Tips for Organizing Your Receipts
Business owners constantly hear “keep all your receipts!” This is quite often the first and most beneficial tax advice that people learn. “And for good reason; without an accurate, easily referenced record of the money you’ve spent, you may not be able to answer the Canada Revenue Agency’s request for verification of your business expenses, (source).” I want to make sorting and organizing your receipts as easy as possible. I always recommend the help of a bookkeeper or the use of Receipt Bank as the best and most valuable tools for when you are looking to organize your receipts. That’s why I’ve compiled a comprehensive list of my favourite tips and tricks to help you get started:
1. Monthly Receipts: “Keep a few zip lock bags and a pen in your car, briefcase or purse. Each month, label a fresh bag with the date. Anytime you get a receipt, just pop it into the bag and collect the bag at the end of the month, transferring any receipts from your purse or wallet at that time, (source).” It will be easier to sort through smaller groups of receipts versus hundreds at the end of the year.
2. Business Receipts: Separating your business and pleasure receipts can make a huge difference in the overall organization of your expenses and budget. “Try to jot the client name or reason for the purchase onto the receipt when you get it. You'll save tons of time with your claims if you don't have to rely on your memory when you're submitting them, (source).”
3. Photocopy: This is one of my favourite tricks when it comes to receipt hacks. You can with photocopy your receipts in the office or simply take digital copies. “The ink used on register tape fades relatively quickly, and the CRA requires taxpayers to keep such records for at least six years. Nothing can be more frustrating than opening your five-year-old receipt folder during an audit and finding nearly blank and illegible slips of paper inside, (source).”
4. System: Developing your own specific system for what works for you is essential to getting organized. Having your own system and trying out different methods to find what works for you is part of the experience and learning curve. A great example is separating “the appropriate monthly file folder and sort the business receipts into piles based on their income tax classifications. For instance, I paperclip together all the software receipts, all the food and entertainment expense receipts, and all the automobile-related expense receipts, (source).”
The beauty of implementing some of these tips means that you can cut down on your tax time. This will not only save you money, but also greatly reduce stress and headaches. Being organized will honestly make it so much easier and less work to get everything in line. “For one thing, you'll have all your receipts that are going to serve as proof for your business-related income tax deductions. No more desperately digging through the glovebox of your car or that disorganized drawer that you've been tossing receipts into all year. For another, having already sorted your receipts by business expense categories, all your relevant receipts for each category are ready to tally, making filling out your income tax return faster and easier, (source).” Still have questions about receipt organizing tips? Contact me at firstname.lastname@example.org or 250-686-2500!