"Do I really have to keep *all* these receipts?"

This is a common question from people in business. Let's think practically here for a moment. Those receipts can be quite a bother. They seem to accumulate over night and take over your desk before you can sort through them! Right? Well the bigger trouble is, at year's end, they matter. You need to be able to prove your expenses if you're going to claim them on your tax return against the income you've received.

A sound piece of advice would be to find a way of contending with receipts as the year progresses, perhaps a filing system or system of envelopes by category would work. Remember, always date such envelopes with atleast the year on the outside, this will help keep things simple in the future. Maybe it could be just as simple as stapling them to the check stubs or taping it to your calender. A quick note on the receipt saying who/what it was for or to would also be a good idea, this may clear up any questions regarding it's relativity later.

Also, talk to your tax preparation professional to find out which receipts they need to complete your tax forms. As a preparer, they do not need to see every one, you wouldn't want to pay them that much to sit and go through all those receipts. But they will need some for back up in their records. Contributions is a more recent important receipt that will be needed by your tax professional due to changes in the recent tax laws.

Always keep in mind, an IRS agent will automatically delete any expense you can't prove so it is extremely important to keep your receipts and keep them in an orderly fashion for easy retrieval for this purpose. If you are ever audited by the IRS, your receipts are imperative. So be diligent and organized when it comes to receipts and work closely with your tax professional to save expense and time in the long run.

1st Things 1st - Getting Organized

Those of you just starting a business will benefit greatly from starting off on the right foot with organization. If you are already up and running and find yourself in a disorganized mess, don't fret!

Getting organized is really easier than you might think. Your desk, paperwork, bills, invoices, supply orders, emails, bank statements and post it notes will all begin to pile up if you don't implement a system for dealing with it.

Just starting out?
The most obvious suggestion would be to get a bin, basket or folder for putting everything as it accumulates and then once a week, sit down and go through it all. Have separate files according to what action is necessary for what's inside. In other words, have an Accounts Payable file for storing the bills to be paid, a separate file for receipts on items already paid and so on. I find having different colored files help with this task as well. Don't forget to have a separate file for 'Income Tax Information'. This is one area you will not want to get behind in. Whatever the system you create, just stick with it. You will benefit much in the long run from a little preventative organization all along. If this is your first year in business, please stay tuned for more beginning helpful information.
Already up and running?
If you have been in business for a while and find yourself in a disorganized mess, don't give up yet! A smooth and organized accounting system is just around the corner. You can do *something* intentional each day to move toward a more organized way of doing things. One thing's for sure, if you have outdated information in your way, this is definitely a good place to start. I find having 1 big file or box for each calender year's records (or fiscal year) is best. That way after the year end, all the information is now in 1 place. Having a system of folders for A/P and such is great for staying on track in the current year. At the end of the year, after everything has been balanced and filed, in the box or file it goes and that's that! Whatever system you utilize, just keep up with it. Do a little something each day to stay on top of new things and take 5 or 10 minutes to get prior information organized too.

Don't forget to keep all those receipts! For more information on the importance of keeping receipts, please stay tuned.