Tips on Managing your Biz Receipts
Business records management is an essential part of running your small business; however, it has always been an area of entrepreneurship that many small business owners struggle with.
Personally I put keeping track of my business receipts in the same category as a trip to the dentist…
you don’t necessarily like it, but know it has to be done.
However, I do realize the importance of good business records management, especially come tax time.
Case in point: a relative of mine received every small business owner’s worst nightmare…an audit letter from the government. To make matters worse, they could not find all of their business receipts and some that they could find they couldn’t explain what they were for.
The IRS’s response, ”We don’t care if your cat ate your receipts. Without them, you cannot take the deductions and you now owe us money…lots of money”.
Sadly, they will be paying for their poor records management for a very long time.
Here are some business records management tips for you to keep in mind, so you will not ever find yourself in that same predicament:
Business Records Management Tips:
Tip #1: Keep your personal and business expenses separate:
One task that is very important in good business records management is opening a separate bank account for your small business.
Do not pay your personal expenses out of this account.
If you need money from your business for personal expenses write yourself a check or transfer the money into your personal bank account.
Tip #2: Always get a business receipt:
Get into a habit of always asking for a receipt. Even if it is just for a couple of stamps…get a receipt! Those small expenses will add up and no matter what you purchase…you need receipts to back up your deductions.
Tip #3: Always look at your business receipts:
Get into a habit of looking at your receipt as soon as you get it. Sometimes your receipt won’t print off properly. Fill in any missing information. Always write or circle the date on it too. If it was a dining receipt, flip it over and write the name of the client or business associate you met with and the purpose of the meeting.
Tip #4: Take a picture of the receipts.
Set up a free account in a good online organizer such as Evernote. If you have a smart phone, install your organizer on your phone…then take a picture of the receipt as soon as possible and file in appropriate place in the app.
Check with your country’s regulations to see if a scanned or photocopy receipt is acceptable in an audit…but even if you are required to keep original receipts…having a picture of it is a good back up to have and makes it easier to record those receipts in your accounting system.
Tip #5: Keep track of your business receipts:
Have one special place to put your receipts as soon as you receive them. For some people this may be a compartment in their wallet or purse. For others it could be a pocket in their day planner, a compartment in their laptop bag, or a special place in their vehicle….just as long as you get in the habit of putting your receipts in that same safe place every time.
Tip #6: File your receipts promptly:
Every day or at least once a week…take those receipts you have put in that special place and file them.
Do not just stick them in your desk drawer. If you have a very small business, you can file them in an accordion file separated into the 12 months or put them in a binder with 12 dividers with tabs. You can use sheet protectors to put the receipts in,
You can staple or tape small receipts on to copy paper and write out to the side: when, where, and why you bought that particular item.
Put in the sheet protectors and organize them in the binder or in a series of file folders labeled by the month and year such as “Receipts July 20xx”. You can keep this month and even last month’s on your desktop for easy filing and data entries.
Another way you can manage your business receipts is by filing them into categories such as office supplies, advertising, utilities, etc.
See this page for more ideas on business records management.
Tip #7: Enter your receipts into your accounting software often:
Most important business records management tip! Don’t let those nicely filed receipts stack up. Enter them into your accounting software at least once a month. I put a small check mark in the corner of my receipt to indicate that I have entered it into my accounting software.
Tip #8: If you hate filing and data entry as much as I do…try Shoeboxed:
This is a company I wished I would have known about years ago. You simply stuff all your receipts and/or business cards into a pre-addressed envelope, or take a picture of your receipt with your phone, or forward on all your email receipts such as Amazon to Shoeboxed and they scan it, categorize it, and organize it into your online secure account. No more worrying about filing your receipts!
After your documents are processed into your Shoeboxed account, they can be viewed, printed, emailed, downloaded, or exported from your account in a wide variety of formats including PDF, Excel, CSV, QuickBooks, and Quicken file types.
You can also integrate your Shoeboxed data with their growing number of partners including FreshBooks, QuickBooks Online, Xero, Evernote (my favorite free small business software), Bill.com, BatchBook, Constant Contact, and many more. Sweet!!!
Best of all, Shoeboxed receipts are accepted by the IRS, so if you ever found yourself in a sticky situation like the couple above, they would provide you with all your required receipts.
Whichever method you use for your business records management, do it faithfully. It will end up making your life a lot easier…especially come tax time.
For more information, check out Shoeboxed
Whichever method you use for your business records management, do it faithfully. It will end up making your life a lot easier…especially come tax time.