As a business owner, you understand the importance of receipts that pertain to business expenses.
While you may simply toss personal receipts that just seem like a waste of paper (looking at you CVS), business receipts are an important part of ensuring that you’re accurately tracking sales and revenue.
Also, if you are ever audited by the IRS, receipts will serve as very valuable documentation of sales transactions.
That being said, trying to organize your construction receipts can be a major headache.
Luckily for you, we’ve got a list of five foolproof ways to organize your receipts to keep your construction accounting clean and tidy.
First up, one of the old fashioned methods.
Use a Dedicated Cabinet For File Folders
For the non-tech savvy or traditional business owners, having a dedicated cabinet with file folders for your receipts is a tried-and-true method.
However, the key to this method is to make sure that your cabinet is well organized. Just tossing receipts into your cabinet and forgetting about them is going to cause problems down the road.
That brings us to our next method, which is categorizing your receipts.
Come Up With a Simple But Detailed Categorization Method
Perhaps the most important part about organizing your receipts is to make sure you’re using a simple but detailed categorized method so that you can find any receipts you need fast.
In addition to this, you’ll be less likely to lose receipts if you’re organizing them this way.
You can create categories such as by month or by the vendor — as well as advertising and marketing, material, machinery, and other supplies, insurance, and license expenses (among many others).
However, you don’t have to just use file cabinets when it comes to your reception. Instead, you can go digital.
Which brings us to the next method…
Consider Going Paperless (It May Change Your Life)
There are plenty of applications and scanners available today that allow you to digitize your receipts.
This provides many benefits for you, including:
Save time – You’ll spend less time digging around your desk and folders searching for specific receipts.
Use less space – You’ll free up space in your office and declutter your cabinets because you can throw away your receipts once they are saved on your paperless application.
More secure – You don’t have to worry about losing any of your receipts or accidentally tossing them.
Here is a helpful list of 13 of the best receipt scanners if you’re looking to digitize your receipt records.
Keep Notes on Where Your Receipts Came From
Whether you’re jotting them down on the receipt itself or adding notes to your digitized version, keeping handy notes on the purpose of the purchase or transaction is important.
This isn’t so much for organizational purposes, but, once again, it’s a tactic that can be really beneficial come tax time.
This article from entrepreneur.com talks about the story of a small business owner in Northern California who lost to the IRS in tax court after deducting thousands of dollars for business expenses. While this is perfectly fine to do in theory, you need to have the proper records proving the expenses were in fact business-related.
This means in addition to receipts, you should have notes and documentation that back-up your claims.
It may seem unnecessary to be that careful with your receipts, but it’ll pay major dividends if the IRS ever comes knocking.
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You have enough things to focus on without having to make sure that your accounting is in order.
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