When keeping records for your business there are three words to remember. Paperwork, paperwork, paperwork. Everyone loves paperwork, except those who have to do it. Keeping quality paperwork though can ensure you maximize your deductible expenses. Remember that an expense forgotten is something you get to pay taxes on.
I find that most businesses have moved to a really crappy quality ink system on their receipts. I personally believe this is so that you won’t be able to return any goods purchased if you have them for longer than a few weeks. Unfortunately it also means that figuring out how much you spent on something is just as difficult once the ink starts to fade.
To assist with remembering the receipt value I find that creating a photocopy right away is the simplest way of ensuring you have quality proof of the expense. I simply slip my receipt into the photocopier and click the copy button. Then once printed I paperclip the receipt to the copied page for safekeeping. I suppose I could staple it but for now the paperclips are working well enough.
Having somewhere to file your receipts is as important as ensuring you have them. Nothing can be more frustrating than having to spend days and days trying to find all your business receipts when it comes time for bookkeeping. At the simplest you need a shoebox for your receipts. Preferably you should invest in a simple filing system (or cabinet) and some hanging folders. Using folders will ensure you have everything nicely split up and come time to do bookkeeping you will have everything nicely organized. If you use and outside bookkeeper this will also save you tons of fees for sorting all your receipts.
I have gone through the searching phase, the shoebox phase and am now working with a fairly effective filing cabinet. I discovered along the way that legal size folders is definitely the way to go, so don’t bother with the letter sized folders, not worth the money for the aggravation it will cause.
Letting your paperwork build up for too long will only cause you to waste even more time. Not only will you get to fret about doing the work for weeks on end but the paperwork will take longer. Choose a schedule and stick to it. Most small businesses can afford to manage their expenses either quarterly or every half year. Paying bills still needs to be on time, but chalking it all up into your computer system or other accounting book can easily be put off to less often. Depending upon how many bills and miscellaneous papers that you manage in a year you will likely be able to manage paperwork only 2-4 times per year. This helps push the headache into only a day or two and keeps the pile from building up too far.
These rather simple record keeping suggestions will save you numerous hours. I can vouch for that since these pieces of advice have cut my bookkeeping time down by at least 75%. Keeping good records can be annoying but having a simple system to manage it will ensure your time is not wasted.