Expenses are a major part of most small business owners tax filing preparations each year, and you can never be organized enough when it comes to keeping track of them. If you spend hours searching through drawers, boxes and cupboards for receipts, then you can be confident that your ‘system’ requires updating. Fortunately, updating an ineffective expense tracking system is not difficult, it’s more about developing good habits and sticking to them throughout the year.
No matter how disorganized you are, here are two handy tips to help you keep better track of your expenses:
- Put all your receipts into portable filing cases:
Dumping a box full of receipts onto your accountant’s desk and expecting them to spend their valuable time (and your hard-earned money) sorting through them all, is not the way to go and will create problems for both you and your accountant.
Instead, as you get each receipt, pop it neatly into a portable filing case, and preferably, have a separate file for each month. That way your accountant can focus on getting you the most deductions and can do so in an orderly fashion. Essentially, you want to pay them for their tax expertise, not their sorting skills.
Be sure to label files clearly, so that not only are you certain of what each file contains, but your accountant will be, too.
- Segregate your business and personal expenses:
Such a simple concept, yet one that so many tax payers forget, or cannot be bothered, to do. One set of folders should be for your business-related expenses, and one should be for all personal expenses. There are a wide variety of suitable filing systems available on the market to help you store and organize your receipts, so finding one should not be an issue.
There are few excuses for keeping poor track of your expenses, and while you may occasionally forget to keep hold of a receipt, or forget to collect it from the cashier, once you’ve got it in your head that you need to keep them, most will be able to do it. Keeping them in an organized and orderly fashion is where most will slip up, but gradually it will become a habit, and when you see how much easier it makes life for your accountant, you’ll be further encouraged to be better organized.