Why Should Your Business Store Receipts Carefully?

 As a business owner, you will be buying many things for your business and will get a receipt for your purchases. It is easy to misplace these receipts but remember that if you do, you will not be able to use them to reduce your tax liabilities. Yes, that is right.

 

Any Red Hill accountant will tell you that it is not sufficient to maintain a record of your expenses – you also need to store every receipt safely so that your accountant can get access to each receipt during the tax season. However, most small business owners have too much on their plate and they often do not have a system in place to store receipts. That can make it easy to misplace or lose receipts. Thankfully, there are a few steps that you can take to safely store receipts.

 

Maintain a Folder

Keep a dedicated folder in which you can store the physical copies of the receipts. Arrange them date-wise so that your accountant near Red Hill will easily be able to figure out what you spent when and why. You will be surprised how this simple step can ease a lot of your worries and stress. You can easily go back and check the receipts in case you have forgotten about an expense.

 

It is advisable to maintain separate folders for stationery, electricity, water, telephone, and other ancillary expenses. That way, the receipts will not get mixed up and you will be able to find what you need without shuffling through tons of paper.

 

Maintain the Written Record

You most probably have a diary for your appointments. Similarly, maintain a diary for the expenses. Jot down the time, amount, and the reason for spending the money. For any reason you misplace the receipt, you will have a record in your expense diary and will be able to refer to it should the need arise.

 

Many Bardon accountants will tell you that small business owners often cannot justify the reason for an expense and this can make it difficult for the accountants to use the expense to reduce the business’ tax liability. Hence, maintaining a written record with the reason for the expense will go a long way in helping your accountant and you when tax season approaches.

 

In Conclusion

If you are worried about the receipts fading, you can scan and store them digitally in the cloud. That way, your accountant will be able to regularly access them and update the books. This will also make it easy for the accountant to reduce your tax liability as many expenses can easily be deducted from the taxable income.