If you are keeping good records, you might have a lot of paperwork. I’ll give you some pointers of how to keep it clutter free and integrate it into your business so it isn’t a nightmare trying to stay on top of it.
Keep your records electronically.
Electronic records work as support in an audit if they contain the information that a paper receipt would show. Print your bank and credit card statements to pdf and see if your accountant can send you pdf’s of tax returns. Scan in your receipts and keep them organized. Some accounting softwares allow you to attach copies of your receipts to individual expenses which is nice, but if you switch software later you need to make sure you have copies of those somewhere else. Also, make sure you have a backup system for your electronic documents!
Each person has a different system but here is what works for me:
I use a folder system and it is separated between personal and business. From there, I have a sub-folder for different items and then by years. For each of my expenses that I have pdf for, I use a naming convention so they are ordered chronologically and it is easy to see what it is for. That way, if I need to access a receipt, I can look at when it occurred and find it quickly. With my paper receipts, I don’t scan each of those in separately, I do it on a monthly basis. I’ll then upload them as a single pdf per month into the correct sub-folder. Here’s a quick peek:
Here’s how I do it so it doesn’t take me forever at the end of the year or get overwhelming:
Each time I get a receipt emailed to me, I convert it to a pdf and save it to the correct place. This way, I don’t have a ton of unread emails lingering in my inbox AND I don’t need to go searching through my emails at year end to make sure I have them all saved and all my expenses recorded. This is extremely helpful with my personal stuff like donations and other tax deductible items that don’t run through my business account. If I do it right away, then I don’t miss out on things at tax time.
On a monthly basis:
I print my bank and credit card statements to pdf, include the reconciliation reports and save them to the right folder. Then I scan and upload my paper receipts for the previous month. Example: I usually just do a one pdf for all of the receipts and save them labeled with the date: 2017-11-30 Monthly Receipts. Lastly, I make sure my calendar is up to date with any meetings and my mileage log is up to date with any travel (I still just use excel for my mileage log).
Then I am done. That’s it. Doing this on a monthly basis saves me a ton of time over doing it at year end and it gives me the chance to look over how my business did that month.