I talked in a previous blog post about some simple tips that you could use to help keep your tax receipts in order all year long. There’s four basic tips, and they are as follows:
- Have one designated spot to keep all your receipts
- Organize your receipts into groups or categories
- File away your receipts as soon as you get them
- Write down (on the receipt or in a spreadsheet) what the receipt was for
Have you set up your own system yet? If you haven’t done it yet, what are you waiting for? The sooner you get a system set up and running smoothly, the less time you’ll have to spend on organizing everything next year when tax time rolls around again.
I’ll help you out and give you specific instructions of what to do:
- Go buy an accordion file that has at least 24 slots in it OR go buy 30 file folders and some kind of holder for them (whichever you prefer)
- Go buy some labels from your favourite office supply store (get id labels if you bought an accordion file, or get file folder labels if you bought file folders)
- Look up what the allowable business expense categories are according to your government or your accountant (if you’re in Canada get the T2124 form to see what they are)
- Write each expense type on a label (DO NOT create one called “Miscellaneous”, it just creates problems – stick to the known, allowable expenses only)
- Stick the labels on each accordion file slot/file folder
Voila! You have a tax receipt filing system. Now whenever you get a receipt for your business, file it in the appropriate section as soon as you get it so that it doesn’t get lost. AND remember to write what it was for on the receipt.
If you’re feeling really ambitious why not create yourself a spreadsheet to record each receipt? You’ll probably have to make one later anyways. If you create a spreadsheet you will want to have a column for each of these things:
- category (corresponding with your accordion file or file folders)
- where the receipt came from (Staples, Home Hardware, etc.)
- the date on the receipt
- the receipt number (if there is one)
- the total amount paid
- the taxes paid (if you’re in Canada you’ll probably want a column for GST)
- notes (here is where you’d briefly describe what the receipt was for)
And, if you’re feeling really, REALLY ambitious you should think about creating a selection list for your Category column – that way you will be forced to choose one of the categories that you have in your list thereby eliminating spelling mistakes and making it WAY easier to sort your spreadsheet by category later on.
Of course, if the whole spreadsheet thing isn’t up your alley you can get your Virtual Assistant to create one for you. If you like you can even set up a system where you send your receipts to your VA periodically and they can enter the information into your spreadsheet for you. Easy!
So, if you’ve already created your own tax receipt filing system; good on ya! If not, now you’ve got a handy-dandy step by step list to help you get started. What are you waiting for? You’ll thank me next year when your receipts are all ready to go!