If you plan to list deductions when you file taxes, then documentation is vital and so is organizing business receipts. Without documentation to back up your claims, you leave yourself at risk should the IRS select you for an audit. But if you aren’t wanting to live your life underneath a pile of receipts, organization is key. Below are some tips for organizing business receipts.
It is so tempting to cut down on the receipts you keep, but this would be a big mistake. Even if you have already filed your taxes, even if the receipts are years old, keep them. Unlike most areas of life where decluttering would be a great idea, when it comes to business receipts, you never toss them.
To help keep things clear, make notes on the actual receipts, by either writing on them or stapling a note to the receipt. This will help you should you need to make sense of them in the future.
Remember how we said not to throw any business receipts away? Well, the exception to this rule is if you go digital. You can either scan the receipts, or, if you have a good smartphone, take pictures. Just be sure that you are organizing these online in the right folders on your cloud.
While cloud storage eliminates many issues with data loss, it isn’t foolproof. Be sure you are keeping your scans or pictures in more than one location so that everything is safe and available to you in the future.
Dividing your receipts into folders is really just the first step in organization. If you have a high volume of receipts, you will need more than just folders to make sense of them. Use tags if possible, and rename files do that they are descriptive. This will make it much easier to find the specific receipt you need.
Do you have tips for organizing business receipts? Share them with us!