Accounting For Receipts

Accounting For Receipts

Receipts for business expenditure.  They are small and they often go missing.  Do you know where all yours are?  If you had to complete a tax return tomorrow, could you provide your accountant with a carefully recorded, tidily managed pile of receipts for them to work from?  Or would you have to hand over a shoe box or plastic bag full of documentation that has little or no organisation to it?

As a sole trader, finding time for all the varied tasks required of you in business can be a challenge, particularly if your business is booming and you have no administrative assistance.  However, the time it will take to unravel records which have not been kept up to date will be considerable at tax return time so it is worth having an ongoing system that will avoid you having to spend three days with your receipts spread out across the living room carpet, scratching your head and cursing the cat for walking over the piles you have created.  You could hand the entire thing to your accountant to sort out, but the bill would be quite considerable.  By planning ahead you can avoid all the pain.

Have a System

You don’t need a complicated system when you are first starting out.  A set of well labelled envelopes for the receipts and an Excel spreadsheet for the accounts themselves will do for many smaller businesses.

Every transaction has its own unique reference number and this should be written on the receipt and the accounts spreadsheet so they can be matched up easily.  Any transactions that will go through the bank are treated in this way.

Keeping it Together

Keep all receipts for credit card transactions together in one plastic envelope, ideally in date order.  Then, when the bill comes in, you can number every line on the bill sequentially.  It is then possible to match the receipts to the items on the bill, recording the relevant number on the receipt itself.  I find that it is credit card receipts that tend to go walkabouts, and by reconciling the bill in this way every month, you can more easily search out the errant receipt before it goes into hiding and, like Lord Lucan, is never seen again.

The settled credit card bill and its lovely set of numbered receipts can be placed in an envelope with the date marked on it, and filed with the rest of the receipts for that month.  Obviously when you have paid the credit card the transaction is entered on the accounting spreadsheet so the bank account remains correctly balanced.

Don’t forget your petrol receipts if you are accounting for these.  One client keeps these in the car in a small folder and then hands them to me every couple of months for recording.  If you get in the habit of putting the receipts in the same place each time this can make a real difference and massively reduce those awful “dig through every possible drawer to find that receipt” moments.

Finally there are those pesky online bills.  Don’t forget to enter these to your spreadsheet and either save them with a clear reference number (in line with your chosen naming process above) on a memory stick that you can send to your accountant, or print, add the reference number, and then file in the relevant envelope.

Still Need a Hand with those Receipts?

If you struggled to get the supporting information for your tax bill organised for the last tax year and vowed never to go through that again, why not get in touch?  I can help you to set up a process that works for you so that your accountant doesn’t hide from you during tax return season.

Posted in Blog and tagged , , , , , .