What is a Bank Transaction Receipt and its Benefits for Your Business

Whenever you visit a bank and make a monetary transaction, such as a deposit or withdrawal, the bank will provide you with a bank transaction receipt. This is how banks keep an accurate and up-to-date record of all financial transactions conducted at a given location by various account holders. 

Since this financial term is used in many situations in daily life, it’s good to have a basic understanding of bank transaction receipts and how your business can benefit from them. 

What is a bank transaction receipt?

A bank transaction receipt (also known as a bank receipt) is a standard form of documentation for most financial transactions. Customers who go to banks or other financial institutions to conduct any monetary transactions should expect to receive a bank receipt for these transactions. 

Besides transactions involving deposit accounts, these receipts are also sent to customers who make loan payments, credit card payments, and conduct other similar types of transactions. Bank transaction receipts are also given to businesses that conduct financial transactions at a given bank or financial institution. 

Banks also keep their own copies of bank transaction receipts. This ensures thorough record-keeping for all financial transactions for each of their various account holders. These receipts are also a form of collateral. If a customer makes a request, the bank will have a detailed record of the transaction to refer back to. Whether a bank employee makes an error or an account holder miscalculates a portion of the transaction, bank transaction receipts make it much easier to resolve disputes. 

In the past, bank transaction receipts were paper slips. However, in recent years, many banks have begun to offer digital copies of receipts (by email,  text message, or other methods). 

Using digital receipts rather than paper receipts enables the bank to save on printing costs. Digital receipts also provide convenience for account holders as they no longer have to keep track of numerous paper receipts. 

Bank transaction receipt details

A bank transaction receipt contains detailed information about a financial transaction conducted at a particular bank. The form of the receipt may vary by bank or institution, but all bank transaction receipts must include these essential details: 

  • Bank account numbers
  • Account holder name(s)
  • Date of transaction
  • The total amount of the transaction

Sometimes a bank transaction receipt will even include detailed information such as the employee number of the bank employee who conducted your transaction. 

How to use bank transaction receipts for bookkeeping

Given the importance of bank receipts to businesses, you can make use of these documents and turn them into a helpful tool for your bookkeeping practices, either for personal or business expenses. In fact, many banks and other financial institutions recommend balancing your account books on a monthly basis and referring to your bank transaction receipts throughout the process. It’s common to go over monthly bank statements and cross-check this information with all of your bank transaction receipts that you have collected for a given month. 

Even if you hire a professional accountant to track your personal or business finances, they will request a copy of your bank transaction receipts. Bookkeepers use this information to track your income, expenses, and other financial transactions impacting your cash flow. This financial data helps keep an accurate and real-time record of your financial activities. 

Bookkeepers also use bank transaction receipts for data entry purposes to track your credit card payments, which can help you control your spending. Bank transaction receipts can even help you improve your credit score over time with good bookkeeping practices

Some people prefer to use receipt tracking mobile apps that automatically track this information in real-time instead of working with an accountant. You’ll no longer have to keep a hard copy of your bank transaction receipts by using mobile apps, as this information is readily available on your mobile device. You only need to make sure that you store these physical copies of your bank receipts before uploading them into a cloud-based system. After scanning your documents with a versatile mobile app, you can free your desk and drawers from piles of paper receipts and keep them for years!

See more: 5 Best Receipt Scanner and Organizer Apps for Small Businesses in 2021.

How to use bank transaction receipts for taxes

Bank transaction receipts can be very beneficial when preparing for tax season. To work on the tax reduction process, first, you need to collect all proof of purchases for your business expenses. Next, you need to find the right tax form and fill in all the details. The last step is to submit the form and then you’re good to go. 

Business owners can use their bank transaction receipts to balance their accounts. You can do this by reviewing the monthly bank statement and comparing the amount and transaction dates of items listed on the statement with their bank receipts. 

Typically, businesses will keep their bank receipts until the end of the year for tax preparation purposes. Individuals who claim tax deductions for certain types of expenses must also keep copies of bank transaction receipts to prove that they qualify for deductions related to banking transactions, such as interest charges or mortgages.

