Receipts hold such a significance over key financial matters within a business. One of these financial matters being tax returns. Receipts are a vital record for the many deductions available for businesses. Therefore it is imperative to keep on top of them. But how does an individual ensure these small pieces of paper don’t get lost amongst other paperwork. Here are some helpful tips for keeping on track of your receipts in 2021.
Why You Should Always Keep Your Receipts
Receipts are an essential component of a tax return, as they provide evidence of work related expenses that you want to claim. Even with the digitalised world that we live in presently, many receipts are still in paper form. Therefore it is important to have a system in place to keep them.
For a successful tax return you should have an organised record of your business purchases. This streamlines the process for both yourself, your bookkeeper and your accountant. If you are searching for ways to efficiently organise your receipts here are some handy tips.
File Receipts Straight Away
I’m sure like many of us, you have started to do something and quickly got distracted then forgot what the task at hand was. It is human nature to not remember lots of things at one time. A great habit to start is recording receipts straight away if possible. This is an important practice if your business processes a significant number of paper receipts.
Allocating a small amount of time each day or week to organise your receipts can help to prevent them from piling up. Noting is another beneficial habit to get into, either on the receipt or in another document. If you are a small business owner you may have the joys of having to differentiate between personal finances and business financial data. Making regular notes can assist with tracking expenses for tax purposes.
Categorising your receipts will make your life and filing system so much easier to navigate. This will also save you time in the future if you are searching for a particular receipt. With this organisation tactic in place there will be no need to search through piles of receipts, as you will know exactly where to find each one. Here is an example of what categories you may use:
- Office supplies
- Apps and software
A common pain point of paper receipts is that the ink fades over time, which can make it difficult to see. Once the receipt is unreadable it becomes redundant. That is why getting an electronic receipt where possible is preferable. It is a simple process to store an electronic receipt and they can be uploaded to cloud based accounting software including Xero. Having this in place means that you no longer need to keep paper receipts.
Utilise Your Mobile Device
Mobile phones can do so many things these days including making tracking receipts a lot easier. Taking pictures of receipts and storing them in folders specific to their category, ensures you will have a digital record of them. These images can be backed up onto a cloud-based drive so you still have access to them if anything happens to your phone. Storing them in specific folders means that you won’t have to search through your whole camera roll to find your receipts.
Get An App
If a cluttered camera roll doesn’t appeal to you then there are apps available for you to store your receipts digitally. Apps also have the ability to create expense reports, which will allow you to track your expenses more efficiently.
There are a variety of apps on the market that can be used in conjunction with Xero accounting software. DEXT formally known as receipt bank is an innovative app to assist with receipt management. Here is a helpful clip for preparing your receipts through the DEXT app. Therefore your accountant or bookkeeper will be able to access receipt data, in real time, with little effort.
The most important tip for organising your receipts is to make a habit of tracking them regularly. This may be scheduling a time to do so on a regular basis, such as weekly. Keeping personal and business records separately can also make receipt tracking a more seamless process. For example you may have a business card, such as a credit card, used solely for work related expenses.
Organising your finances doesn’t need to be a tedious process. Trying out some of these tips and finding out what works best for you will simplify receipt tracking for your business expenses. If you require any further assistance in regards to receipt tracking you may like to get in touch with Liz at Keeping Numbers. Liz is a highly experienced bookkeeper who has the skills to help you with the financial side of your business.