# 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.

Published October 30, 2026.

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](https://rightobooks.com/blog/how-long-to-keep-business-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](https://www.irs.gov/publications/p334)). See [what counts as a business expense](https://rightobooks.com/blog/what-counts-as-a-business-expense/).
- **Schedule C:** the form where a sole proprietor reports business income and expenses. See [Schedule C explained](https://rightobooks.com/blog/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](https://www.irs.gov/publications/p583)).

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](https://rightobooks.com/blog/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](https://www.irs.gov/publications/p583)).

## 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](https://www.irs.gov/publications/p463)):

- **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](https://rightobooks.com/blog/business-meals-deduction/) are usually 50% deductible ([Instructions for Schedule C](https://www.irs.gov/instructions/i1040sc)).
- **Gifts:** the cost, date and what it was. You can deduct no more than $25 for [business gifts](https://rightobooks.com/blog/business-gifts-deduction/) to each person in a year ([IRS Publication 463](https://www.irs.gov/publications/p463)).

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](https://www.irs.gov/publications/p463)).

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](https://www.irs.gov/pub/irs-pdf/f1040sc.pdf). 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](https://rightobooks.com/tools/schedule-c-categories/) 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](https://rightobooks.com/blog/how-to-categorize-bank-transactions/).

## A simple routine

1. **Each day:** take a photo of the receipt. Add a note if the purpose is not clear.
2. **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](https://www.irs.gov/publications/p463)).
3. **Each week:** give each transaction a category and attach its receipt.
4. **Each month:** check your records against your bank statement, so nothing is missing or counted twice.
5. **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](https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records)).

## 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](https://www.irs.gov/tax-professionals/standard-mileage-rates); [Announcement 2026-11](https://www.irs.gov/irb/2026-29_IRB)). 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](https://rightobooks.com/tools/mileage-deduction/).

## A Righto tip

In [Righto](https://rightobooks.com/), 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](https://rightobooks.com/agents/).

## 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

1. Pick one business account or card for all business costs.
2. Name your expense categories after Schedule C lines.
3. Start a [mileage log](https://rightobooks.com/blog/mileage-log-requirements/) today, with a date on every entry.
4. Go through last month's statement and add a receipt or note to each line, largest first.

[Righto](https://rightobooks.com/download/) is free, easy to use and needs no account.

## Sources

- [Publication 334, Tax Guide for Small Business](https://www.irs.gov/publications/p334), IRS
- [Publication 583, Starting a Business and Keeping Records](https://www.irs.gov/publications/p583), IRS
- [Publication 463, Travel, Gift, and Car Expenses](https://www.irs.gov/publications/p463), IRS
- [Instructions for Schedule C (Form 1040)](https://www.irs.gov/instructions/i1040sc), IRS
- [Schedule C (Form 1040), Profit or Loss From Business](https://www.irs.gov/pub/irs-pdf/f1040sc.pdf), IRS
- [Standard mileage rates](https://www.irs.gov/tax-professionals/standard-mileage-rates), IRS
- [Internal Revenue Bulletin 2026-29 (Announcement 2026-11)](https://www.irs.gov/irb/2026-29_IRB), IRS
- [How long should I keep records?](https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records), IRS