What’s the best way to organize your receipts? Since I’ve been an entrepreneur since I was in my early 20’s and now own multiple businesses, this is a question I’ve often asked myself. Another little known fact about me is that my dad (now retired) is a Certified Public Accountant (CPA), so I think a lot more about taxes than the average person.
As a freelancer, it’s vital that you save and keep track of all of your receipts. Having these receipts come tax season means you’ll be able to deduct those expenses. If you don’t have all of your receipts when it’s time for taxes, then you could be missing out on some savings.
However, saving all your receipts in a single drawer isn’t going to help you much. You need to know the best way to organize receipts to optimize your savings come tax time. Continue reading below for a few ideas of how to do just that.
Keep Copies
Because you’re a freelancer, it’s your responsibility to keep track of all of your income, expenses, and receipts for anything else as well. You’ll need proof of everything and this comes in the forms of copies, not notes or records. Keep copies of everything.
This includes your receipts, checks, invoices, and more. Make both physical copies and digital ones. Keep the physical copies in an organizational binder or drawer.
Keep your digital copies on your mobile and at-home device for easy access no matter where you are.
Separate Business from Personal
Now that you have copies of everything, you’ll need to separate your business receipts from your personal ones. One great way to do so is to have a separate credit card for your business expenses. A good time to invest in a credit card specifically for your business expenses is about one year after you begin freelancing.
You’ll find this tip to be very helpful for keeping personal and business expenses separate. Do keep in mind that if you have your personal card linked to any account such as Amazon, then you’ll want to link your business card to these accounts as well. This way you don’t accidentally charge your personal card for business expenses.
You can also consider creating your own spreadsheet to keep the two separate.
Use Categories
Instead of waiting until tax season to begin placing your receipts into categories, know and use these categories while organizing your receipts now. For example, if you file your taxes online using a tax filing tool when you get to the deductions section, it’ll list several different business expense categories. These categories might include office supplies, transportation expenses, advertising, and more.
Know what these categories are and begin placing all receipts into the correct section as you receive them to save yourself time and stress.
Utilize Excel
Although Excel isn’t something that’s taught as much in school, it’s an effective tool for documenting your receipts. You can also use Google Spreadsheets, which works just as well. These tools allow you to create columns for your expenses such as travel, office utilities, marketing, office rent, and more.
When using these tools, however, you’ll still need to have backup copies of all your receipts. These tools help you organize the expenses, while the physical receipts show proof.
Utilize Technology
Advances in technology surprise us every day. With that being said, you should consider taking full advantage of the technology created to help you keep track of your expenses. An app like Shoedboxed is one tool that works on your mobile device and on your desktop.
This app has features that allow you to take a picture of your receipts and then records and categorizes them for you. Another great feature is that it also tracks the miles that you travel for work each day. If you have a large number of receipts and the thought of taking a picture of each and every one of them is overwhelming, then you’re in luck.
For an added fee, you can send all of your receipts out to the app’s headquarters. Here they’ll do all of the dirty work for you. They’ll record them and categorize them into a spreadsheet!
Go Old School
The last way that you can organize your receipts is by going old school. That’s right: a pen and paper. This way doesn’t keep your records as neat as the other options, but some people don’t care for technology and like to avoid it when possible.
To go old school, you can purchase a spiral notepad and tape one receipt to a page. On the page, be sure to add any important notes about the receipt. If your receipts are a bit crumbled and out of shape, you can copy them with a copy machine and place the freshly printed receipts into a notepad or in a filing cabinet.
Don’t Wait Until It’s Too Late
No matter which idea you’d like to use, it’s important that you don’t wait until it’s too late. Start sorting, categorizing, and organizing your receipts as soon as possible. Don’t get used to throwing them into a bin or pile and telling yourself you’ll come back to them later.
By the time tax season comes and you have no choice but to begin sorting, it’ll be quite overwhelming. With that being said, whenever you have any type of business expense, put it in its rightful place immediately. It’s a task that only takes a couple of minutes but will save you much more down the road.
Know the Best Way to Organize Receipts!
Do you know the best way to organize receipts as a freelancer? I hope that you have some good ideas of how you want to start organizing after reading this blog.
Most importantly, keep your business separate from personal expenses, make copies of everything, and find the tool that works best for you.
If you found this topic helpful, then you’ll enjoy reading other posts on this blog.
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