When customers get asked at check-out if they want a receipt, most folks say, "No thanks." People view receipts as just clutter but as a business; receipts are your armor when an audit arrives.
Why? Because receipts help keep your books straight when tax season rolls around.
No, it is not fun wading through different receipts and trying to get them into some semblance of order. However, it is necessary to make sure your business remains compliant with regulations.
They aren't just tiny pieces of paper, no.
Why Should You Keep Track of Business Receipts?
Apart from working to develop sales and customer relationships, good record-keeping is also an important aspect of building, maintaining, and growing a business.
Keeping A Good Business Record
Keeping receipts is part of maintaining good business records and spending visibility. They help you keep track of the progress of your business. It helps you answer the following questions:
- Are you spending more than you projected on something?
- Are the actual costs of raw materials lower than you expected?
- Is it affecting your profit margin?
- Are you earning, or are you just staying afloat?
- Do you need to adjust your prices?
Keeping receipts can help you answer these questions by providing you with actual figures you can work with.
Preparing For Tax Returns
Receipts are proof of deductibles when you file your tax returns and will help you enormously when you do your income tax returns. If questions about the legitimacy of any expense, you can easily show them your receipts as proof.
Preparing Financial Statements
Receipts are part of any business' financial statements. These usually include receipts as proof of either sale or expense. Keeping factual financial statements for your business is essential when dealing with creditors or applying for a business loan. Keeping everything transparent, in order, and accurate will make your transactions with your creditors smoother.
Proof Of Sale
Keeping receipts means you have a record of an actual transaction that occurred. If there is dissatisfaction with the service received, that receipt goes a long way in proving that:
- There was indeed a sale and
- It was between the two parties involved.
Should any refund or exchange of any kind, the amount must be reconciled with the actual receipt.
Also Read:
How To Keep Track Of Receipts For Taxes?
Organize Your Paper Receipts Properly
- Organize them as you receive them. It may be a good idea to keep separate envelopes for personal and business receipts. This practice will save you a migraine when tax season comes.
- Note what each receipt is for. What was the business purpose of that restaurant receipt? Was it for a dinner meeting with your clients or a team gathering? Making notes on them will help you recall each receipt's purpose. Some receipts, like a receipt for ten new desks, are easier to remember the purpose of than other, more obscure ones.
- Put organizing receipts as a task in your calendar. This way, you always have time to organize your receipts during the workweek. Letting them pile up only means more work for you during crunch time.
- Use binders and folders to categorize your receipts. Keep them separated by month and then by type of receipt. Or whatever makes sense in your business. Keeping them organized like this will make tracking them more accessible.
Digitize Your Receipts
Keeping a soft copy of your paper receipts is just a smart move. However, keeping digital documents and then uploading them to your expense tracker app will make keeping track of receipts even easier for you.
First, take a picture with your smartphone or use a scanner. Then, upload it to your receipt tracker or your business computer; you now have hard and soft copies of your receipts. Depending on where you are, digital copies of your receipts might even suffice when filing income tax returns. This also works best for teams that have started doing hybrid work, wherein not everyone can submit receipts in person promptly.
Use A Receipt Tracker
Choosing the best receipt tracker for your business depends on the nature of your business and what you want to get out of your chosen receipt tracker app. For example, do you want a receipt tracker that helps you track only online transactions? Do you want one that also helps you track paper receipts? Do you want one with 24/7 live chat support in case you have questions in the middle of the night? You can find the perfect receipt tracker for you out there.
The Best Receipt Management Software for Small Businesses
Below are a few of the most popular receipt-tracking apps your business can benefit from.
Fyle
Just snap a picture of your receipt and text it to Fyle, and its AI does the magic from there! It will automatically create an expense report, pull out all the key details, categorize it according to your company's system, and store it for you. It works for both credit card and out-of-pocket expenses—all without downloading an app. Fyle starts at just $11.99 per active user/month.
Quickbooks
Probably the most popular one on this list, Quickbooks is a great receipt tracking software for businesses of all sizes. It aims to make your business receipt tracking run smoothly at all times. For example, the platform enables you to track small receipts that could be misplaced and even client invoices. In addition, it features real-time dashboards and downloadable bank data to make it easier to update your accounts. The tool is available for Mac, Windows, and mobile devices. The corporate package price ranges from $15 to $35 monthly.
