A drawer full of receipts can seem like a waster of time to many business owners. However, there’s a hidden treasure in these receipts as they can be used for myriad claims resulting in huge savings. Most people would dispose of these receipts as they don’t want to go through a painstaking process of organizing them, but these are worth storing.
There are countless reasons why you should keep receipts, especially if you run a small business. Organizing them category-wise into neat folders can do wonders for your accounts. Savvy business owners know these can bring money back to their accounts when turned over to the accountant during the tax season.
Receipts offer audit protection and must be taken seriously. Here’s why you must store these receipts safely.
- Refund – There’s no refund if you don’t carry the receipt with you at the store. Receipts ensure the hassle-free return of goods/products.
- Reimbursements – Most companies have reimbursement policies for their employees. It allows the employees to claim reimbursements for various tasks performed as part of their job profile. For example, fuel reimbursement and hotel room reimbursement can be claimed using a receipt.
- Verify with Credit Card – Technical errors can lead to exaggerated bills sometimes. So, it is ideal for matching your receipts with credit card bills to avoid glaring mistakes.
- Claim Tax Reductions – Even in today’s online tax era, receipts carry a lot of importance. When the tax season starts, you will be thanking yourself for preserving receipts as they are crucial for auditing.
- Warranty and Guarantee Claims – It is easier to claim a warranty or guarantee with a receipt in hand. A receipt is the most genuine proof that you are the owner of the product.
- Budgetary Record – Maintaining an annual budget is the key to success for every small business. In the long run, you will be glad that you saved those receipts in the very beginning.
Essential Tips for Receipt Maintenance and How to Benefit From Receipts
- Receipt Maintenance – Create a dedicated folder for all the receipts and, if possible, assign a specific drawer. Build a systematic receipt storage process and categorize them as per the timeline for efficient auditing.
- Classify Receipts – Every receipt must mention its purpose. For example, you can categorize them as per the activity, such as dining, supplies, stationery, office supplies, and more.
- Scan receipts – If possible, keep a digital record of all the receipts in possession. Small businesses must maintain a digital record for the past five years. The same can also be shared with the authorities for auditing in digital mode.
- Electronic Pictures – Take pictures of essential receipts on your smartphone and back them up on cloud storage. This gives you access during emergencies and helps in quick auditing.
- Choose Digital Receipts – If the source allows, choose a digital receipt. Choose the email option if available.
- Avoid Cash – Tracking cash can be hard, and it also creates accounting nightmares. Receipts are an ideal choice for efficient auditing and help during the tax season.
Receipt Management Can Do Wonders to Your Small Business
Receipts can ward off IRS nightmares as they help you organize your auditing activities. Small business owners must pay attention to receipt management tips to boost their savings.
At SkySmart Accounting, we help you organize your receipts to achieve maximum savings during tax audits.