Receipts are the paper trail of the life you are living.
Every time you make a purchase, in order to prove that you actually own the item you are walking out of the store with (or the box you are retrieving off of your front porch), the seller will give you some kind of receipt. Most likely, in the business you run, you do the same for your customers.
It’s a way of saying “our transaction is officially finished and everyone is satisfied.” It also gives you the peace of mind that if you encounter a problem with that item, you have a way of easily returning it.
How many problems have we all encountered (and how much money have we had to “eat”) simply because we did not keep a receipt?
When it comes to managing your business, you deal with a lot of reports in order to stay on top of your financial situation. While all of them are valuable, receipts are some of the most important paperwork you need to keep up with on a day-to-day basis.
You need your numbers to be accurate, and detailed receipts are what allow you to do that.
- They help you track your spending.
- They can help you discover errors in reconciliation.
- They ensure that you can take advantage of every credit and deduction you are entitled to at tax time. (The IRS will also consider them very important in the event of an audit.)
How to Effectively Manage Your Receipts
- Keep them. Even though it seems obvious and we’ve already stated how important it is, none of this matters if you don’t actually have the receipts. Be sure to get a receipt every time…especially for cash purchases.
- Make notes on them. Business gets busy, so it’s easy to forget what a particular receipt was for later on. If you are handing them off to an accountant or an outside firm, it’s especially helpful for them to have as much information as possible about the purchase. Take a few seconds as soon as you get the receipt to jot a note on the back along the lines of “Prospective client lunch” or “copy machine paper”, etc.
- Scan them. Receipts aren’t made for long-term storage; ink doesn’t last forever. Plus, paper takes up space. Make a habit of scanning your receipts into a digital format once a week or so. (Make it an appointment on your calendar so you don’t forget.) Business.org has a good list of some of the best receipt scanners currently available, or you can simply take a picture of them with your phone and keep those in a dedicated file in the cloud somewhere like Dropbox.
We’ve recently created a free PDF on “9 Simple Accounting Mistakes That Are Costing Your Business Money.” Managing receipts is one of the topics we cover. Click here to learn about the rest.
When you’re ready to take your receipt management to the next level, it’s time to partner with a professional accounting firm that can take all of the hassle off of your plate. At CRS CPA, we record and store receipts for many of our small business clients every day.
Schedule a call to learn more about the wide range of accounting services that our team can put to work to help you grow your business and rest easy knowing your finances are in good hands.