5 Tips To Help Small Businesses Organize Receipts

Why You Should Organize Receipts

For a business of any size, managing your finances is critical. Failing to to do is one of, if not the most common reason why businesses fail in their first five years. The first step to managing your finances is knowing how much money your business spends. This is why it’s important for businesses to save their receipts. Not just for taxes – although that’s certainly important – saving receipts help you get an accurate picture of how much money your business spends and what it spends it on. You need to know this to make good business decisions.

But just keeping them isn’t enough; you also have to organize receipts so that they’re easy to find when you need them. That can be a struggle. How do you deal with that?

5 Tips To Organize Receipts

1. Make Copies

It’s easy to lose receipts, so you’ll want to have backup copies. In addition to getting printed receipts, never refuse an offer to have a receipt mailed to you. When you do get physical receipts, scan the receipts as redundant back-ups. That way, if one receipt gets lost, you have backups. You should also have a separate, redundant back-up for digital copies in case the hard-drive on the machine you’re saving these receipts on happens to crash.

2. Make Notes On Them

When you get a receipt, make important notes on them. Did you pay for a business dinner? Write down who it was with, and what the meeting was about. This way, you will be able to know what each receipt was for in precise detail and won’t have to worry about remembering.

3. Organize Receipts Chronologically

When you need to pull up some receipts, you’ll generally want to do so within a date range. This is especially true for tax records: you will want all of your financial records within a given year for each tax declaration. If you organize your receipts chronologically, you’ll always know about where each receipt is for the given time period you want to search.

4. Group Receipts Into Categories

Chronological is the best base for your organization, but you should also have secondary organization. Within chronological periods, you should organize receipts into different categories. Categories like “marketing,” “equipment,” “building rental” and other sub-categories will mean you know exactly where to go when you’re looking for a specific kind of expense. It also helps you locate and add all categories of expenses when you need to see how much overall you’ve spent. Since most tax write-offs only allow so much, this is a great way to keep yourself from overspending.

5. Keep Your Business and Personal Expenses Separated

It cannot be overstressed that separating business and personal expenses is vital. When the two mix, it becomes a management nightmare that leads to all kinds of audits. Whenever you do something for your business, do it through a business account that is separate from your personal finances. Equally important, never use your business account for anything personal. That way, there can be no confusion about what expenses are business expenses. If you mix it up, the IRS will audit you at some point. Keep the accounts separate to save yourself a massive headache.

How You Organize Receipts Can Save You Hassle

You need to organize your receipts if you want your business to succeed. It keeps you fully informed of how much money your business spends and how it spends that money. Without this information, you’ll have a hard time making important spending decisions and your taxes will become a nightmare. These 5 tips will serve as a good foundation for any organizational system. Redundant backups make sure you don’t lose things, while notes give you specific information about the expenses. Organizing chronologically and according to categories lets you find old receipts quickly when you need to. Separating your business and personal expenses helps avoid confusion and audits.

If you stick to these tips, you should be able to keep your business finances straight. You’ll be able to manage your finances much more efficiently, letting you make smarter decisions and make more money.

Let Us Help

As bookkeepers, Dragon Financial can help you out. We can help you organize your records and keep redundant back-ups of the data on hand so you can access it more easily when you need it. With the help of our virtual assistants, you’ll have everything you need to succeed. Get in touch with us today to find out what we can do for you.