I am often asked “Do I really need to keep the receipts?” The answer is yes, you should keep the receipts. You may need that detail in a tax audit. I know because I speak from personal experience.
Despite claims of paperless office, I still deal with way too many receipts. Ideally, the receipts should be scanned and kept in electronic form, but who really has the time or wants to pay for that to be done.
If you are like most small businesses you are using personal and business debit and credit cards. Every so often you use the wrong card. Oops, I bought the groceries on the business card. Hey stuff happens, we’ve all done it.
Now, those debit and credit card transactions show up on a statement, but what about cash purchases (I have many parking lot charges) and the vague paypal/amazon purchases that are listed on the statements?
To help you minimize your time on this and keep the filing simple:
1. Get yourself an accordion file with the months listed on the tabs.
2. As you get your receipts, mark on them whether personal or business expense.
As simple “P” or “B” at the top corner will do. Then mark what the purpose for the expense is. For example, you went to a restaurant for a business meeting, “B” at the top corner, then “Lunch with Joe to discuss Biz Dev”
3. Put the receipt in the accordion folder in the corresponding month.
Also add the bank statement and the credit card statement for the month. If you are feeling really ambitious you can staple the receipts to the statements. That way if you ever needed to get the details of the transaction you can get to it easily.
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