8 Simple Practices For Small Businesses To Organize Receipts Efficiently

Keeping a record of your business transactions is considered a top priority for a self-employed or small business owner. Keeping your records properly saves you from being audited by the IRS. Plus, staying organized will save you time during tax season. 

However, we understand that keeping track of all your receipts and records can be tedious and time-consuming. That’s why in this article, we’ve outlined eight best practices to help you organize receipts and records efficiently. 

1. Use a business account and credit card instead of cash

As the IRS will continue to enforce its audit rules, keeping a better set of bookkeeping and receipts for all of your expenses will help you save time and hustle. This simple yet important tip can help you cope with it. Avoid using cash — it’s easy to spend, hard to track, and nearly impossible to match up cash spent with receipts. 

On the other hand, a credit card or debit card will provide you with monthly statements, enabling you to cross-check details with your paper receipts. It’s also a good idea to have a separate business account and credit card, so you don’t mix business expenses with your personal spending. 

2. Save your receipts

Don’t just rely on bank statements, credit card statements, or canceled checks! The IRS won’t accept your bank or credit card statements to justify deductible expenses. You will need an itemized receipt that corresponds with the transaction. 

Hang on those itemized receipts, which are also called “source documents,” for at least six years after your last Notice of Assessment since the IRS will ask to see them in the event of an audit. You can keep a physical or digital version of receipts. 

3. Choose email receipts instead of paper receipts

Nowadays, many merchants offer this service to their customers. You can choose to receive your receipts via emails, label and categorize them in a specific order. Email receipts are convenient and friendly to the environment as they go straight to your inbox and clear your desk and drawers from piles of paper receipts. You can always find them easily, create expense reports, and do so much more. 

4. Review your receipts once a month

Spending some time reviewing, categorizing, and organizing receipts for 30 minutes every month can make a huge difference! It keeps things manageable as the year progresses and helps you keep track of your spending so that you won’t miss out on any tax deductions. 

You can purchase an accordion folder every year to store all business receipts and make sure each folder contains all receipts for the year. These folders are inexpensive and easy to obtain. They allow you to organize receipts by category and year, making it easier than ever to find any receipt even years later. 

5. Make notes on the back of receipts

This is an especially great idea to keep track of dining and entertainment expenses. It’s easy to recall why you bought a printer, but it can be difficult to suddenly remember who you went to dinner with and what the business purpose was in 2015. By starting this simple habit, you will rest assured that you will not miss any dining and entertainment expense deductions for business purposes.

6. Create a spreadsheet for work-from-home expenses

Whether you have always been working from home, or you are working remotely due to the Covid-19 pandemic, there will always be some noticeably deductible business expenses. These expenses include a portion of cleaning materials, utilities, home insurances, office supplies, along with part of your property taxes, mortgage interest, and capital cost allowance.

To claim these expenses, you need to calculate the percentage of your home used for business and apply that percentage to the tax deduction. Create a spreadsheet including your receipts for home office expenses throughout the year. By making it a habit to update the spreadsheet once a month, you’ll save yourself the headache of scrambling to input and tally up all your work-from-home expenses at the end of the tax year.

7. Back up your receipts

Since paper receipts tend to fade with time, keeping a digital copy of each receipt can save you from getting in trouble with the IRS. The simplest practice is to snap a picture of each receipt on your phone, then upload it to a central location later and keep it for at least six years. The IRS allows digitally stored receipts, however, don’t forget to back up stored receipts (on the cloud or a memory device) in case your hard drive crashes and deletes all your important information by accident. 

8. Scan and store your receipts digitally

Storing receipts digitally has been proven to improve business efficiency. It provides several benefits including time and cost-saving, easy to store and access, tax-ready, reduces clutter,  lessens the risk of data loss, increases security, and so much more. 

There are plenty of receipt scanning apps that you can use to scan and store your receipt digitally. Each offers special features for particular purposes, so anyone can choose the most suitable one and benefit from it. 

Shoeboxed is a painless receipt scanning and organizing solution for freelancers and small businesses owners. This versatile app serves many purposes: scan, store and organize receipts, manage business expenses, store business cards and even track mileage for business travelers. 

