Last week, I started this Productivity Series with solutions for the desk dumping ground! A related question was “What to Do With Receipts? specifically receipts for filing business taxes?” I understand the connection  – I’ve seen dozens of desk cluttered with receipts!

Think about this.  Generally, we need to keep receipts for three reasons:

1. for the information contained on the receipt;

2. as a reminder of a next action to take; and

3. as a physical record of an action, in case you need to prove how money was spent.

Next, think about basic accounting. Money spent moves out of “Cash” and into a different category.  For example, buying a printer at Office Max / Depot moves money from my checking account into my office supplies / assets.

Reason #1: Manage the information contained on the receipt.  How much, to whom, for what?  And make it meaningful.

For example, my business recently spent $$ on:

• a new printer and toner, a lamp and pens
• advertising in the form of a charitable donation  / sponsorship
• gas
• day-care expenses
• lunch at Panera
• annual dues for my professional organization
• UPS for shipping, on behalf of a client

Each expense I mentioned above would be listed under different Expense categories in my Quicken software.  Office supplies, advertising, Dues and Subscriptions, Meals and Entertainment, Automotive, etc.  These categories are pre-set in Quickbooks and Quicken, and you can also create new ones specific to your business. (I’m not recommending one type of software over another, just reporting on what I know).

Since my friend’s question was about Managing Receipts for Tax Time, I strongly recommend discussing category questions with your Accountant as you set up your system, to make tax time easier. 

Manage your bookkeeping regularly (and if you need help with this, I can suggest a few great people!).  My business books are simple.  I track my expenses and sales daily on a spreadsheet, entering it all into Quicken once a month with my bank statement reconciliation.  My next step is to streamline that process, and enter the daily info directly into Quicken.   Some businesses will need to do this daily, some can stretch to weekly or monthly.   Regardless of how often, We HAVE TO DO IT!

Once the categories are created, and your information for the year is entered, preparing for tax time is a matter of running your reports, and handing the reports and receipts over to your accountant

For example, in my list above, the actions are to input the information into Quicken, and then with the UPS expense, I need to collect payment from my client, for services rendered and also for the UPS expense.  When I manage my bookkeeping, I need to make sure the two items are entered separately – one for sales, and one for reimbursement.

Manage your bookkeeping, send the invoice, submit the expense report, etc.    JUST ACT!!!

After you record the information, and take the actions required, storing the physical records is easy.

Reason #3: Keep your receipts in a monthly folder.   This makes it easier to reconcile your monthly bank statement, and in the rare instance that you actually need to produce the receipt as proof of an expense, monthly files will make your items easy enough to find, without wasting too much time on filing.  Don’t bother with specific vendor files, chronological files should be detailed enough, since you’ve already recorded the information.

Wrap up your receipts with your tax returns, and store them for 4-7 years.  Random receipts for printer toner from 3 years ago should not be floating around your office!!

Imagine how clean your desk will be, with all the Receipts managed and easily filed away!`