34: Managing Receipts Physically And Electronically In Your Business Whether You Are Starting A Bus
34: Managing Receipts Physically And Electronically In Your Business Whether You Are Starting A Business, You Are Self-Employed, A Solopreneur, Entrepreneur, Small Business Owner, Virtual Online Bookkeeper, Virtual Assistant Or VA
When you think about a paperless business, does this sound like a dream come true, or do you view it more as a nightmare? There are many businesses that don’t even offer a paper receipt anymore. So, when you don’t have a receipt, how are you supposed to even manage it? My clients will ask me about the best way to manage their business receipts, and unfortunately, my answer is normally: It depends. I know this isn’t a good answer, and it surely isn’t what the client wants to hear, but the main reason for the unclear answer really is because every business is unique, and every business owner is unique. I always talk to my clients to see what the best option is for them. I want to make sure the option they select is something they are able to do, and they are consistent. Your overall goal when setting up a system to manage your receipts should be to make it as simple as possible while developing a system where you will be able to find your receipts when needed. Today I am going to talk about the best ways to manage your receipts using paper and paperless options whether you are using a software like QuickBooks or Xero or you do your bookkeeping manually. If you feel like this is an area in your business where you struggle to have a good system in place, or if you already have a system in place, but wonder if there is an easier way to manage your receipts, you definitely want to listen in. This episode will be helpful for you whether you are just starting your small business, you’re a solopreneur, entrepreneur, small business owner, virtual online bookkeeper or virtual assistant. Every business has receipts they need to manage, and after this episode, you will be able to decide which system will work best for you to be able to locate your receipts easily when you need to…
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When you think about a paperless business, does this sound like a dream come true, or do you view it more as a nightmare? There are many businesses that don’t even offer a paper receipt anymore. So, when you don’t have a receipt, how are you supposed to even manage it? My clients will ask me about the best way to manage their receipts, and unfortunately, my answer is normally: It depends. I know this isn’t a good answer, and it surely isn’t what the client wants to hear, but the main reason for the unclear answer really is because every business is unique, and every business owner is unique. I always talk to my clients to see what the best option is for them. I want to make sure the option they select is something they are able to do, and they are consistent. Your overall goal when setting up a system to manage your receipts should be to make it as simple as possible while developing a system where you will be able to find your receipts when needed. Today I am going to talk about the best ways to manage your receipts using paper and paperless options. If you feel like this is an area in your business where you struggle to have a good system in place, or if you already have a system in place, but wonder if there is an easier way to manage your receipts, you definitely want to listen in. This episode will be helpful for you whether you are just starting your small business, you’re a solopreneur, entrepreneur, small business owner, virtual online bookkeeper or virtual assistant. Every business has receipts they need to manage, and after this episode, you will be able to decide which system will work best for you to be able to locate your receipts easily when you need to…
Welcome Back…Receipt management for your business once you have the proper processes in place will not only help you organize your receipts, but once you have a smooth process in place, you will also find yourself saving time. Saving you time from struggling to decide how to file your receipts, as well as saving you time when it comes to looking for them in case of a return or even an audit. Even just a few extra minutes of time will add up over the course of a year, and who wouldn’t mind adding some extra time to their day?
One of the first questions I get from business owners is if they should be saving their receipts physically or electronically. The answer here really depends on what is easier for them. I have some clients who are on their computer all day long, and it is easy for them to create an electronic version of their receipt management system, but others may not be in the office much and struggle every time they come in contact with a computer. The first thing I want you to ask yourself is how comfortable you would be with an electronic receipt management system. If you feel like this would be something you would struggle with, then I would recommend you continue to use a physical receipt management system, but I am going to cover both in this episode. Again, your main goal when deciding on which process will work best for you is to be consistent, make sure you are following it, and you capture all of your receipts. You could have an amazing process set up, but if you are never following it, you will have a disaster when it comes to the end of the year. Be honest with yourself here and make sure you select the option that works best for you.