The bottom line

Bank transaction receipts, along with business plans, marketing strategies, and financial reports, are essential documents for all businesses. Keeping and managing these documents properly can help track your business’s financial performance, solve disputes, keep the bookkeeping up to date and even claim tax deductions with ease. A simple yet effective way to achieve this is to digitally scan and store your important documents. 

Shoeboxed is a painless receipt-scanning and organizing solution for freelancers and small business owners. After scanning your receipts with the Shoeboxed app, our OCR engine will automatically extract the most important data points and automatically categorize them by vendor, total spent, date, and payment type. After that, our staff will double-check to ensure that all of your data is human-verified, categorized, organized, fully searchable, and available on any device. Shoeboxed keeps your bank transaction receipts in a safe place with high accessibility. 

See also: How To Scan A Receipt Digitally With The Shoeboxed App.

The Shoeboxed app is available on iOS and Android. You can try Shoeboxed for free before choosing the perfect plan for your purposes!

5 Tips to Control Your Business’ Expenses

“You have to spend money to make money”, that’s undeniable. Before a business can gain profit, it must first invest in designing your office space, equipment, etc. Unless you’re a fully remote business otherwise, you also have to spend money to rent an office and hire employees. There are budgets for marketing and sales campaigns too. 

Expenses are a necessary part of any business. But if you don’t control your expenses, chances are you’re likely to run out of funds. Worst case scenario, your company is deep in debt. That’s why it’s always important to have some plans in place to control your expenses. 

Do you know what exactly business expenses are and how to control them? If you have to think about it for more than a minute, it seems like you don’t really have a good grasp on it. No worries. We’re here to give you insight into business expenses and tips to control expenses better. 

What are business expenses?

Business expenses are costs required to run a business. It could be anything from the money you pay to rent an office to the funds for your employees’ training courses. Knowing types of expenses allows you to classify your expenses into the right group and manage them better. 

Typically, these expenses are categorized into three groups: fixed, variable, and periodic expenses. Fixed expenses are costs that remain constant for a period of time, such as rental, employee salaries, or interest charges. Variable expenses, on the other hand, are costs that fluctuate over a period depending on the situation. Examples of variable expenses are raw material and direct labor costs. Periodic expenses incur less frequently than fixed or variable expenses. They’re payments for some special occasions such as education fees or travel expenses. 

5 tips to control your expenses better

1. Make plans and stick to the budget

Doing business is like a running marathon, not sprinting. Aim for long-term progress, and don’t expect sudden good luck to carry you through. You need to understand your company’s mission and vision, evaluate where your business is now and where you want to take it in the future. 

A thought-out road map is essential to forecast expenses and allows you to stay within budget. For example, if you want to expand your business to other countries in the next year, you’ll need a plan with clear goals and budgeted expenses. 

2. Manage fixed expenses

Fixed expenses are costs that remain constant throughout a particular period. The reason why these expenses stay unchanged is that they are not directly associated with manufacturing or the business’s performance. As a result, fixed expenses are considered to be indirect costs. 

To determine the fixed costs, think of the expenses you have to pay whether or not your company operates. For example, due to the outbreak of the Covid-19, many companies are being forced to shut down their operation temporarily. Though there are no operating activities, businesses still have to pay for fixed costs such as rent and interest charges. It’s important for business owners to understand the incurred expenses to manage and control them effectively. 

Fixed costs are more controllable than variable costs. As a result, managing those expenses is less stressful and you can be more flexible if anything happens. Because fixed costs such as rent are established by contract agreements, if the landlord wants to charge higher rents in the future, they will have to notify you in advance. You’ll be aware of this change quite some time before it happens, thus coming up with different plans to deal with it. 

3. Manage variable expenses

Variable expenses are costs that fluctuate from month to month. The payments you make in a given month could be different from your earlier bills or ones you’ll make in the future. Managing variable costs is no easy game for business owners. Therefore they have to understand the dynamics of these costs to stay competitive. 

Variable expenses are costs that are associated directly with business activities. These costs are also known as manufacturing costs. They include raw materials, inventory, and direct labor costs. 

Manufacturing costs rise either when the production goes up or costs of material rise. If manufacturing expenses and production volume go hand in hand and increase simultaneously, the business is more likely to witness a profit. On the other hand, if manufacturing expenses climb as a result of surged material costs, they are sure to hurt the business’s profitability. 

