Keeping receipts might seem like a mundane task, but it’s a crucial part of bookkeeping for your business. In this blog post, we’ll explore why keeping receipts is important, how to organize them, and some tips for making the process easier.
Why Keep Receipts?
There are several reasons why small business owners should keep receipts. First and foremost, receipts serve as proof of purchases. If you need to return an item, or if you’re audited by the IRS, you’ll need to provide proof of purchase. Without a receipt, you might not be able to get a refund or prove a purchase was legitimate.
Secondly, receipts help you track expenses. By keeping receipts for every purchase you make, you can easily see how much money you’re spending on specific items or categories. This information can be invaluable when it comes time to create a budget or evaluate your business’s financial health.
Lastly, receipts are important for tax purposes. If you want to claim a deduction for a business expense, you’ll need to provide documentation that shows the amount you spent, the date of the purchase, and the nature of the expense. Keeping receipts can help you meet these requirements and avoid any issues with the IRS.
How to Organize
Keeping receipts organized can be a challenge, but there are several methods you can use to make the process easier. Here are a few tips:
Digitize your receipts
Instead of keeping physical receipts, consider scanning them and saving them on your computer or in the cloud. Since most modern day receipts are on thermal paper that fades over time digitizing your receipts not only saves space but ensures your receipts are readable year after year.
- Bonus Organization Tip: Create a separate folder for each year with folders inside for each month. This can make it easier to search and find receipts at a later time.
Use a receipt tracking software
There are several apps available that can help you track receipts and expenses. These apps can be especially helpful if you’re on the go and need to track expenses while you’re away from the office.
- Bonus Organization Tip: We recommend Hubdoc, an easy to use receipt management program that is available online and has a mobile app!
Tips for Making Receipt-Keeping Easier
Keeping receipts organized can be a time-consuming task, but there are several tips you can use to make the process easier:
- Make it a habit: Get into the habit of collecting receipts for every purchase you make. This will make it easier to keep track of expenses and avoid the need to go back and find missing receipts later.
- Label your receipts: Write a brief description of the purchase on each receipt. This can be especially helpful if you have a lot of receipts for similar items.
- Keep receipts in a central location: Designate a specific location for storing receipts, and make sure everyone in your organization knows where it is. This will help avoid lost or missing receipts.
- Use a separate credit card for business expenses: Using a separate credit card for business expenses can make it easier to track expenses and avoid the need to sort through personal expenses to find business receipts.
Keeping receipts might not be the most exciting part of running a small business, but it’s an essential part of bookkeeping. By keeping receipts organized and readily available, you’ll be able to track expenses, prove purchases, and avoid issues with the IRS. With these tips, you can make receipt-keeping easier and more efficient, giving you more time to focus on other aspects of your business.