In my last post, Recordkeeping for Your Rental Property or Small Business, I touched on the need to have a system in place to save the physical receipts for all deductible expenses. In the event of an IRS audit, you’ll need to have access to these receipts in either paper or electronic form. Even for personal expenses, it’s a good idea to keep your receipts for major expenditures or for items you might want to return later. Besides all that, having a lot of receipts floating around almost always causes a certain amount of mental clutter and stress– and who needs that?
There are many ways to accomplish the task of organizing your receipts, ranging from the simple to the more sophisticated. On the low-tech end, simply designate a box, basket or folder to hold all your receipts. If you have a lot of them, you might want to categorize them by account (Bank Account “A” or Credit Card “B”) or by category (Marketing, Legal, Repairs, etc.). I personally organize my paper receipts by account in a small box like this one (inside there’s a #10 envelope labeled for each account). Once the receipts are matched to my bank or credit card statements, I get rid of the majority– mainly personal receipts such as those for consumables like gas, groceries, restaurants, haircuts, etc.– and file the rest along with the statements. Those receipts related to our rental properties or my business are kept indefinitely, whereas those for the household are shredded after a period of time has gone by.
Many of our purchases are online these days, with the original receipt received in an electronic format. To eliminate paper clutter, consider saving these receipts in electronic form rather than printing them out. For those receipts provided in PDF, just save directly to your computer. For those received in an email or a web-based file, print the purchase confirmation to PDF using Adobe Acrobat or any number of free PDF converters. Of course, you’ll need some sort of a system for organizing all these files you’re saving on your computer so that you can find them if needed!
But what if you just aren’t good at organizing things, have very limited time, or just don’t want the bother? One great option is to use a service like Shoeboxed. With their Receipt Mail-In plans, you can simply gather up all your receipts (business cards and other documents, too), stick them in one of the provided envelopes, and send them off. In a few days, all of your receipts will be scanned and electronically organized. What could be easier and less stressful than having someone else do all the work for you?
If you’d rather not commit to the mail-in plans just yet, Shoeboxed has a 30-day free trial as well as a “Forever Free” account that doesn’t include the mailers. Use your own scanner or smartphone to take pictures of your receipts, then just upload or email them to Shoeboxed. From your online account, you can access your data anytime, print or download copies of receipts, email expense reports, or export your data to programs like Excel and QuickBooks.
Whether you choose a “low-tech” method or a service like Shoeboxed, it’s important to have a process in place to save and organize your receipts. A little effort upfront to put your system in place now can help eliminate stress at tax-time and beyond.
What’s your system for organizing receipts?