While there are general guidelines on how long to keep your business receipts for your pharmacy, the specifics can vary based on your pharmacy’s operations. It’s wise to stay informed and proactive about your record-keeping practices, which we’re here to help you do.
Keep Your Receipts for Seven Years
CRA requires that pharmacists in Canada keep their business and personal records for seven years.
Maintaining thorough records can not only help you during tax season when you will need to provide proof of your expenses and income to the CRA, but it will also ensure you accurately report your financial situation to avoid any potential issues with audits.
Secondly, retaining these records can be beneficial for inventory purposes, such as management, financial analysis, etc.
By reviewing past receipts, you can also track purchasing trends, assess the cost-effectiveness of different suppliers, and make informed decisions about your business moving forward.
Lastly, keeping receipts for seven years can also aid in resolving any disputes with customers or suppliers, as well as assisting with warranty claims for products. Diligent record-keeping allows you to comply with legal requirements and supports the overall health and efficiency of your pharmacy business.
In Some Cases, You’ll Need to Keep Receipts For a Different Period of Time
There are some cases in which you’ll need to keep your receipts for a different period of time, including:
- The CRA informs you of how long to keep your records
- When your records and supporting documents concern long-term acquisitions, the share registry and other information that may affect the sale, liquidation, etc., you have to keep them indefinitely
- If you filed an objection or an appeal, you must keep your records until the object or appeal is resolved, or the date for filling any further appeal has passed
- When a non-incorporated business or other organization ends, it must keep its records for six years from the end of the tax year in which the business or organization ended
- When you are the legal representative of a deceased taxpayer or trust, you can destroy the records after receiving a clearance certificate(s) to distribute property under your control
- And more situations stated on the Government of Canada’s website.
How to Store Your Receipts Securely
It’s important to store your documents, but you don’t necessarily need to keep physical forms and spend extra money on storage.
You can securely store documents digitally with receipt-scanning apps such as QuickBooks, Hubdoc, Dext, Expensify, Zoho, and more. These apps allow you to accurately store receipts, invoices, and other important documents pertaining to your pharmacy business at affordable rates.
As long as the receipts and other documents are legible and include all of the data the CRA requires, then they are acceptable in case of an audit. Once you take a photo, you can throw the receipt away.
What the Photos Should Entail
If you want to keep digitized records, they need to be clear and easy to read. All photos of your receipts should include the following information:
- The date of purchase
- The name and address of the seller
- The name and address of the buyer
- The description of goods or services
- The vendor’s business number if they are a GST/HST registrant when the purchase price is $30 or more (before tax)
You should always ask for a receipt when you purchase something for your pharmacy business, however, in case you do not receive one, you can write down the name and address of the seller or supplier, the amount paid for the goods or services, and the date you made the payment and the details of the transaction in an expense journal or your digital records.
Always keep a record of the properties you bought and sold – this should include who you sold the property to, the cost, or the date you bought it. This information helps you calculate the capital cost allowance and more.
Set a Solid Foundation For Your Business’s Success
Your business receipts should always be accurately stored, either physically or digitally, for up to seven years.
Proper record-keeping not only helps in tracking financial performance but also aids in meeting legal requirements, preparing for audits, and organizing documents regarding employee and customer data. It also allows for easy access and the retrieval of information when needed. Just ensure that, if you are storing receipts digitally, they include the necessary information.
Consider keeping a backup of your records too to safeguard against data loss or unforeseen circumstances. By prioritizing accurate and organized record-keeping, you’re setting yourself up for success and an easier tax filing process each year.
For any questions regarding tax receipts for your pharmacy business, contact the experts at Pharma Tax.
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