The need to track receipts is important in saving you time and money during tax season.
Hopefully, you have chosen software to help you track receipts. If not, you can read my blogs about how to easily track your receipts (which includes options for both the technical and non-technical person.)
If you’re tracking receipts, you may ask yourself, what is the next step??? Throw them into a box and forget about them until tax season??
Let take a different route this season! We’re going to talk about a simple bookkeeping system to get up and running. Tracking receipts is just part of the picture (although a very large part.)
Use the steps below to track, enter, and save your receipts into your Bookkeeping system, to make your life easier and your business more profitable.
If you are often on the go, take pictures of the receipt. I love this method because if the receipt is misplaced for some reason, I already have a photo. You can use these services to capture a picture of the receipt with your mobile device:
If you’re at your computer or online, you can save receipts for online purchases in a PDF form into an Evernote notebook. This will make it easier to email the notebook later.
Choose one day a week to review and enter the receipts into your software. Or, you can choose to do this daily, at the beginning or end of your day (as it only takes about 5 minutes.) Your software could be applications such as Quicken, QuickBooks, Xero, or any other software that you have chosen. Enter the receipts into the expense or spending areas and assign the appropriate accounts. You may ask your accountant regarding any accounts that you are not sure of. Assigning the correct account is very important. The accounts determine which transactions are deductible. You can also download bank transactions.
(You will need to match and reconcile all transactions at the end of the month.)
A good example of a qualified expense is the purchase of a meal at a business meeting. This is a deductible business expense. The determination of your expenses affects the amount of taxes you may have to pay. This is the reason receipt tracking can save you thousands of dollars.
Save the original paper receipt in a folder or binder as back up. You will rarely need the original paper copy, however, keep the original receipt if you have one. Retain the previously saved digital copy in your software or on your computer in a folder. Digital copies save you time and energy when you have to pull the receipt to respond to a question.
That's it! You have started your bookkeeping system! You have captured, recorded and classified the receipt and saved the information in preparation for tax time! All you have to do during tax season is reviewing, print or email to your tax preparer or accountant! Thousands of hours and dollars saved!
I hope you enjoy your new freedom and peace of mind!
The need to track receipts is important to save you time and money during tax season. Hopefully, you have chosen software to help you track receipts. If you need assistance, see my blog recommendations: "3 Fast and Easy Ways to Track Receipts with Apps" or "3 Fast Steps to Track Receipts for the Non-Tech".