Track business expenses and organize receipts
If you are like most business owners, you probably don’t enjoy the effort required to track business expenses and organize receipts. While it may not be something you enjoy, it’s an essential part of owning a business. Properly tracking expenses and managing receipts could save significant amounts of money for your business by making tax preparation easier and faster and ensuring proper deductions.
If you are overwhelmed by the mountain of receipts and spreadsheets that pile up at the end of each calendar year, try instituting a process to stay ahead of it this year. Here are a few tips that can help you accomplish that.
Make this a regular and consistent part of your routine
Instead of hoarding receipts in a shoebox until the end of the year, create a filing system. I suggest processing the receipts once a week or even once a month. Whether you prefer paper or digital filing systems, there are plenty of options for both. For the paper filers, get a large accordion file folder and label each divided section to correspond with your expense categories, such as travel expenses, meals, entertainment, shipping, postage, etc.
There are quite a few apps for Android and iOS users that offer receipt scanning and automatic processing for those who prefer working with digital files. Just be sure to do your research to determine which app best suits your needs. Also, remember that some will be free, while others may have monthly subscriptions and/or one-time fees for certain services. If you choose a paid app for receipt tracking, add it to your list of deductible expenses.
Schedule a time every week to organize and file receipts
Even if you do not have the time to process receipts every week fully, you will still be way ahead if you take time every week to organize and file those receipts in the proper categories. This receipt process will save you hours of time at the end of the year by simply pulling out each bundle of receipts and knowing their category. Have 20 minutes between scheduled meetings every Thursday morning? Use that small block of time to sort your receipts. Or, plan to do it just before your lunch break every Tuesday. If you make it a weekly habit, you’ll find that it doesn’t take long.
Start saying yes when someone asks if you need a receipt
If your receipt pile overwhelms you, just remember the money that you are saving by having it. The more receipts you hold on to, the longer your list of deductible expenses is. Receipts are a business owner’s best friend, especially for small businesses. When you make a purchase and get a receipt, jot a quick note on the back of the receipt. In doing so will allow you to categorize the expense later.
Remember that all deductions must be substantiated with the appropriate paperwork, such as a receipt. If your business gets audited, you could end up owing money to the IRS for any expenses that don’t have proper documentation.
Hire someone to help keep track of expenses
A professional bookkeeping company can be a massive asset to your business by helping you track and categorize expenses throughout the year. You still need to save receipts, but having a bookkeeper regularly review and categorize your expenses can help ensure nothing falls through the cracks.
Whether you choose to do it yourself or hire a professional bookkeeper, taking time to keep track of business expenses and organize receipts throughout the year will save you time and money. With the suitable systems in place, you’ll know exactly where your business stands financially through the year.
Need help with your bookkeeping? We help many clients stay on top of their business expenses and receipts throughout the year.
If you would like a 15 minute complimentary call to talk about bookkeeping for your business, please don’t hesitate to email us for an appointment.