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Tuesday, December 21, 2010

Organization: Simple Receipt Management for your Home Business

It's nearly tax time.  We've talked about organizing and managing your business, regardless of your space, time, and income; let's talk about receipts.

Receipts: can live without them, but for tax purposes (and refunds, returns, and exchanges), we will not.

For the sake of simplifying and working in a small space, let's try the easiest and smallest method available (aside of the computer program).  If your home business has become  so big you need a complete and elaborate method, not counting a computerized program, you may need to move your business to a separate location. While this receipt system can pretty much work for most businesses, it's not the best solution for a multi-million dollar business.
Using an inexpensive accordion file wallet with at least twelve tabs (each accordion wallet file shown here is under $4 and has 12 tabs), label one tab for each month (if you use a fiscal period, start with the first fiscal month).  Mark the front of the wallet with the year (when using fiscal years, use the actual year your twelve month file ends).

File each receipt into the corresponding tab, always filing each receipt behind the one that came before (this is an easy habit to get into and is more likely to find your receipts in dated order).

Make notes on the back of receipts and circle business items and amounts on the front. My businesses are small enough that I actually file ALL receipts in the wallet, even copies of the receipts I give away, and copies of items shipped to me.  Do what works for you.
Keep your wallet in the same place throughout the year; consistency makes for good habits.
At the end of the year, secure with elastic band or ribbon, tuck into your tax box or set aside until you're ready to file.  

Once taxes are filed, store your receipts, wallet and all, in a safe place for however long is necessary in your line of work.  

Many business owners scan and electronically file their receipts, throwing out the hard copy, however, the wallet is affordable enough to use a new one each year, keeping the old one for storage (this method also saves you time - no scanning and labeling).

Okay, do you understand the system?  Get a receipt; file a receipt.

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