Where do you store your piles of receipts? A box? A drawer? A cabinet?
Maybe you have them nicely organized. Now what do you do with the filing cabinets of invoices, bills, and receipts?
Receipts and documents are one of the most necessary nuisances you’ll find in the world of business today. Everyone knows they need to keep them, but few know of a reason for keeping them, or use an effective system that doesn’t eat loads of their time. As I talk to business owners in a variety of professions, many of them come up with a statement that sounds like a confession, “I have a receipt box (drawer, desk, car)”.
Why Keep Them?
Business owners are aware that receipts are important to keep, but why? Why must they be stored and organized seemingly forever (Really only 3-6 years). The IRS defines receipts, invoices, purchase orders, paid bills, deposit slips etc. as “supporting documents”. Thus named because they support your business’s books. Supporting documents can include anything that relates to financial activity from your business. There needs to be proof that what is being recorded in your bookkeeping software has actually happened. Proof that what is being recorded is accurate and true.
Will this ever be checked? It depends on your industry and the size of your business. If you are ever audited, you will need proof to back up your bookkeeping. If you don’t have proof, you could end up in serious trouble with the IRS. “Better safe than sorry” is the mantra to go by when it comes to this documentation. Plan on keeping anything from your business and you’ll be in good shape in case of an audit.
Recycle Those Shoeboxes
You definitely need to keep your “supporting documents” and these days there is definitely a better way than a shoebox or a drawer. There are multiple apps/websites that have been developed solely to help you keep your documents without having to hold on to the paper copy.
My favorite is Hubdoc. For a relatively low price (lower if you subscribe through your bookkeeper or accountant), Hubdoc allows you to take pictures or email links of all of your supporting documents. Received an invoice in your email? Simply forward it and it will be saved on Hubdoc’s cloud storage. If you buy office supplies at the store, snap a picture of the receipt and throw it away.
Hubdoc stores everything online in it’s secure cloud storage (and connects to QuickBooks or Xero) so you and your bookkeeper, accountant, and any other team member can find all of your documents online. You can even connect it to your utility providers, bank accounts and more to get all of your documents in one place. Once online, you can organize all of your documents in folders so you can find them easily when you need to. The best part is that you’ll never need to save another piece of paper.
Another possibility is to use your bookkeeping software. Both QuickBooks Online and Xero allow you to snap pictures of receipts through their app. You won’t be able to track and keep quite as many types of documents, but you’ll still be able to keep track of most of the necessary documents for no added fee.
There are also a number of apps that will do similar services such as Shoeboxed, Evernote, and Expensify. Just make sure they connect to your bookkeeping software easily so that you don’t need to do the extra step of matching your receipts to the correct transactions.
With so many options it’s an easy decision to start using one of these services to start tracking your receipts. They’ll save you from possible trouble with the IRS, while also giving you a huge “level up” in both organization and the quality of your supporting document storage. The first step is saying goodbye to that not-so-trusty shoebox/desk drawer “organizer”.
What’s your receipt horror story? Leave it in the comments below.