We’ll start with the physical receipt management systems. Physical receipt management systems would be having an actual paper copy of your receipt to file for your records. I normally divide the physical receipt management systems into two categories. One would be to keep your paper receipts by month and the other is to keep your receipts by vendor. When you keep your receipts by month, you would have a folder for each month of the year and as you accumulate your receipts, you would file them in the month they are incurred. When you are done with the year, you would the store that years’ worth of records so that they are available if or when you need to look back for any reason. I also recommend when you are doing your monthly bank account reconciliations and closing out your month, you print out copies of your balance sheet and profit and loss report when you have all your transactions entered if you are using a computerized software system such as QuickBooks, include your bank statements and any other relevant information for that month. If you have a bookkeeper helping you, you can ask them for these reports on a monthly basis, and if you are doing your bookkeeping manually, you can include your bank statements and any reports you generate in that monthly file as well. Your goal here is to try to have all the information in one file per month that you can quickly look back on if necessary. You will have the proper documentation for any transaction that happens within that month all within that one file. This will make it simple for you to look for any documentation you need as long as you know the date that the transaction was incurred.
The second option for physical receipt management would be to keep a file by vendor name or an alphabetical vendor filing system. In this method, you could start with a folder for each letter of the alphabet and start filing your receipts in the appropriate folder. If you find you are using a specific vendor multiple times a year, you may want to have a file set up just for that vendor. You would set this system up to encompass one year’s worth of information as well, and when the year is over, you would start with a new set of folders to keep your receipts in. When you file your receipts in this manner, it is still important to keep your financial reports by month, so you may want to have a separate folder to store these reports as well. Your goal with this system again is to be able to file your receipts quickly and when needed, you will be able to locate your receipts by finding the folder that would contain the appropriate vendor. One key thing to remember with both of these physical options is to make sure you have a copy of your receipts. So, when you are asked, would you like a receipt? You need to say yes. If there isn’t an option to get a printed receipt at the time of purchase, make sure you have your receipt emailed or capture a photo of the receipt that you can print at a later time to get into your receipt management system. I know this is hard to do since not all vendors ask if you even want a receipt, but most times when you ask for the receipt, they should be able to provide it to you, and this will be your responsibility to make sure you get a copy for your files.
Ok, now that we covered how to handle your physical receipt management, I am going to cover how you can do this electronically. Very similar to how the physical receipt management system worked, you will be able to replicate this electronically. You can purchase receipt management software if you are interested, but I normally tell my clients this is something you can do right on your computer without having to purchase any software, but you will need to have a good scanner, and you will want to make sure when you scan any receipts that you are able to read the full receipt. I recommend you make a separate file on your computer and call it something like receipt management or something similar that you will know how to find it. Once you have this folder set up on your computer, you will then want to set up a separate folder for each year you are doing your electronic receipt management for. This will help you to find your receipts easily as long as you know which year they were incurred. Next, you have a couple of options. Again, much like the physical receipt management system, you can set up folders within the year by month or you can set them up alphabetically so you can save your receipts by vendor. It doesn’t matter which direction you go, but you do want to be consistent to help you create a good filing system. Once you have the folders set up on your computer, you will scan your receipt and save them to the appropriate folder, either by date or by vendor. When you save them, I would recommend saving the document with the vendor’s name and the date of purchase as the file name. This again will make it easy for you to find your receipt without having to open a million documents looking for a specific receipt. Once you have the vendor’s name and the date, you should be able to find your receipts fairly quickly. I also recommend that you save a copy of your financial statements and your bank statements electronically if you are using an electronic receipt management system. It is just nice to have all your documents readily available in the receipt management system you choose. You can do this by scanning your documents and saving them in a file in they year you are saving all your receipts. One last thing regarding the electronic receipt management system. Make sure that you have a good system set up for backing up your files. If this is the only record you have of your files, you don’t want to lose them if you happen to have a virus or your computer crashes.
No matter which receipt management solution you are using, it is beneficial to make a note on each receipt so that you are able to remember exactly what the receipt was for. Make sure you do this prior to scanning your receipt if you are using the electronic receipt management system so that your notes show up on your scanned receipt. These notes will be especially important if it is a meal or entertainment expense as well as anything that is out of the ordinary. If it is a meal or entertainment expense, you should note who you were with as well as the reason you incurred the expense, or the business purpose.
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