Image of a woman at her computer with the tag line - receipt management 101 learning the process of managing your receipts and why it's so important to make them digital

So you started your business at the beginning of the year but you haven’t even thought about bookkeeping or you’ve been in business for a bit but you’ve been doing ALL of your bookkeeping at the end of the year – let’s be honest here. Been there, done that, got the tshirt!  

But you made a promise to yourself on Jan 1 not to go through this again…but it’s 4th quarter and you’re kind of panicking because you’ve done it again!

Okay first off, deep deep breath. I am going to get you on track but I will say it’s going to take some raw determination, a few tools, and a few days to hash all this out. 

Let’s start with some tools you’re going to need in order to get caught up. 

Let’s talk accounting software.

To be perfectly honest there are two options…really there are about 50 but there’s only 2 that I actually recommend to people due to pricing and general availability of features. Those options are wave accounting and quickbooks online.

I prefer Wave, personally, because most small businesses that are a 1-3 person show don’t need all the bells and whistles and hefty price tag of quickbooks online. Wave is Free and it offers most of the basic needs of a small business or freelancer. You can connect and automatically import the transactions from your bank and run the basic reports you will need throughout the year. You can also add on your accountant so that they can pull the reports themselves as well which is super handy! 

Quickbooks is a bit pricier but does come with more features, like a mileage tracker within their app, and a payroll option for those companies that have a few employees and need to get more options – though truthfully I have another recommendation for that as well (look in to gusto). Quickbooks does have more robust options like being able to use it as a payment processor (wave’s payment processor has caused me some issues in the past) and also allows for more robust reporting and the opportunity to create budgets within the program. 

Okay so now that we have covered the basics on programs – i’ll be writing more in depth reviews of both of those in the future…let’s move on to what the heck you’re going to do with all those receipts. 

It’s time to cover the receipts management workflow

So once you have those 2 folders you’re going to scour the house, office, and car for all of your receipts and place them inside the folders. In the future you’ll keep one of those folders in the car so that when you go somewhere and have a business receipt it automatically goes into the folder. Once a week you will take that folder into the house and replace it with an empty folder. Or if you do a lot of your stuff online you’ll set up a base folder on your computer where you will dump all the online receipts as you incur expenses. PS if you do any shopping online for business this should be a thing.

There are two ways to go about this. You can take pictures of each receipt as you incur them if that is something you can commit to. Another option is to schedule time once a week or once a month to scan all of the physical receipts into the base folder. After you’re done with that you will then rename each file and move them to the folder for that month. Ex file name – 09.22.21 homedepot would go into the September file folder. The receipts themselves go into a box – yes a shoebox is fine but make sure your box is labeled and at the end of the year you move those receipts somewhere else that is labeled with the year so that you know where they are and you can start over again. 

Now here’s the crux of the entire situation!

You HAVE to schedule time each month to make this happen. I even have to do this! It’s imperative. And if you honestly get through this article and you say to yourself – I either can’t, won’t, or don’t even want to deal with this crap – welp it’s time to click here to schedule a chat with me because I help people with this kind of thing ALL the time. Those who are local hand over all their receipts to me and I manage the scanning and labeling and then I hand them back the following month. Those who are outside the area take pictures or scan them themselves and I handle all the file allocation and naming and all that jazz. 

One way or the other it has to be done because the receipts of today fade and they fade badly and the IRS wants you to have proof of all purchases above $25 for a minimum of 3 years – and for some expenses it’s upwards of 5 years. Personally I tell everyone to just keep your physical receipts for 3 years and don’t delete the cloud based ones at all. It’s just not worth it. They barely take up any room at all. (ps if you don’t file a return one year there is no statute of limitations on how far back they can go on receipts). This also applies to invoices and income receipts.  

So how are you feeling about your ability to tackle those receipts and transactions?

Tell me your thoughts in the comments section below!