All the "stuff" | Productivity
01 July 2021
Speak with any small business owner and chances are they’re facing a similar frustrating challenge: organizing receipts.
Filing receipts and invoices is not only time consuming, it’s simply no fun.
Plus, to make matters worse, storing receipts has become increasingly complex. In the world of digital receipts, some are now sent via email, others are messaged over text and the rest are available by logging in to various accounts. Gone are the days of purely paper receipts.
So, how is a busy business owner supposed to keep up with growing clutter? What are the best ways to file, store and organize receipts? And how can you set up a receipt filing system that prepares you for tax time?
If you’re struggling with any of these questions, we’ve got you covered.
In this article, you’ll learn:
- Top reasons to hang on to receipts and store them properly
- Why you should consider using an electronic filing system for receipts
- Tips on how to set up a receipt organizing system that works for you
Why You Should be Keeping Your Receipts
Whether you have an accountant or you take care of your books yourself, you probably know that keeping receipts is important for your business.
Come tax time, you’ll want to have documentation of your expenses should you get audited. However, there are other reasons why you should hang on to receipts, including:
- To track the progress of the business
- To monitor financials and help with the preparation of statements
- To know where money is being spent and how much
- To record deductible expenses and purchases
- To support tax returns and proof of purchase
Most of the advice out there says you should keep receipts for at least 3-7 years, depending on the type of record and your line of work. It’s best to get a professional opinion and air on the side of caution, since you never know when the IRS could come knocking!
Remember, when it does come time to trash your receipts, you should shred anything that has personal information on it like your name, address, phone number, bank number or other data. That includes ATM receipts, deposit receipts, delivery receipts, airline tickets and more.
Why Electronic Filing is Perfect for Receipts
Are you tired of keeping folders of paper receipts that fade over time? Are you looking for a more modern approach for organizing your receipts? If so, electronic filing is your answer.
Digitizing and storing receipts electronically is not only encouraged by the IRS for ease of access, but it also has a lot of benefits for you.
- You can declutter your desk and filing cabinet. Whether you’re on a mission to organize your life or simply clear more room at your workspace, digitizing receipts means no more loose paper floating around that can be lost and forgotten.
- You’ll be able to find things faster. That’s right, no more rifling through shoe boxes of receipts looking for that purchase you made 8 months ago. When you store your receipts electronically, you can search and access them faster.
- You’ll have better records for tax time. Receipts printed on heat-sensitive paper fade over time. They’re also at risk of being lost should you experience the unexpected like fire, flood or theft. The IRS allows you to use any storage system to retain receipts, providing they’re clear, accurate and include all of the required information.
How to Organize Your Receipts
We’ve discussed why you should keep your receipts and why electronic storage makes sense. Now it’s time to look at some tips on how to set up a receipt organization system that works for you.
Here are 5 methods you can use to organize your receipts and invoices for good:
1. Try the shoe box method
This is a tried and true traditional method for keeping paper receipts organized. There are many variations, but the common method is to find a shoe box, put envelopes inside labelled by month or expense type, and file your receipts in the envelopes as you receive them.
The size and shape of the shoe box make it perfect for stashing away under your desk, bed or in a closet.
Variations on this method are practically endless but some common ideas include using an accordion folder, glass jars, a hanging folder or a classic filing cabinet.
The trick with this method is to file your receipts as soon as you receive them. For it to work well, you need to make it a habit.
2. Set up a “To File” folder
If you don’t think you can keep up with the frequency required for the shoe box method, you can add a precursor step to it. To do this, find a file folder (or another shoe box) and label it with the words “to file”.
Each time you get a receipt, pop it in your “to file” folder. Then, every 2 to 6 months, go through the folder and file each receipt in its proper place in your shoe box.
3. Download a receipt scanning app
Both of the methods discussed so far have worked well for many people over the years.
However, they don’t eliminate the challenge of clutter or faded receipts. That’s where receipt scanning apps come into play. Receipt scanning apps use smart technologies, like OCR (optical character recognition) to digitize your paper receipts, so you can store an electronic version for years to come — and shred the paper one.
There are lots of receipt scanning apps available for download for both Android and iOS, and many of these apps are free. Some popular choices include Expensify, Receipts by Wave, Shoeboxed and Veryfi Core.
4. Create email folders for electronic receipts
Are more and more of your receipts being sent to you as emails? This is a common trend being used by everyone from utility providers to big box stores.
To avoid scrambling at tax time, try setting up a series of folders in your email account. This could be done by year, or by category, such as:
- Meals & Entertainment
- Professional Services
When you receive an email receipt, simply file it under the appropriate folder. Don’t like folders? The same idea can also be accomplished using tags, depending on your email platform. You can also set up rules to automate the filing process.
5. Let Charli take care of it
If you’re like most of today’s business owners and you have both paper receipts and electronic ones to deal with, it’s probably time to find a system that is more powerful and flexible. That’s where Charli comes into play.
Just like an IRL assistant, Charli is an app that uses AI to intelligently scan and understand receipts (paper and electronic) and then smartly file them on your Google Drive, making them super easy to find again.
For a paper receipt, simply snap a picture of it with your phone and send it to your Charli app. You can include tags if you want, or leave all the work up to Charli. Charli will extract the important information, create any necessary folders on your Google Drive and file the receipt in a place that makes sense.
When it comes to electronic receipts, the process is similar. For these, you simply forward the emailed receipt to Charli and Charli will extract important information from it, create a digitized copy of it and save it to the right spot on your Google Drive.
Charli will even turn those receipts into a spreadsheet. With a couple of clicks you can ask Charli to generate an expense report in Google Sheets, making it even easier to share your expenses with a bookkeeper, accountant, or admin assistant.
With Charli, you’ll have all your receipts in one place — and easily findable — plus you’ll love the added benefit of an organized Google Drive. It’s win, win, win.
Don’t Be Afraid to Toss Those Receipts!
If you’ve digitized your receipts and stored them in a safe place, you can now shred your paper receipts.
Goodbye clutter, hello organized business.
Organizing your receipts and setting up a filing system that works for you isn’t so hard — especially when you use the right tools for the job.
With a little effort to develop a streamlined process, you’ll be clear sailing for years to come!