How to track business expenses for taxes

A plain guide to tracking business expenses for taxes: pay from one account, sort each cost by Schedule C line, and keep proof of what you bought.

Tracking business expenses means you keep a list of what your business spends, and proof for each item. At tax time, the totals become the expense lines on your tax return.

A card statement shows that you paid. It does not show what you bought or why. A line such as “AMZN MKTP $86.40” can be printer ink or a birthday present. Only one of those is a deduction. Good tracking closes that gap.

The short version

Pay business costs from one business account or card.
Give each expense a category that matches a Schedule C line.
Keep a receipt or note that shows what you bought and why.
For car, travel, meals and gifts, also keep a written log of the date, place and business purpose.
Keep your records for at least 3 years after you file.

Words to know

Business expense: a cost that is “ordinary and necessary” for your work. Ordinary means common in your field. Necessary means helpful and appropriate. It does not have to be essential (IRS Publication 334). See what counts as a business expense.
Schedule C: the form where a sole proprietor reports business income and expenses. See Schedule C explained.
Category: the label you give an expense, such as Advertising or Travel.

Two kinds of proof

The IRS says your records should show two things: the amount you paid, and that the amount was for a business expense (IRS Publication 583).

A bank or card statement can show the amount, the payee and the date. But the IRS also says that proof of payment, by itself, does not show that you can take a deduction. You should also keep documents such as sales slips and invoices. So the statement is half the proof. The receipt is the other half. For more, see do I need to keep receipts.

A photo or an email receipt is fine. The same rules apply to electronic records as to paper ones (IRS Publication 583).

Car, travel, meals and gifts

The IRS asks for more on these four. Keep a written record, such as a log, together with your receipts (IRS Publication 463):

Car: the date, destination, business purpose and miles of each business trip, and your total miles for the year.
Travel: the dates you left and came back, the place, and the business purpose.
Meals: who you ate with and why. Business meals are usually 50% deductible (Instructions for Schedule C).
Gifts: the cost, date and what it was. You can deduct no more than $25 for business gifts to each person in a year (IRS Publication 463).

There is one exception. You do not need a receipt for one of these expenses, other than lodging, if it is less than $75. You still need the written record (IRS Publication 463).

Record the full amount you paid. The 50% and $25 limits are applied when your return is prepared.

Use Schedule C lines as categories

Give your categories the same names as the expense lines on Schedule C. Then your year-end totals go straight onto the form. Some examples: Advertising (line 8), Car and truck expenses (line 9), Contract labor (line 11), Travel (line 24a) and Deductible meals (line 24b). Costs with no line of their own go under Other expenses.

Not sure which line? Our Schedule C line finder shows the usual line for common costs. Use the same category for the same kind of cost every year. To sort a statement, see how to categorize bank transactions.

A simple routine

Each day: take a photo of the receipt. Add a note if the purpose is not clear.
Each trip: log the date, place, purpose and miles. The IRS says a record made at or near the time is worth more than one made later (IRS Publication 463).
Each week: give each transaction a category and attach its receipt.
Each month: check your records against your bank statement, so nothing is missing or counted twice.
Each year: run a profit and loss report and keep your records. The general rule is 3 years from the date you filed, and longer for some records (IRS).

An example

Jordan is a wedding photographer. (He is an example, not a real person.) He uses the standard mileage rate. For 2026, the IRS business rate is 72.5 cents per mile from January 1 to June 30, and 76 cents per mile from July 1 to December 31 (IRS; Announcement 2026-11). So the dates in his log matter.

Step	Amount
1,200 miles (Jan to June) × $0.725	$870.00
900 miles (July to Dec) × $0.76	$684.00
Car and truck expenses	$1,554.00

He also had a $68.40 lunch with a wedding planner. He records the full $68.40 under Deductible meals and writes on the receipt who he met and why. Try your own miles in our mileage deduction calculator.

A Righto tip

In Righto, you can import your bank statement (CSV, OFX or PDF), give each line a category and see the totals in the Profit and Loss report. You can also ask your own AI agent, such as Claude Code, which charges still need a category. See how agents work with Righto.

Common questions

Do I need to keep paper receipts? No. A clear photo or a saved email receipt is fine, if you can produce a readable copy when asked.

What if I paid a business cost with a personal card? Record it as a business expense paid by the owner. Keep the receipt. Use the business card next time.

Can I deduct an expense with no receipt? You need some record that shows what you bought. For car, travel, meal and gift costs under $75 (other than lodging), a written record without a receipt is enough. For a large cost with lost records, ask a tax professional.

What to do now

Pick one business account or card for all business costs.
Name your expense categories after Schedule C lines.
Start a mileage log today, with a date on every entry.
Go through last month’s statement and add a receipt or note to each line, largest first.

Righto is free, easy to use and needs no account.

Sources

Righto gives general information, not tax or legal advice. Ask a tax professional about your business.