Don’t you absolutely hate having to keep records and receipts every minute of the day?
It can become a really tedious chore having to remember how much things cost, what you spend money on (especially when it comes to cash.)
How about sales? Do you have a system in place to accurately record all of your sales, how about your returns?
If this is making you a bit anxious have no fear because I’m going to show you three simple methods that you can use right now to organize your business record keeping (plus it also works in your personal life as well.)
Method # 1 – The Envelope System
This is a simple but massively effective system that I use to capture any and all receipts. It can be used either for your business or for never missing a red cent that a company owes you on an expense report (If you are still gainfully employed by someone else.)
The gist of this system is keep an envelope with you at all times (can be in your jacket, your briefcase or laptop case, your car or your office) what ever works for you. I use plain white (non-windowed) envelopes. Each time I get a receipt, I flip it around and write a brief description on the back of the receipt (So I don’t forget in a week what exactly it was for.) I write who I was with if a T&E type of receipt. (like a meal)
Just quickly write whatever info will help jog your memory.
Next I place the receipt in the envelope. I use a separate envelopes for each month. So on the outside of the envelope I put the month (March 2011 for example). Then I continue putting all receipts in the envelope. I add them up when I prepare my month-end reports.
For things I don’t get a receipt for (like tipping the cab driver) I write on the front of the envelope the date, amount and a (really) brief description. (like: 3/11/11 $5 Tip – