Organize Business Receipts: How to Create a Simple Filing System to Keep All Your Business Receipts Organized

There are many reasons to keep your business receipts organized and ready at hand, from tax audits to insurance claims and product warranty issues. The problem is coming up with a simple and effective system that’s easy to maintain, so that you don’t just end up cramming them all into your pocket to be dealt with on some ‘deferred’ date.

There can be different ways to arrive at the same end. The method I’ll be sharing with you today is an old secret that has passed down in my family from generation to generation (well, to be more precise, I’ve learned it from my girlfriend, who took it from her ex... so 'stolen secret' and 'extended family' might be more appropriate). What's awesome is it's cheap, simple, and effective.

At the end of this tutorial, you’ll have all those loose receipts housed in a single binder that spans a full tax-year. So let's get down to it!

What you’ll need:

• A sturdy 4" D-ring binder ($12 - $21 at Office Depot)
• A set of tabbed dividers with an index page ($3 - $8.50 from Avery or Office Depot)
• A few 8.5” x 11” transparency films (Optional. Preferably compatible with your printer. Inkjet $17.50/20 sheets at B&H)
• Plain 8.5" x 11" paper sheets (preferably recycled)
• A stapler with staples
• A three hole puncher

What you’ll do:

1. Separate bills from other receipts.

   Your bills are expenses that occur on a regular basis and usually carry a statement. These include Electricity, Internet Service, Phone/Cellular, Rent, Property Tax, etc.

   Other expenses consist of purchases made on an as-needed basis: food, equipment, supplies, etc.

   It’s a good idea to separate the two for easy reference down the road (see below)

2. Organize your receipts.

   It hurts, it burns, it’s terrifying—but you’ll have to face this task sooner or later, so might as well get it out of the way right now.

   Don’t skim on it either, least you’ll have to redo the work all over again. Dedicate ample time. Crank up your favorite music. Order some take out. Perhaps invite a friend or a colleague to join you—whatever it takes to put yourself in a good space and make the experience less painful.

   Once you’re ready, start going over the receipts and separating them by categories and dates. Your categories can be general at this point, like ‘Vehicle’ or ‘Computer’, and you’ll probably start getting a better sense of the categories you’ll end up having as you move along.

   Once that’s finished, look over the groups of receipts you’re left with and ask yourself if some categories can be merged, and others re-categorized more accurately (for instance, ‘Vehicle’ and ‘Gas’ might go under the broader ‘Transportation’, and Computer and Printer might go under ‘Electronics’ or ‘Equipment’).

   How broad or narrow each of your categories should be will depend on the nature of your business. For instance, if you own an IT company that relies heavily on electronics, you might want to break ‘Electronics’ further down and be more specific, as opposed to someone who runs a trade, for instance, and only uses one computer for database. He, on the other hand, might find Transportation a bit too broad (etc).

   Ultimately, you’ll have to exercise personal judgment. The goal is to be able to think of something and know exactly where you’d look to find it.

3. Prep your index page and tabbed dividers.

   Now that you’ve honed in on your categories, it’s time to put together your index page and tabbed dividers. The index page gives you an overview of your entire binder, so you could quickly run a finger down and find whatever you need. Think of it as the table of contents in a book. The dividers separate the different sections. Think of them as the chapters.

   Avery sells different-sized sets, from as little as 5 tabs to as many as 32. I find 12-15 a good number. More, and the index page starts feeling a bit cluttered and heavy on the eyes. (I’d just as soon use two shorter sets than a long one, but this might be a personal preference)

   If you’ve come up with a lot of categories, consider putting your regular bills on one set, and all other expenses on another. This will keep the presentation cleaner and enable easy reference. Again, play around until you find a setup you feel comfortable with.

4. Label the index page.

   Some index pages come with pre-printed categories, but I find this can be limiting and suggest you buy blank ones and enter your own titles. This will ensure they're best tailored to your needs.

   Next, instead of writing directly on the index page, consider using a transparency film. This will give you the flexibility to make changes in the future or to repurpose the entire tab set and index page down the road. On the other hand, should you mark the index page and later on wish to make some changes, your only remedy would be whiteout or buying a new set.

   The actual labeling can be done by hand or printed out. I find printing gives a cleaner look. If you decide to use a transparency sheet, look for a brand that’s compatible with your printer.

5. Do the same for your bills statements.

   Here the matter is even simpler as you need not fuss with categories. Simply enter a description of the bills on the index page. When you proceed to file the appropriate statements under each section, you’ll have one or two statement per month at the most (depending if it’s monthly, bi-weekly, quarterly, etc

6. Putting it all together.

   Now comes the fun part (well, fun considering what we’re doing). With your receipts organized according to categories and dates, and with your binder labeled, we can finally start filing the receipts.

   Starting with the first category, take a sheet of blank or recycled A1 paper, three-hole punch it, write the corresponding month at the top (i.e. January), and staple the receipts to one side of the paper (the blank side, if using recycled sheets). Keep it neat and don’t overcrowd the page. Four per sheet is a good number; two if the receipts are long. If there are more receipts for a given month, start another page.

   Now, depending on your patience and the volume of your receipts, you can elect to organize them in an ascending order within each month, or simply group them with no internal order.

   Going this extra step will obviously make future reference easier, but it would also require more of your time right now. I’d say it’s only really necessary when you have a lot of receipts for a given month under a category (say, more than two pages). But again, you need to find your own comfort level.

   Once you have finished attaching all the receipts and filing them under the appropriate category, make sure you add enough blank sheets of paper for the coming months (one for each month), and insert a few more at the back of the binder for quick access should you need them.

7. What to do if you’ve got multiple categories on a single receipt?

   To the best of your ability, try to keep your filing system in mind while shopping and to separate purchases on different bills. It becomes intuitive as you grow more accustomed to your system.

   However, at times you’ll still run into this situation, and you can choose one of two options.

   •The simplest and most organized way is to make a photocopy of the relevant receipt and file a copy under both section, highlighting the relevant item.

   • The other (somewhat more involved) option is to file the receipt under one of the sections, and make a note under the other with reference to the item and section the receipt was filed under.

Conclusion:

So now you have an organized binder housing all your business receipts and expenses that’s easy to maintain and refer to. The hard part was putting it all together. Going forward, if you just keep updating it on a regular basis—every day, or at least once a week—with just a little bit of discipline, you’ll never have to suffer rampant receipts ever again.

Next tax season—or if your printer suddenly breaks down—instead of running around like a headless chicken shouting “Where is it?! Where is it?!” you’ll simply walk over to your desk cool as a cucumber, pick up your neat new binder, and hand it over to your accountant (or pull out the receipt for your printer and head over to the local Office Depot).

Now that’s classy!

Labels: avery, binder, filing system, organization, organize business receipts, prepare for tax season, table of contents dividers, taxes, transparency film