Documenting Your Receipts for Tax Purposes

As we approached the deadline to file taxes for 2011 I have been hearing more and more questions about how to organize receipts that are eligible for a write-off.  As a small business owner (and even homeowners), there are items that we purchase while we are at Staples, Home Depot, Office Depot and even Wal-Mart and Target that are eligible for a tax write-off and it is important that we have a system to document these receipts and keep them organized.  Too many times the receipts find their way into the bottom of a purse, pockets, stuck in a checkbook, tossed onto the front seat of your car or even the trash – accidentally, of course.  Here is a simple suggestion that I shared at speaking engagements last week – so I thought I would share them with you to help you keep your receipts organized.

1.  Use a simple coupon holder that you can carry in your purse or in the glove compartment of your car.  Instead of storing your coupons in it, however, identify each section for a month of the year.  Coupon holders usually have 13 sections available so this works perfectly.  Make it a habit to store every receipt into your coupon holder.    

2.  At the end of every month – of even at the middle of the next month:  remove the receipts, scan those that need to be kept for tax purposes and eliminate (or shred) the rest of the receipts. 

3.  Using the coupon holder for receipts also helps keep receipts handy and available – should you need to return an item for any reason.  You will save time and energy looking for the receipt in order to return your item.   

I also have a simple tax file that I use to hold all of my papers that need to be set aside for tax purposes, such as our property tax information, quarterly church donations, school donations, etc.  It is not broken down into categories.  Throughout the year I am constantly placing paperwork into this file.  Since I am not a “type A” personality, I am satisfied with knowing where I can find all of my tax paperwork.  Of course, if this isn’t your personality, you can (and should) set it up in a manner that makes sense to you.

When it is time to file taxes, the important thing to remember is that you have all of your documentation available to turn over to your Accountant (or to do it yourself if you still prepare your own taxes).  The information that needs to be scanned is put into a file on my computer, (and this includes anything that is on a receipt printed from a department store).  All of my other documents are easily available and within minutes I can have everything together. 

As with everything in your home office, developing a system and process that you follow to document your tax receipts and write-offs is the idea here.  You can use such things as Neat Receipts or portable scanners to scan documents – or you can scan them right from your printer/copier/scanner if that is easier.  Whatever system you use, make it simple and easy….complicated systems will stall your progress.

Linda Clevenger

Organization Direct, Speaker, Consultant and Professional Organizer