Shoeboxed’s OCR engine and human data verification features ensure that your receipts are legibly scanned, clearly categorized, and accepted by both the Internal Revenue Service and the Canada Revenue Service in the event of an audit. What’s more, Shoeboxed enables you to create clear and comprehensive expense reports that include images of your receipts. You can then export, share or print all of the information you need for easy tax preparation or reimbursement… within a few clicks. 

Shoeboxed is now available on iOS and Android. Get your free trial before choosing the perfect plan

Conclusion

Organizing your receipts can keep you proactive and productive, which saves you lots of time, stress, and even money in the long run. Going digital helps you organize receipts and keep track of your expenses easier than ever. As everything is digitally stored and accessible through a cloud-based system, you will be able to work with them anytime, from anywhere, with any device, within a few clicks. 

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Business Owners: Are You Forgetting This Sneaky Tax Due Date?

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Did the title freak you out a little? Sorry about that, but we thought ripping the band-aid off would be the way to go. After all, it’s the truth – if you own your own business, freelance or generally work for yourself, quarterly estimated taxes are due to the IRS and, likely, to your state’s taxing authority right around the corner.

Did you forget about them, or have never dealt with them before? Don’t worry, we’re here to help. We’ll go over what QETs are, why you have to deal with them, and some of the basics of the process to get you started.

The Basics of Quarterly Estimated Taxes

Remember back when you had a 9 to 5 or even when you worked at that fast food joint downtown while you were in high school? At the end of the pay period your boss took out a certain percentage from every paycheck to pay taxes to the government. Afterwards you got to take home what was left.

Now that you own your own business, you don’t have a boss to do this for you. This means you have to do it yourself. However, it doesn’t quite work the same as it did back then. You don’t submit your taxes every two weeks or even every month.

If you own an (for example) online coffee cup shop, every time you sell a coffee cup you might think you need to submit taxes. But that would get even more complicated than it already is, which is why the QET system was set up.

Every quarter you send in a payment to the government to take care of your tax responsibilities. January, April, June and September become your “buckle down and take care of business” months from now on.

How QETs Work

So if you don’t remit tax payments every time you make a sale, how do QETs work? If it’s your first time ever doing them it can be extremely confusing, but once you get the hang of it everything will fall into place.

The biggest thing to remember is the word “estimated.” This is precisely what these payments are – estimations, as in you’ll hardly ever run into a payment that’s 100% accurate the first time. This is because you basically take your profit from the year (that’s income minus business expenses), figure out what you would owe on taxes on those sales, and then divide by four to get your quarterly estimated tax payment.

You can probably see how this would cause unbalance. You may make most of your profits in the 4th quarter, or you may shut your business down over the summer. Therefore, this “estimate” may be a little off.

Fortunately, there’s the “Safe Harbor Rule” the IRS has put into place. As long as you submit the same amount in taxes as you owed the the year before, you won’t be charged any fees or penalties. As an example, if you accumulated a $5,000 tax bill last year, but business boomed and you owe $10,000 this year, you’ll be fine as long as you pay at least $5,000 over the year in quarterly estimated tax payments. However, you’ll have to pay up the remaining $5,000 when all is said and done and you file your annual taxes on April 15th.

The good thing about this mess, though, is that it can help you get your finances in order as well as prepare you for tax season. When the time rolls around, you’ll be so used to figuring out this kind of stuff that it’ll be a breeze.

Here’s a calendar to keep you up to date:

Q1 – April  15, 2014 (you should have already paid this one on income made from January 1 -March 31, 2014!)

Q2 – June 16, 2014 (pay on income made between April 1, 2014 and May 30, 2014; this due date falls on the 16th because the 15th is on a Sunday)

Q3 – September 15, 2014 (pay on income made between June 1 and August 31, 2014)

Q4 – January 15, 2015 (pay on income made between September 1, 2014 and December 31, 2014)

What questions do you have about QETs?

Which small business credit card is best for your biz?

One of the most important choices you’ll make as a business owner is which small business credit card to use. In this article, we review four great options and make a recommendation about the best credit card for your business needs.

Finding an awesome virtual assistant, switching your email service provider, scanning your receipts, keeping up with social media… Let’s face it, as a small business owner, you have puh-lenty on your plate without having to scour the Internet trying to find the best small business credit card.

