and consume hundreds and hundreds of hours of time then he might change his attitude of the cost of an IRS audit. They are not nearly as cheap or insignificant as he makes it out to be.
Huh? It's not the lack of paperwork that gets you audited. Your tax returns probably aren't itemized on a customer-by-customer, trip-by-trip basis.
If you get audited, you're in for tens of hours of annoying drama no matter what (in reality, it's your accountant that's going to do all the work).
If you're writing this on the assumption that a small business might handle an audit (or really even simple tax returns) on a DIY basis, get that thought out of your head now. You need an accountant at almost the moment you start seeing revenue in your business.
That depends, my aunt was audited and ended-up with close to a million dollar refund. Here attitude had long been, paying a little extra in taxes is worth not keeping track of every expense. When your actually making real money tracking every lunch has a minimal ROI.
PS: She did still took many large deductions and had reasonable records, she just played it safe when submitting her taxes.
While I agree with David for the most part, his cavalier attitude of "Well, if we get audited it will be cheaper than the cost of tracking shit" is naive. Once he goes through an IRS audit, where they turn everything upside down and consume hundreds and hundreds of hours of time then he might change his attitude of the cost of an IRS audit. They are not nearly as cheap or insignificant as he makes it out to be.