To control variable expenses better, make sure you have at least three to five vendors for a particular material. It’s a poor bet to rely only on one supplier. Imagine if your sole supplier goes out of business suddenly, and you have no other suppliers to turn to; that’s horrible. 

Also, once you have several suppliers, review them regularly. It’s standard practice to make an annual or semi-annual review of all your key vendors. It allows you to track which vendors are doing more business with you or who offer you the best price. 

4. Manage periodic expenses

As its name suggests, this type of expense doesn’t occur monthly or annually like fixed or variable expenses. You’ll be surprised to know that these expenses are not associated with operating activities or manufacturing activities. However, there are some occasions that you’ll need these expenses, so you have to be aware of this and make a budget for them.

Periodic expenses include education expenses, networking expenses, travel expenses, etc. Is it necessary for your marketing team to update their knowledge and technical skills? Absolutely! A collection of skillful marketers will develop and execute strategies more effectively, which maximizes profits for the company. It sounds like a good idea to invest in a training course for your team. Or do you want to expand your contacts to gain more opportunities for your business? Then you have to go to a conference or a seminar and network. It’s the company’s responsibility to pay for such expenses like this. 

5. Track expenses 

Tracking expenses allows you to control them better. When an expense occurs, bookkeepers keep the receipt and record it into the account book. By doing so, bookkeepers can calculate how much a business spends in a month and create a report on spending habits. 

A business generates hundreds of documents per month including receipts, invoices, proposals, etc. It’s a labor-intensive task to categorize and record those documents manually. 

Gone are the days when bookkeepers had to do everything manually. In this technological era, bookkeepers use software to manage their work more efficiently and cut away many tedious tasks. Shoeboxed is a cloud-based software that helps businesses turn their massive paper receipts into digital data. You can get your receipts scanned, stored, and organized by your mobile app. It’s simple to install and easy to use. Start using Shoeboxed today!

The bottom line

Expenses are a necessary part of any business. They can make or break your business’s profitability. That’s why expense control is so important to every business. For those who’re looking for tips to manage their expenses better, following the advice you read in this article will be just what you need.

How To Track Mileage For Taxes With The Shoeboxed App

Whether you are a business owner or an independent contractor, you might need to track miles for taxes. When you file your tax return, all of your business-related mileage needs to be well-categorized according to what type of activity generated those miles. You need to record all of the information so that you can file your taxes more accurately. After all, you can get a significant tax deduction from that. 

This article will give you detailed instructions on how to track mileage for taxes with the Shoeboxed app. This free mobile application allows you to instantly capture receipt images from anywhere and use your phone’s built-in GPS for easy, accurate mileage tracking.

1. What is a mileage-tracking app?

Before we kick off with the mileage-tracking app, we need to clarify what counts as business mileage. There seems to be a common misconception among self-employed workers when claiming mileage for taxes as to whether or not the commute from home to office or vice versa should be deducted as business mileage. A commute is not an activity that generates a revenue stream for your company. However, if your home is your primary place of business, then yes, mileage tracking should start from your home as the point of origin. Business mileage is applied for trips while doing business.

According to the IRS, business mileage is “the ordinary and necessary expenses of traveling away from home for your business, profession, or job.” This includes activities such as driving to clients for lunch or meetings, going to a conference, running errands (i.e: buying office supplies) related to your work, and more. 

When you track your miles during business travel, your tax savings increase in sync with your odometer. It is sometimes impossible to keep quality records of all that travel consistently, accurately, and tidily (i.e. logbooks, gas receipts, parking stubs, etc.)

Luckily, a mileage tracking app is an easy answer for how to track mileage for taxes. It creates an automatic and contemporaneous mileage log for all of your trips. The mileage tracking app saves those records securely in the cloud-based system, so you never have to worry about losing them. Additionally, you can pull out or print out those records years later if you ever have to face an IRS audit. 

Let’s take a closer look at the mileage tracking app to see why you need it, whether you are a freelancer or a small business owner. 

2. Why do you need a mileage-tracking app?

  • As a small business owner

Out-of-town business travel generates tons of receipts, from airline tickets, taxis, meals, laundry, accommodation, and more. Receipts verify what you purchased on the trip and act as a travel log of where time and money were spent on the business trip. Some important factors determining eligibility. For example: How much of the trip was personal, if the trip was away from your home, and if the amounts are justifiable. 