That’s why we’ve done the heavy lifting for you. First, we thought about what small business owners need most in a credit card, and came up with the following criteria:

  • Flexible spending: You have business expenses that need to be taken care of today, not three months from now. You need a card that offers you a generous credit line for emergencies and the regular costs of running your business.
  • Rewards: A good small business credit card should have a stellar rewards program that offers you points every time you spend.
  • Perks: In addition to rewards, we wanted to see additional perks such as the ability to secure credit cards for your employees, 0% introductory APR, no annual fees, etc.

Next, we sifted through hundreds of small business credit cards in order to weed out the duds and present you with the studs. After a lot of blood, sweat, and tears (okay, there wasn’t any blood), here are our top four candidates for the best small business credit cards out there:

AmEx SimplyCash

Our favorite thing about AmEx SimplyCash for small business? You get 3% cash back on the category of your choice from a list of select categories. You can choose the category that works best for your business to ensure you maximize your cash back. Categories you can choose from include U.S. restaurants, U.S. gas stations and shipping in the U.S.

Want even more cash back? Lucky for you, SimplyCash also gives you 5% cash back at U.S. office supplies stores and on wireless telephone services through U.S. service providers.

Another great perk is that you’re automatically entitled to 24/7 service and support through dedicated business consultants to help you solve the specific problems your business is facing. You’ll also receive other great benefits, like access to purchase protection, extended warranty and more.

You might be wondering, “How could it get any better?” Well, on top of all of that, SimplyCash has no annual fee and 0% APR for nine months. Pretty awesome, right?

Terms and restrictions apply.

AmEx Blue for Business

There are serious benefits to using an AmEx Blue for Business card. Stay with AmEx Blue for a year and receive an “anniversary bonus” in the form of extra rewards points, which will be the equivalent of 30% of qualified purchases.

AmEx Blue gives you the flexibility to distribute your points to your employees, clients, or any other area of your business that needs a little TLC.

AmEx Blue for Business also offers an introductory rate of 0% APR for 9 months (like SimplyCash). After this period, Blue for Business offers an APR of 11.24% – 19.24% variable.

Terms and restrictions apply.

Chase Ink Cash Business Card

This card gives you $200 cash back when you spend $3,000 in the first 3 months after opening the card. It’s not as high as AmEx SimplyCash, but Chase Ink Chase offers 0% introductory APR for 12 months, regardless of your credit score. After that, you’re looking at a 13.24% APR that will vary with the prime rate.

So what about rewards? This card will give you 5% cash back on the first $25,000 you spend on office supplies and office utilities like internet, cable and phone services.

You’ll also get 2% cash back on restaurant purchases and gas (up to $25,000). Once you’ve spent $25,000 in these areas, you’ll continue to receive 1% cash back, and all other purchases in other categories will also receive 1% cash back.

Because the introductory APR and ongoing interest rate are not based on credit worthiness, this could be a great business card choice for small business owners with less than perfect credit.

Terms and restrictions apply.

Capital One Spark Cash for Business

What if you don’t want to worry about what you’re spending based on categories like office supplies, gas and so on?

Then Capital One Spark Cash is the small business credit card for you. This is a great introductory card for new business owners. It doesn’t offer the big introductory cash back bonuses of the other cards ($100 vs. $250), but it doesn’t require you spend as much either ($1,000 in the first 3 months instead of $3,000).

The best feature of this card is its “rewards across the board” promise. Instead of earning 5% cash back on some purchases and 1% on others, you simply earn 2% cash back on all purchases, all the time. There are no spending limits, either – the 2% reward stays in place no matter how much you spend, and what you spend it on.

There are two drawbacks to this card when compared with the others: no 0% introductory rate (you’ll pay between 13.9% and 20.9% based on your credit), and there is an annual fee of $59 (although it’s waived during the first year).

Terms and restrictions apply.

Our Recommendation

Choosing the best card for your small business is a personal choice, and depends a lot on the type of small business you’re running, how much you spend each month, and what types of rewards program would benefit you most.

After reviewing the top four cards, we think AmEx SimplyCash is the best small business credit card for the majority of small business owners.

This card gives you the opportunity to earn the most cash back short-term and long-term. It also gives you 9 months with 0% APR, a low long-term interest rate after the first year, and great business-related perks through the OPEN savings network.

Do you use a credit card for small business? Which one? What do you like/dislike most about it?

*This content is not provided or commissioned by American Express. Any opinions, analyses, reviews or evaluations provided here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the Advertiser. This site may be compensated through the Advertiser’s affiliate programs.