Finance: Organize Your Receipts Before Tax Time

Hopefully you're not keeping receipts in a shoebox and have to scrounge around at tax time to get everything in order. And I hope you won’t have to pay your accountant for the extra hours it'll take to get everything organized. When I started my business almost 11 years ago, as part of the Accounting section of my filing system, I had a folder for each vendor I spent money with regularly (e.g., gas, light, Office Depot, etc.). When I found myself sticking receipts in a To Be Filed folder, I knew my system was too tedious. Because I was procrastinating about filing everything, I knew I needed to simplify my system. Here is a simple solution that works for me.

  • Create a home for all receipts for the current month. This can be a file folder, tray, basket, or whatever works for you.
  • Create a home for all pay stubs from clients. For all checks you receive for the month, keep these pay stubs separately and near your receipts.
  • Keep everything with that month's bank statement. When the bank statement arrives, use a jumbo paper clip to keep all receipts and pay stubs for that month behind it.

This system is simple so it's easy to maintain. One thing though, I had to figure out a way to quickly find receipts for higher-priced products in case I needed repair, etc. I created a contact in Outlook called “Big Ticket Items.” In the text area of the contact I have a 2-column table that is similar to the one below. If I ever need to find a receipt, I'll know which month/year bank statement to pull. (To create the table: if you use Outlook as your email editor, create the table in Word and paste it into the text area of the contact. Once it's there, you can click inside the cells and type as you normally would. When you need a new row, click inside the last cell of the table and tab. Once this table fills up, you can quickly find what you need by using Find. Open the Big Ticket Items contact, click anywhere in the body, then press F4. Type whatever you're looking for in the resulting Find what box and press Enter.)

Date Purchased Description
5/15/2008 HP Laptop, Best Buy
5/29/2008 Office Telephone, Office Depot - ATT
8/6/2008 Luggage at TJ Maxx
8/23/2008 Headset for ATT phone, Office Depot
8/29/2008 Took iPhone back and got BlackBerry, AT&T

  What system have you developed that works for you? Let us know. -Peggy Duncan, SCORE Atlanta View more posts by Peggy

Peggy Duncan

Comments

OK. Four choices: learn how

OK. Four choices: learn how to scan (as easy as using a copier); get someone to come in to scan (cheap labor like a kid); don't worry about scanning and just separate everything as I described in the article; or, of course, use the service you suggested.

Going forward, put a system in place so that it doesn't pile up again. Get to it!

Scanning is actually critical

Scanning is actually critical nowadays if any of your receipts are printed on thermal imaging paper. It's basically disappearing ink - you put them diligently into a file, but come tax time when you pull them out, you've got a collection of little blank pieces of paper. Not exactly convincing backup for tax deductions should the IRS ever request to see them! I discovered this hard, cold fact the hard way when I was compiling figures to give my CPA last year. I estimate I lost at least $2000 in tax deductions because of that paper. Unfortunately, in your case you'll have to bite the bullet on the large number of items you have to scan now, but as suggested, hiring a kid to stand there and scan them is a great, lower cost alternative if you can't/don't want to do it yourself. From here forward, however, make it a top priority to scan every single receipt as you get it (or on a daily basis) then keep or discard the originals in the ordinary course of business however you choose to do. That way you'll preserve the information contained in the receipts, which is the most important part, after all! And DON'T FORGET TO BACK UP the data on that computer!! I have an external hard drive and TWO cloud services after one company (a wireless provider that shall go unnamed) somehow "mistakenly" DELETED 7 years of my backed-up files I'd paid a handsome monthly sum for them to protect. Better safe than sorry.

yeah, i just don't really

yeah, i just don't really know how to use a scanner. and i have a big box (maybe hundreds) that i need to back up... that would take a really long time to scan.

Hi Diana, the concept at

Hi Diana, the concept at shoeboxed.com requires me to mail them all of my receipts. I'd be worried they'd get lost. I use my Neat Receipts scanner when I want to create a softcopy of anything. I'd rather do this and keep everything in-house.

Other readers: what do you think?

have you tried

have you tried http://www.shoeboxed.com for organizing receipts?

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