Why are your receipts so darn important?

So, why did I become a bookkeeper? Well, it all started when I realized I had a strange fascination with balancing numbers to the penny. I mean, who doesn't dream of spending their days knee-deep in reports and receipts, balancing numbers like a financial tightrope walker? 

Some people find joy in skydiving or bungee jumping, but me? … I get a thrill out of making sure every penny finds its proper place. Call me crazy, but that’s who I am. It's not for everyone, but for me, it's the perfect match.

Over my extensive years as a bookkeeper I have seen people struggle with bookkeeping rules, especially when you’re first starting out and don’t have the extra funds to hire a bookkeeper.

So, the purpose of this blog is to try to share some bookkeeping tips with you and why they are important. 

Why are your receipts so darn important?

Why are receipts so important?

You know, it's really important to hang onto all your receipts.

Even those little ones, like a $2.00 parking ticket, can actually make a big difference.

Believe it or not, they can help you get money back through things like tax deductions or rebates. So, whether it's claiming a GST/HST rebate or keeping track of your business expenses, every single receipt counts. It might not seem like much at the time, but over time, all those receipts really add up and can save you a lot of money. So, it's worth it to keep them organized and handy.

What happens if you don’t have receipts?

You know how sometimes you lose track of your receipts or just toss them away? While it can cause some headaches down the road, it is not the end of the world! When you don't have all your receipts, you might miss out on getting money back through tax deductions or rebates.

If you ever get audited or need to prove a purchase, not having the receipt can really complicate things. It's like trying to piece together a puzzle without all the pieces – frustrating and potentially costly. It is important to keep all your receipts, but if you miss one or two, it will be ok. 

Different receipt organization processes

Here are three different approaches to receipt management that you can try in your business!

1. Traditional paper-based method

In this approach, physical receipts are manually collected and organized using labelled folders or envelopes within a designated filing system, such as filing cabinets or file folder boxes.

A ledger or spreadsheet is often used to record essential information from each receipt, including date, amount, purpose and category.

While this method demands consistent maintenance and physical storage space, some businesses appreciate the tangible presence of paper receipts and value them as backup copies.

*Note with how technology has improved, this is not a recommended method, but if you insist, here are some tips. 

How I might tackle this:

If I was going to do a tradition paper-based method there are a few things to consider:

• Keep the files in a safe location where they won’t get damp

• Make sure they are organized in folders (not just thrown into a bankers box)

• Colour code file folders to make finding the information easier: 

• Orange: banking information

• Red: accounts payable

• Green: accounts receivable.  

• Keep your files organized alphabetically (and yes, still colour coded)

• In the folders, keep the newest receipts/invoices at the front

2. Digital scanning and storage

This method digitizes receipts using smartphones, scanners or dedicated apps. Receipt images are stored in a centralized digital repository, like Google Drive or dedicated software.

Digital receipts are organized, tagged, and easily searchable. This approach reduces clutter, lowers the risk of losing receipts and allows remote access from any internet-connected device.

How I might tackle this:

You can do this using your smartphone, or a scanner/printer.

• Set up your folder system on your computer or online drive

• Main folders may be: bank statements, accounts payable, accounts receivable

• Create sub folders such as a folder for each bank account, each client and each payable account.

• Take the picture/scan and upload it to the correct folder/subfolder 

3. Integrated receipt management systems

Integrated receipt management systems provide streamlined and automated solutions for businesses. These systems seamlessly integrate with accounting software or expense tracking platforms, enabling direct receipt capture and synchronization.

Employees can capture receipts via mobile apps or email, which are then automatically processed and matched with transactions.

Though initial setup and software subscriptions are required, this method offers unparalleled efficiency and accuracy in receipt management.

Bonus of this method, you can share access with your accountant so they have every receipt at their fingertips!

How I might tackle this:

I’m going to talk to you specifically about QuickBooks Online (QBO) with this application as this is what I specialize in, although there are many other apps … Expensify, FreshBooks, Wave, Xero, etc.  

• Once your QBO is set up for your company you can capture an image of your receipt from your smartphone and import them into QBO receipt section. 

• Create your expense & review to make sure the details are correct:

• GST/HST is correct

• Using the correct expense account (ie: office supplies, gas, hotel, advertising, etc.) 

• Alternatively, you can scan and attach a PDF or word document to your expense.

• This automatically attaches your receipt to your expense. No looking anywhere else for the receipt and it is all filed in the cloud. 

Each of these receipt management methods has its own advantages and considerations.

You should consider your specific needs, resources and preferences to choose the best receipt management method for your business. 

Remember, just because someone else likes a specific process, doesn’t mean it’s a good process for you. 

But, at the same time, be open to try something new. It doesn’t mean that the way you are doing it now is incorrect, but maybe a new way will save you time and energy.

Whether you prefer a traditional paper-based system, digital scanning and storage, or integrated receipt management software, the aim for receipt organization is to efficiently capture, organize and use receipts to maintain accurate financial records. 

Blog written by Chris Bullied