After implementing a few ideas outlined below, you can feel more organized and less stressed about your business receipts… no matter what stage of your business you are at.
Jennifer Hewitson, of Jennifer Hewitson Bookkeeping based in Pointe-Claire, Quebec, offers us some very practical and easy to implement advice.
Keep your business receipts for 7 years
As a reminder, as business owners, we are on the hook for keeping our receipts. Jennifer suggests keeping your receipts for 7 years, as the government can audit up to the last day of the sixth year.
Track your mileage
Jennifer says that it’s common for people to forget to track mileage and to claim it. Regardless of whether you are using a business vehicle or personal vehicle, you are eligible to claim any driving for work.
She suggests keeping a notebook in your car or even using an app on your phone. Just jot down the starting mileage at departure and the ending mileage upon arrival. To be safe, you could add in addresses and a note with the purpose of the trip.
So what mileage can you claim? Any mileage that related to the running of your business…. from getting supplies for your business to meeting people. To clarify:
- Driving back and forth to work from home? Nope, doesn’t count.
- Driving to buy office supplies? Yes
- Driving to a client meeting or dinner? Yes
- Driving to a training? Yes
- Driving to a networking meeting? Yes
Make notes on each receipt
At the top of each and every paper receipt, Jennifer suggests that you make a note about whether it’s for a networking meeting, for business office supplies or for coffee with a client. If it’s for a meeting, include your client’s name.
It just takes a few seconds but it makes a big difference for tracking purposes and in case of an audit!
Take a photo of every receipt
It is so easy for receipts to get damaged, so Jennifer recommends always taking a photo of each paper receipt. This way you will have a copy that won’t degrade over time.
Again, it’s even better for you when you put a note at the top first!
Once you take a photo of the receipt, and store it securely, technically you don’t need to keep the paper copy anymore. But Jen does like to keep them, if she can, just to be safe.
In Canada, the government accepts electronic files such as JPEGS, which most people’s phone cameras create by default. There are also many apps available.
Seperate your receipts
“Separate month by month by month… because at year-end it’s a real pain if everything’s just mixed in one pile”.
Jennifer suggests separating your receipts as you go. She suggests getting a file-size, waterproof container and organizing your receipts by month. If you prefer a smaller size, use a waterproof zip pouch.
Store your receipts with an online service
Jen also recommends, once your business and budget grows, using an online receipt storage service. There are many companies who offer such services, including Hubdoc, Receipt Bank or Bill.com.
With any of these companies, you can store all your receipts in one spot. They collect your electronic receipts from your online purchases and your monthly bills (such as your phone bill and electric bill). You can upload photos of your receipts. You can also link your bank statement. And so, you always have your transactions backed up. It’s essentially a virtual shoebox that is safely stored with military grade security!
Link your online receipt storage to accounting software
Jennifer loves this system as it helps small business owners stay on top of their finances!
When you link your online receipt storage with your accounting software, it’s easy to compare the transactions in the system and make sure your information is complete. If you are working with a bookkeeper, it will allow them to provide you with timely feedback.
This system automates a lot of the accounting that falls through the cracks for many small business owners!
Accounting habits to implement
In the early stages of running a business, many entrepreneurs try to bootstrap it and do the bookkeeping themselves. In this case, Jen says to:
“Remember to take a picture of each receipt, write your notes, and keep them in a file in one spot. Then, take a day at the end of each month and go through your books. Make sure that every receipt matches up with what you have in your statements.”
She also says:
“Sometimes you’ll see on the statement, you’ll have more transactions than receipts. You’ll want to see if you can find those receipts and just make sure you have everything you can. If, every month, you have your bank statement and receipts it’s so easy by the time you get to tax time. It’s so easy and so fast. And it saves you alot of money in the end.”
Getting caught up
If you have fallen behind on your bookkeeping, have a shoebox full of receipts and are looking to start working with a bookkeeper, here’s what Jen suggests:
“Take a consultation, just have a conversation. Most bookkeepers will offer a free consultation where you go and talk about your concerns. And you know, everybody’s embarrassed by their shoebox, but everybody’s got one. You know, I’ve had my own shoeboxes. So it’s understandable and it’s not that hard to fix.”
Thank you so much Jennifer for sharing your strategies with us!
Photo courtesy of Jennifer Hewitson.