Last Updated on March 22, 2024 by Treana Wunsch
In this article, I’ll explore some tips and tricks on how to keep track of receipts for small business. From digital apps to old-fashioned filing systems, we’ll cover all the bases so that you can stay organized and stress-free when it comes time to file taxes or analyze your expenses.
As a small business owner, knowing how to keep track of receipts for small business can be a daunting task. Not only is it necessary for tax purposes, but it also helps you keep an accurate record of your expenses and financial transactions. It’s easy to let the chaos of running a business lead to disorganization in your financial records. Still, with the right tools and strategies in place, managing receipts can become a simple part of your routine.
This article is all about how to keep track of receipts for small business.
Importance of keeping track of receipts
Firstly, learning how to keep track of receipts for small business is crucial for small business owners, as it helps them to keep a record of their expenses. This record can be used for various purposes, such as tax deductions and financial analysis. Without proper documentation of expenses, small business owners may miss out on potential tax deductions and face difficulty in calculating their actual profits.
Secondly, having a system in place to keep track of receipts for small business can save time and effort during tax season. Instead of scrambling through piles of paper receipts or trying to remember expenses from memory, having all the necessary documents readily available can help simplify the process. By keeping receipts organized throughout the year, small business owners can avoid last-minute stress and ensure they submit accurate information to the government.
Finally, keeping track of receipts also helps small business owners monitor their cash flow and identify any areas where they need to cut costs or invest more money. It provides insight into how money is being spent within the company and can assist with making informed financial decisions for future growth and success. Overall, properly tracking receipts is an essential component of running a successful small business.
Digital vs. Hard copy receipts: Pros and cons of each method
Digital and hard copy receipts both have pros and cons when you keep track of expenses for small business. The main advantage of digital receipts is that they are easy to store, organize, and search for later on. With tools like scanning apps or email integration, business owners can quickly capture receipts with their smartphones and send them to a cloud-based storage system. Quickbooks Online has both a scanning function as well as email integration. This saves time compared to manually filing paper receipts and reduces the risk of losing important documents. However, digital records may not be acceptable for tax purposes in some countries. In my experience Canada and the province of Saskatchewan accept digital receipts.
On the other hand, hard copy receipts offer physical proof of transactions that can be useful in case of disputes or audits. They also don’t require any special equipment or technical skills to handle. Business owners who prefer this method should consider using an accordion folder or a binder with dividers to keep track of receipts by date, category, or vendor name. However, they need to make sure that the ink doesn’t fade over time and that the papers don’t get damaged due to water or fire hazards. Later in this article, I give instructions on how I organize all my client receipts. It’ll work for you as well.
Ultimately, choosing between digital and hard copy methods depends on personal preferences and legal requirements. A good practice is to keep both types of records if possible so that you have a backup in case one fails or gets lost. In any case, staying organized throughout the year will pay off when it’s time to file taxes or analyze your financial performance as a business owner.
Organizing Small Business Receipts: Strategies to keep receipts organized
Bookkeeping Checklist
One of the best strategies for how to keep track of receipts for small business is to create a system and stick to it consistently. This can involve creating categories for different types of expenses, such as office supplies or travel expenses, and then filing each receipt accordingly. Another effective approach is to digitize receipts by scanning or taking pictures of them using a mobile app. Quickbooks Online has an app that allows you to do this. This not only saves physical space but also makes it easier to search for specific receipts later on.
It’s also important to set aside time regularly, such as once a week or at the end of each month, to review and organize all receipts accumulated during that period. Having an Excel spreadsheet or accounting software can be helpful in tracking expenses and ensuring that no important receipts are missing. If you are just starting out an Excel spreadsheet might be all you need. However, Quickbooks Online saves time by automating some of the bookkeeping processes.
By following these simple strategies, small business owners can avoid the stress of scrambling through piles of unorganized receipts come tax season.
{RELATED ARTICLE: Why Quickbooks Online is the Best Small Business Bookkeeping App}
Tips for Recording: Best practices for recording receipt information
1. Use a dedicated system for storing receipts: To avoid losing or misplacing receipts, it’s important to have a dedicated system for storing them. This could be as simple as a folder or envelope labelled with the date range and type of expenses covered by the receipts.
2. Record information immediately: Don’t wait until later to record receipt information; instead, make it a habit to jot down any necessary details as soon as you receive the receipt. This includes the date, vendor name, amount spent, and the purpose of the expense.
3. Take clear photos or scans: If your business is primarily digital, taking clear photos or scans of your physical receipts can be an effective way to keep track of them without worrying about lost paper copies. Just make sure that all relevant information is clearly visible in the image.
