Seven Business Records Management Tips

Last week I had a reminder on the importance of keeping your business receipts properly filed.

My sister and brother-in-law received every small business owner’s worst nightmare...an audit letter from the government. To make matters worse, they couldn’t find all of their business receipts and some that they could find...they couldn’t explain what they were for.

The IRS’s response...”We don’t care if your cat ate your receipts...without them...you cannot take the deductions and you now owe us money...lots of money”.

Here are some business records management tips to keep in mind:

Tip #1: Keep your personal and business expenses separate.
One task that is very important in good business records management is opening a separate bank account for your small business. Do not pay your personal expenses out of this account. If you need money from your business for personal expenses write yourself a check or transfer the money into your personal bank account.

Tip #2: Always get a business receipt.
Get into a habit of always asking for a receipt. Even if it is just for a couple of stamps...get a receipt! Those small expenses will add up and no matter what you purchase...you need receipts to back up your deductions.

Tip #3: Always look at your business receipts.
Get into a habit of looking at your receipt as soon as you get it. Sometimes your receipt won’t print off properly. Fill in any missing information. Always write or circle the date on it too. If it was a dining receipt, flip it over and write the name of the client or business associate you met with and the purpose of the meeting.

Tip #4: Keep track of your business receipts.
Have one special place to put your receipts as soon as you receive them. For some people this may be a compartment in their wallet or purse. For others it could be a pocket in their day planner, a compartment in their laptop bag, or a special place in their vehicle....just as long as you get in the habit of putting your receipts in that same safe place every time.

Tip #5: File your receipts promptly.
Every day or at least once a week...take those receipts you have put in that special place and file them.

Do not just stick them in your desk drawer. If you have a very small business, you can file them in an accordion file separated into the 12 months.

You can staple or tape small receipts on to copy paper and write out to the side: when, where, and why you bought that particular item. Then file them into a file system that works best for you.

One way is to organize them in a series of file folders labeled by the month and year such as “Receipts July 2010”. You can keep this month and even last month’s on your desktop for easy filing and data entries.

Another way you can manage your business receipts is by filing them into categories such as office supplies, advertising, utilities, etc.

See this page for more ideas on filing and retaining your business receipts.

Tip #6: Enter your receipts into your accounting software often.
Most important business records management tip! Don’t let those nicely filed receipts stack up. Enter them into your accounting software at least once a month. I put a small check mark in the corner of my receipt to indicate that I have entered it into my accounting software.

Tip #7: If you hate filing and data entry as much as I do...try Shoeboxed
This is a company I wished I would have known about years ago. You simply stuff all your receipts and/or business cards into a pre-addressed envelope, or take a picture of your receipt with your phone, or forward on all your email receipts such as Amazon to Shoeboxed and they scan it, categorize it, and organize it into your online secure account. No more worrying about filing your receipts!

You can also integrate your Shoeboxed data with their growing number of partners including FreshBooks, Outright.com (my favorite free online bookkeeping), Evernote (my favorite free small business software), Bill.com, BatchBook, Constant Contact, and many more. Sweet!!!

Best of all, Shoeboxed receipts are accepted by the IRS, so if you ever found yourself in the sticky situation my sister is in, they would provide you with all your required receipts.

For a limited time...save $10 on any Shoeboxed Mail-In plan.

Whichever method you use for your business records management, do it faithfully. It will end up making your life a lot easier...especially come tax time.

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