Hurdlr
Hurdlr is a receipt tracking software and a tax savings platform. It is a simple and automatic tool for tracking business expenses and increasing tax savings simultaneously. In addition, it features real-time status for your profits before and after tax deductions. You also have the option to link your business accounts in the app so that you can automatically submit your tax filings to your chosen certified public accountant.
Mint
A simple receipt tracker popular with small businesses and freelancers, Mint features a budget and goal tracker that aids financial planning and management. It also has cash tracking, credit score tracking, and bill and purchase reminder features. Another good thing about this app is that it is free and available on iOS, Android, and web browsers.
Freshbooks
If you do not have an in-house CPA, then Freshbooks might be a good fit for you. It aims to provide a platform for entrepreneurs to avoid the hassle of intimidating spreadsheets and put all data into one location. A great feature of Freshbooks is the automatic importing of expenses. Once you’ve linked your account, your expenses are automatically uploaded to the platform. This app is available on iOS, Android, Windows, and Mac devices, and the plan starts at $15.
Expensify
Expensify is a free receipt app that allows you to scan and log receipts for every incoming and outgoing business transaction. It will then generate reports and submit them to you for approval. Expensify factors in your company policy to develop well-analyzed and accurate information. This is the perfect app for those who want to manage and organize their expenses in real-time, have their expenses automatically recorded, and have their reports updated.
Bench
Bench takes care of importing, reviewing, and categorizing your monthly expenses, relieving you of the tedious accounting admin tasks. Aside from tracking your business expenses, Bench also sends monthly financial reports, letting you monitor and understand your cash flow.
Wellybox
Wellybox is a smart, automated receipt tracker app that lets you scan your receipts and send them to a WhatsApp chatbot using advanced scanning technology. Afterward, your emails and receipts generate permanent digital reports on the cloud. In addition, expense reports are accessible since they are stored in the cloud. Wellybox can be synced with Quickbooks, making it convenient for those already subscribed to Quickbooks. But Wellybox can also work as a standalone application.
Messy Receipts, Messy Books: The Dangers Of Not Tracking Receipts
When your receipts are not in order, your books are also not in order, and record-keeping is a basic necessity to adhere to tax laws. So, not being able to organize your records well can have legal consequences. Listed below are some of the dangers of not tracking your receipts.
Not Knowing What Goes On In Your Business
When your financial records are unorganized, it becomes difficult for you to identify the following:
- Department costs
- Projected vs. actual income
- How much it costs to get a dollar in revenue
Sound bookkeeping is what ensures that you’re always on top of your finances.
Inability To Strategize
Another consequence of disorganized records, such as receipts, is the inability to create a sound business strategy. When you don’t know the numbers and your accounting strategy is lacking, it’s hard to devise a plan for the next month, quarter, or year. Well-organized books enable you to set goals properly, monitor progress, and keep track of milestones.
Having Problems With Cash Flow
You can better grasp your business finances when you track your expenses and payables properly. Automation can also help you get those invoices out on time and do your collections more efficiently. When you clearly see how much you spend and earn as a business, you can also foresee cash flow hurdles before they even happen.
Not Being Able To Optimize Your Pricing
If you have no idea what your expenses are because your receipts are messy, you risk not being able to price your goods and services accurately and strategically. Without optimized pricing, you cannot strengthen your profit margins.
Missing Tax Due Dates
If your receipts are in order, you are ready for tax season all year. Tax time can be stressful for many businesses. Imagine not getting stressed out come tax season because your books are in order. When your receipts are not tracked properly, you will inevitably spend many labor hours sorting through a massive pile of receipts. Chances are you’re going to miss the deadline and incur penalties.
Paying For Unnecessary Expenses
When your books are disorganized, you risk paying penalties, overdraft fees, or late fees with vendors and lenders. Not to mention tax-related penalties. On the other hand, having an organized back office — which means receipts are properly tracked — saves you dollars, helps you avoid stress, and ultimately saves your business.
In Conclusion
Good bookkeeping can often be one of the major reasons why any business sustains against its competition. Receipts provide a host of information for your business and can serve as one of your barometers for growth while also helping you with pricing.
Additionally, being organized will also help you save a lot of time and money in the long run, as you’re always aware of how much you spent, when you spent it, and where it was spent.
If you’re wondering where to begin your search for the perfect receipt management software, sign up for a demo and start tracking your receipts with Fyle.
Now, you’ll see how easy receipt management can be.
