What might seem like the easiest part of your bookkeeping (but can quickly become one of the most overwhelming) is organizing your receipts.
You know you need to keep track of your transactions, but during the busy months, while you’re traveling, or simply refilling your office snack basket, it feels like one more annoying point of having a business. Add on, you often don’t know how BEST to organize your receipts — even if you do have a bookkeeper.
So, how do you organize business receipts? What’s the best way to keep track of everything to make it easier come tax time? Here’s what you need to know:
Receipts are needed for accuracy — and in some cases, for “proof.” For example, your bookkeeper might request receipts for bigger business expenses to ensure they’re categorizing it correctly and that the transaction in your account matches your purchase.
But, it’s not just for bookkeepers — if you’re DIY-ing your bookkeeping, receipts can help YOU categorize expenses for tax time and accurately mark your deductions (and save you money).
And, in a worst-case scenario, receipts will serve as proof of purchasing what you said you purchased and that there’s not a misuse of funds or misrepresentation of deductions during a tax audit.
Essentially, organizing your receipts NOW can save you money and prevent fees for the next 3 years (how long the IRS has to audit you, although you should keep your financial records for longer, closer to 7 years).
You know you need to keep your receipts, but how do you actually organize them for your bookkeeping records? While stashing all your paper receipts in a dedicated folder in your home office isn’t the worst idea, so many invoices and receipts are delivered solely via email.
Here are the best ways I’ve found to store receipts as a bookkeeper and tax expert, and add them to your quarterly (or monthly) bookkeeping to-do list:
Your bookkeeping software likely offers some form of receipt tracking, but they’re not that great and cause issues later down the road — and if you DO choose to use them, make sure you’re double-checking your work.
For example, QuickBooks Online offers the ability to take a picture of your receipt and upload it to your transaction, OR forward an email invoice to your QuickBooks account.
This is my top recommended method of organizing your business receipts! You can use any cloud-based storage, such as Google Drive, Box, Dropbox, etc., to save your receipts. This makes it easy for you to access anywhere (and you can still upload images while on the go in their respective apps), and you can share access to your bookkeeper or tax expert at any point.
Not my recommended route, but you can store original paper receipts to use as reference during tax time — I just recommend you partner it with a cloud-based storage option in case something goes wrong.
You can’t predict natural disasters, accidents in your office (spilled coffee, roof leak, etc), or accidentally misplacing your folder right before tax time.
Yes and no, a bookkeeper isn’t responsible for tracking your receipts — at least, not 100%. If provided the receipt, a bookkeeper will place it in its logical spot. Alternatively, they may provide a cloud-based storage space for you to upload receipts to accurately track your expenses and mark your deductions.
It’s ultimately up to the bookkeeper you’re working with and the services provided to you! If you would like help keeping your receipts organized, mention it to your bookkeeper, and they can either create a plan to help (and make it more hands-off for you) or create a system that WORKS for you!
Ready to start working with a bookkeeper? Book a call and let’s create a system that works for you!