Receipts to a bookkeeper are gold; to a business owner a pile of anxiety and nuance; and to the IRS a legal requirement.
Naturally, as a bookkeeping firm, we are going to write about how easy it is to keep your receipts and go paperless – we love receipts! For business owners that have an opposite opinion around receipts there is no magic pill or tool to change that. Instead we need to look at your personal “nature” when creating a plan on how to adjust your mindset that creates a process to work with your behavior, not against it.
What is your personal nature?
Some of us love the tactile feel of receipts and the security they bring. Others hate paper but have a deep attachment to technology. You choose! Just create a habit around the choice.
Keep envelopes with you when you travel. Stick all your receipts in the envelopes and use the outside of the envelopes to write down all your travel info – dates, who did you see, business purpose etc. When you get back, delegate this to a team member to note the info on the receipts; enter into your accounting tool; and then scan/file them.
- Be consistent
- Keep ALL receipts
- Have some place to capture those cash items you don’t get a receipt for
- Embrace writing down the specifics
Embrace that smart phone and find an app that you like. You’ll combine:
- Taking photos with your phone
- Emailing your receipts to your tracking solution, OR
- Upload them directly to your online storage
- Documenting the specifics into the app via your phone and/or computer option after the trip
When looking at a tool, consider those tools that will include mileage tracking or automatically pull your credit card activity. Plus you’ll need something that your team can access. Apps we like include:
- Shoeboxed.com – scanning service; email or upload direct; ability to add notes about the receipts and Gmail pull; mileage tracking
- Expensify – expense report that pulls activity on your credit cards that you can then match receipts to; mileage tracking; perfect solution when you have client expenses that need to be reimbursed AND track administrative expenses
- Hubdoc – fetch solution for utilities and bank statements; email or upload direct; bank level security storage solution that is easy to share with team
- Dropbox or Google Drive – browser based storage that you and your team already use and is accessible on all your devices; consider this your electronic envelope system that a team member or yourself will use as temporary and back-up storage – still need all the “deets” to make it useable for accounting and IRS purposes
IRS Guidelines & Retention
IRS tax court has ruled that electronic records are the same as original, and in fact can even be better because in time, credit card receipts can fade and disappear. Regardless if the receipts are hard copy or electronic you still need to keep them based on IRS record retention guidelines. ADI Accounting Team recommends you keep them for up to seven years, but check with your tax professional for their recommendations.
You may not get a receipt EVERYTIME so you’ll need to create a habit of capturing your activity daily or at the time when there is a money involved transaction. You can use a note-capturing device (we like Evernote) or record yourself a voice memo to capture later.
Many of your receipts may also come electronically or are stored online. Finding a tool that will pull or push those receipts will help automate the process. There is risk leaving the receipts in your email solution, either due to losing them or inability to search/find them. Remember receipts need to be kept for seven years, how easy will it be to go back in your emails to find them?
- Shoeboxed.com has a pull relationship with Gmail and will automatically pull anything that looks like a receipt. Create a process to review those pulls on a regular basis.
- Hubdoc is a fetch solution to go pull receipts from utilities and banks. Sometimes the feeds may need a little assistance so a process to review the pulls is required.
- Use your email solution to create a rule to pull those receipts into a folder taking them out of your inbox; outsource the electronic filing of those receipts, as needed
When creating a solution for your business receipts look at your personal nature first. If it is not your strength to be detail oriented or you have an allergy to handling receipts, then find a team member that loves all that stuff. Or perhaps that is a sign to outsource your accounting needs. Who knows, perhaps it will even be a little fun taking your receipts to the next level? Do you have a tool or process that you love? Share it with us below.