As a small business owner, managing your expenses can be a full-time job. Juggling receipts, bills and invoices can cause you to drown in piles of paper. However, the importance of keeping your receipts organised cannot be overstated. At the end of the year, you’ll be glad that you’ve kept things in order when it’s time to do your taxes.
Here are ways to cut down on the clutter and get organised.
1. Get an Organisational System
When claiming business expenses, especially those for things like entertainment or food, you need to have very specific information to report, including the business purpose of the event. But information is borderline useless unless you have ready access to it. Simply stating that you spent $200 on dinner for a new client isn’t adequate enough. You need to have the names of the attendees and their job titles, as well as the date of the event and the restaurant.
One way to record this information is to write it directly on the receipt. If writing it on the receipt doesn’t work, you can also look to record all of your appointments in an email. If you choose this method, you’ll still need to revisit the appointment after the fact and enter the details regarding the price of the dinner. An even better method is to keep an accurate calendar that lists time, place and the people you met with.
2. Keep Permanent Records
Anyone who has receipts that are even a few months old will tell you that the ink fades pretty fast. Plus, what happens if your wallet takes a swim, or there’s an accident or natural disaster that makes your physical files unreadable?
With today’s technology, it’s actually very easy to address these issues. You can use your cell phone to snap a photo of the receipt, but make sure you can see all of the information clearly. You can also use a scanner to turn the receipts into JPEGs or PDFs. Converting your paper receipts to digital also saves you storage space.
Make sure to back up your digital files. A system crash that took all of your records isn’t an excuse that will fly. It’s also a good idea to still keep the physical copy of the receipts as well, just as backup.
3. Categorise Individual Purchases (Not Just Receipts)
You might have a credit card specifically for business, and therefore assume that your credit card statements alone are sufficient for record keeping. Unfortunately, that’s not true.
Credit card statements are never itemised, so purchases you made, even at office supply stores, will simply look like large lump sums without the register receipt to accompany it. You may need to show the details, which can only be found within the itemised record itself.
4. Better Yet, Keep Everything
Unfortunately, this is just a cold, hard truth.
5. You (Probably) Need Help
As mentioned at the beginning, managing expenses can be a full-time job and you may legitimately not have the time to handle it. It’s also possible that organising receipts and expenses is not your strength, and that’s okay.