Of course, business travelers can also make small mistakes, adding another reason for the IRS to audit with scrutiny. In this case, submitting receipts once you make the purchase will be a great idea. Don’t wait until the end of the trip to gather all your paper trail receipts! Shoeboxed can be a helpful assistant to do this and also eliminate the possibility of losing a receipt. You wouldn’t let a misplaced piece of paper allow you to lose reimbursement or deduction money, would you?

Another related issue that a small business owner will face when tracking mileage for taxes is the “mixed-use” asset. (For example, a vehicle is used for both personal and business purposes). The mixed-use asset requires extra care to distinguish when the vehicle is being used for business and when it is not. Since only the portion of use for business would be counted in the company’s book, keeping clear and detailed records of time, route, and reason it is used for business purposes help to establish what portion of use is business-related. 

Shoeboxed tracks mileage using your phone’s built-in GPS when traveling to and from business meetings. The app will record the precise start and end location, as well as the date of your trip for detailed documentation.

See more: 5 Receipts Small Business Owners Should Take Extra Care to Keep

  • As a freelancer

As a freelancer, you are 100% in charge of your business. Therefore, organization and tracking become a top priority to successful freelancing. 

Like any other good expense-tracking habit, tracking travel mileage ensures protection against tax audits and business disputes. Keeping track of your business mileage is important because it is tax-deductible. This means you can reduce your taxable income based on how much you drive for work. Various travel miles qualify, such as business travel to and from airports and hotels, errands and supply runs, travel to clients’ offices, and to and from business meetings. Don’t skip those valuable deductions!

One effective way to do this is to track your mileage and report those miles to the IRS. However, a freelancer’s line of work is usually busy and stressful since a lot can fall on your shoulders at once. Using a mileage tracking app can help take some of the pressure off. This app will consistently track your mileage so you can focus on more important aspects of running your business. You can rest easy, knowing that you are going to get the right amount of money back on your tax return. The mileage tracking app also alleviates the stress of an administrative task that requires hours working. 

3. How to track mileage for taxes with the Shoeboxed app

As introduced above, Shoeboxed helps you track mileage using your phone’s built-in GPS for unmatched ease and accuracy. With the intuitive interface and features, everyone at all technology proficiency levels can start using Shoeboxed to track their mileage and other expenses. 

Here is a step-by-step guide on how to track mileage for taxes with Shoeboxed: 

Shoeboxed on Apple Store
Shoeboxed on Google Play
  • Step 2: Sign in or sign up to Shoeboxed Receipt & Mileage Tracker. You can sign in/sign up with your Facebook or Google account. 
  • Step 3: To start tracking, simply navigate to the “Trips” area of the app. Click the “Start Mileage Tracking” button to begin a new trip. Your location will be saved, and you can start driving.
  • Step 4: When you reach your destination, click “Stop Trip”. The app will generate a trip summary, including the date, the ability to name the trip, editable mileage, and deductible rate information. It will even show you the route you took.
  • Step 5: Once you’ve edited and approved the information, click “Done”. The trip info (along with the map) will be submitted to Shoeboxed as a receipt with an automatic category assignment for mileage.

But what if you have to stop on the way for business purposes, perhaps for a lunch meeting? No worries! You can still submit a receipt for your meal without interrupting your mileage trip.

You can create a mileage report or a combination report including mileage and any receipts incurred during this trip. After that, you can submit the report to your employer to be reimbursed. Alternatively,  you can filter for all mileage during the tax year and make sure you get all of the deductions for which you qualify.

Still unsure what should be reimbursed and what should be deducted? Check our Tax Deductions Cheat Sheet to discover the most common deductions and how they can help you save on your taxes.

Final thoughts

Now that you know how to track mileage for taxes with the Shoeboxed app. Let’s get ready to be a pro at tracking your business expenses!

Download (or update) the Shoeboxed Receipt and Mileage Tracker app for iOS or Android now to get the 30-day trial. Don’t forget to subscribe to the Shoeboxed blog for more engaging entrepreneurship stories, how to stay organized, DIY accounting, and the latest Shoeboxed news.