Get Organized
Dealing with Receipts
Question: My husband and I are just starting a home business and I am responsible for handling the receipts and the daily journal. My question is: Do I separate the receipts into categories for the whole year or by month in categories or do I put all of January's bills in one pile and February's in another pile etc. My aim is to save time for income tax time. I want to do it right from the start.
Gisele
Answer: The first thing you need to do is run this question by your accountant. If
you don't yet have one, find a good one that has been recommended by a
trusted friend or colleague. It's well worth the investment you make for a
short amount of their time to save you hours of your time later! Your
accountant can tell you exactly what to save, for how long, and just what
you will need come tax time.
As for the daily paper shuffle, you have a couple of choices for your set
up. If you want to balance your books each month, either manually or using
financial software, the monthly file will work for you. After balancing your
books, reconciling receipts with bills, and so forth, you can then file away
your processed paperwork by categories. Be sure to keep these in a nice fat
folder or hanging file system labeled especially for your taxes so they
don't get mixed in with other generic files.
If you prefer to balance your books quarterly rather than monthly, go ahead
with your file categories as you go. Travel expenses, payables, clients, and
so forth can easily be divided according to tax classes. Once you do your
taxes, you'll get a better feel for what you can write off and what you
can't, which categories you need to pull for documentation, etc. But of
course planning now for success is a wonderful way to jumpstart your
business' financial system.
For detailed information on taxes and documentation, be sure to visit the
IRS online- they have a very user-friendly website and if it's not tax
season, can answer your questions by phone. Feel free to run your questions
and ideas by experienced businessmen and women, such as those who volunteer
at S.C.O.R.E. And for additional organizing information, I highly recommend
"Taming The Paper Tiger at Work" by Barbara Hemphill - she's an expert in paper
management.
Good luck,
Debbie Williams
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