4. Use digital tools for organization: Consider using digital tools like accounting software or cloud-based storage solutions to help organize your receipt information more efficiently. Many options now offer automatic categorization and tagging based on keywords found in receipt images.
By following these best practices for how to keep track of receipts for small business, business owners can save time and reduce stress when it comes to tax season or other financial reporting requirements.
My Fool-proof System to Organize Hard Copy Receipts for Small Business
For those of you who haven’t discovered paperless bookkeeping yet, I’ve created this easy to follow infographic to show you how to keep track of receipts for small business.
If you’re curious about going paperless, email me at treana@treanawunsch.com or through the contact form to the right and I can introduce you to it.
{RELATED ARTICLE: 13 Important Reasons to Store Your Small Business Documents Digitally}
Purchase a 3 ring binder
Label the binder with the business name and the year you’ll be organizning.
Purchase 12 binder tabs
Insert 12 tabs into the binder. Label them with each month of the fiscal year.
Purchase 24 blank labels
These will be used in the next step.
Purchase 24 page protectors
Insert two page protectors after each month tab. Using the labels from the previous step, label one protector ‘expenses’ and one ‘income.
3 hole punch your bank statements and insert them into appropriate month
This will help with reconciliation. Now, you can insert expense bills and receipts into the corresponding page protector. Do the same with any income documents such as cheques.
I’ve created this simple-to-follow infographic that shows step-by-step how to create a system to organize your paper receipts.
Software Options: Examples of software for tracking receipts
One of the biggest headaches for small business owners during tax season is keeping track of receipts. Fortunately, there are software options available to make this process easier. One such option is Shoeboxed, which allows users to scan and organize receipts in a digital format. The software also extracts important information such as vendor name and total amount spent, making it easy to categorize expenses. However, Quickbooks Online has this feature built-in and with my discount, it’s cheaper.
Another popular software option for tracking receipts is Expensify. This software not only allows users to upload and store receipts but also generates expense reports and invoices. It also has features such as automatic mileage tracking for those who frequently drive for work purposes. Plus, Expensify can integrate with accounting software like Quickbooks or Xero, saving even more time for small business owners come tax season. I used this until Quickbooks Online implemented the receipt scanning feature.
Overall, investing in receipt tracking software can save small business owners time and stress when it comes to organizing expenses for taxes. These two examples are just a starting point; there are many other options available that may better fit your specific needs as a business owner.
Outsourcing Options: Options for outsourcing receipt management
Outsourcing receipt management is a viable option for small businesses that struggle with how to keep track receipts for small business. One outsourcing option is to hire a freelance bookkeeper who can manage all aspects of the business’s finances, including receipt management. The bookkeeper can scan and organize receipts into digital files, making it easier for the business owner to access them when needed.
{RELATED ARTICLE: 12 Important Reasons Hiring a Bookkeeper for a Small Business is One of the Best Decisions You’ll Ever Make}
Another outsourcing option is to use an online receipt management service. These services allow businesses to upload their receipts onto a cloud-based platform where they can be easily accessed and organized. Some of these services also offer features such as automatic data extraction and categorization, which saves time and reduces errors. I’ve used The Neat Company in the past and had a good experience. However, since I already have a subscription to Adobe Pro I use Adobe Scan for any documents I need to make a digital copy of that aren’t bookkeeping related.
Overall, outsourcing receipt management allows small business owners to focus on other aspects of their business while ensuring that their finances are well-organized and up-to-date. It is important for businesses to weigh the cost-benefit analysis of outsourcing versus managing receipts in-house before making a decision.
Conclusion: Benefits of organized receipt tracking
In conclusion, organized receipt tracking offers several benefits for small business owners. Firstly, it makes tax season a breeze by providing a clear paper trail of all expenses incurred throughout the year. This ensures that businesses can claim all eligible deductions and avoid any penalties or audits from the IRS and CRA.
Secondly, tracking receipts helps in budgeting and expense management. By keeping track of every penny spent, businesses can identify areas where they may be overspending and make necessary adjustments to their budgets.
{RELATED ARTICLE: Why Developing a Budget for Small Business Determines Success}
Lastly, organized receipt tracking simplifies bookkeeping processes. It ensures that accurate financial records are maintained which is crucial for making informed decisions about the business’s finances.
Overall, establishing a system for organizing receipts is an essential aspect of running a successful small business. It saves time and money while also providing peace of mind when it comes to taxes and financial management.
This article was all about how to keep track of receipts for small business.
Thanks for reading! As always comment below with any questions or strategies that have worked for you!
