Fotolia_ReceiptsIs your receipt management system something more developed than a cardboard box?  For many, it isn't.  I have recently had requests for information on handling receipts and with tax deadlines looming near, I thought it would be a great topic to cover this month.  The system you choose for managing receipts is dependent on a few factors. 

Receipts are first categorized into either personal or business. 

Personal (or non-business) receipts can be divided into 3 types, and managed according to the type:
1.  Non-tax related, short-term receipts (those needed for less than1 year) are those that you keep just in case you need to return something or for a short-term warranty.  For example, clothing, toys and less expensive household items are short-term receipts.  I recommend these receipts be stored in a small accordion file by month.  Each month, the prior year's receipts for that month can be tossed or shredded and a new month stored -- maintenance becomes very easy.  Store the file close to the area that you unload your bags or clear your purse or wallet of the receipts.
2. Non-tax related receipts for larger purchases or for items with warranties that last more than 1 year can be filed for long-term reference. Furniture, home maintenance and electronics purchases fall under this category.  This category also includes receipts that may be needed for insurance purposes, such as the purchase of an engagement ring. I recommend using hanging files for all of your paper reference files.  If you have an interest in moving towards paperless filing, tools for reaching this goal are discussed below.
3. Receipts that are needed as documentation for tax purposes (such as charitable donations) should also be filed for in your reference filing system, with the file contents being removed and stored with your tax return in a long-term, or archival, storage location. (This could be a box, or bin, in your basement or attic.)

Business receipts will normally fall under category 3 above as they are needed for tax documentation each year.  To determine how to manage and store your business receipts, you should first ask yourself the following questions:

  • How many receipts do you manage on a monthly basis?
  • Do you travel often for your business? In other words, would a mobile way to manage receipts be helpful?
  • Are you interested in storing your receipts electronically?
  • Do you need to be able to enter or import receipt information in a financial program such as Quickbooks?

If you manage a relatively small number of receipts, storing them in paper form by month may be sufficient.  You can store them with your hanging reference files, or perhaps a larger accordion file that is divided by month.  Information from a smaller number of receipts can fairly easily be entered into your financial management program, and finding a receipt should be quick if it is filed appropriately.  If you manage a relatively large number of receipts, you can reduce time and energy by automating your storage, retrieval and input of receipt information.  Following are two of my favorite options:

  1. Shoeboxed is an online service that allows you to mail, scan, upload or email your receipts for scanning and data extraction.  I love the ability to mail a pile of receipts in a pre-paid envelope they provide.  Shoeboxed will scan them in, verify the data and post the information to your online account.  The data is stored safely for you, you can download it to your chosen storage solution, and/or export the information to financial management programs such as Quickbooks and  Freshbooks.
  2. NeatReceipts or NeatDesk:  NeatReceipts or NeatDesk handle your receipts and data similarly to Shoeboxed, but they are tools you purchase and use within your own office.  NeatReceipts is a small, mobile version that is great for those that travel frequently.  Scan in your receipts on-the-go and then toss them.

Of course, any good scanner is a fine way to electronically store your receipts.  Making sure the scanner has OCR capability will insure you can find your receipts by searching on any of the text from the receipt.  Be sure to store the electronic versions in a secure location that is backed up on a regular basis.  Without tools such as Shoeboxed or NeatDesk, you will lose the capability to import the receipt data into a financial or tax management program and therefore spend extra time on data entry.  It is important to balance the cost of a new tool with the time and energy it will save you in the long-run.

Whether you are busy preparing for this year's tax returns, or need to improve your method for next year, spending time to set up the right receipt management system for your needs will save you time, energy and headaches.

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