Organizing your business expenses is a great way to keep track of everything you spend money on. It will also help you build a system that helps you better understand where your money goes and how much it should be coming back out of your business after each month. I’ve found that the best way to organize your expenses as a small business owner is with a simple filing system, but one where all of your receipts are kept in one spot. By doing so, you can easily find documents related to any given category at any time without having to wonder whether or not they’re around somewhere else in the house! Here’s how I organized my receipts and bills:
The first step when organizing your expenses is to separate them by category.
The first step when organizing your expenses is to separate them by category. You can use categories like:
- Supplies (like paper for the office)
- Rent and mortgage payments, etc. If you have multiple bills from one company, it’s easier to categorize them in this way than having different tabs for each bill on a single spreadsheet or calendar.
Create a filing system.
When you’re just starting out and have limited experience with accounting, it can be tempting to keep things simple. But if you have a small business, that’s not always the best option. A well-organized system will make your bookkeeping easier over time and help you stay on top of things when things get busy in the office or at home.
The first step is deciding what kind of filing method will work best for your business: paper or electronic? Do you want all receipts destroyed after a certain date? How much space do you need for each type of document?
Once these questions have been answered, create an inventory list that includes details about each expense (such as where it was spent). Then categorize these expenses according to category so that they’re easy for reference later on down the line (for example: taxes vs payroll). Finally, decide how often (if at all) different types of documents should be reviewed based on their frequency—for example does this type require monthly reporting?
Create a Master File of your business transactions that are all organized by categories.
You should create a master file of all your business expenses. This will help you keep track of the receipts and show them to the IRS if they ask, which is good practice anyway.
You can do this by creating an Excel spreadsheet or using an online tool like QuickBooks (which we’ve already talked about). If you’re audited for your taxes, this is one way to prove that you actually spent the money on what it says in your books—and no one will ever have access to it!
Keep original receipts and bills.
If you’re keeping records for more than 7 years, keep them in a fireproof container that’s large enough to hold all of your receipts and bills from the past year. You should also make sure that any originals are stored securely so they don’t get destroyed by house fires or floods.
If you’re required to file your tax return at the end of each year (for example, if you’re self-employed), then make sure all of your paperwork is kept up-to-date with last year’s information before filing! This will save time when it comes time for taxes next year because there won’t be any questions about where things are supposed to go (i.e., on which form).
Scan or photocopy your receipts and bills.
Scanning is better than photocopying.
- Scanning is faster and easier, so you can get your finances organized more quickly.
- Scanning is more secure, because it’s harder to steal information from a document that has been scanned instead of copied by hand on paper.
- And scanning saves paper—the planet will love you for this!
Keep your receipts for at least seven years.
You may think that keeping receipts for a year is enough, but it can actually be the opposite. One way to keep track of your expenses is by using a calendar or journal that you can write in every day. This will help you remember what happened when, where and why certain things cost what they did so that you don’t have to look back at old data later on in life as well!
Organize your bills by month.
If you want to keep your bills organized, there are a few ways to go about it. You can organize them by month or year and keep all the bills in one place. This is great for keeping track of which bills have been paid off using employees card and which ones still need attention. Or, if your business has a lot of small expenses that happen throughout the year (like taxes), consider organizing your expenses by month instead of year so they’re easier to find when they come due again!
Another option is just putting everything in chronological order—that way, if something needs attention next month rather than this month or even this week then it’s easy enough for someone else on staff who knows where their job description sits within our organization chart at work (I mean…it’s not like anyone would know anyway).
The organization is key!
Organizing your expenses is an important part of running a small business. It’s not only helpful for keeping track of your income and expenses, but it can also help you save time, money and stress.
Here are some benefits of having an organized system:
- You’ll be able to find what you need quickly when making payments or tax returns—and it will all be in one place!
- You’ll be able to keep track of where all your money goes so that when taxes come around again next year (or even just this year), everything looks more clear-cut than ever before because there won’t be any surprises left behind from last year’s budgeting process that could cause issues down the road (like forgetting about something).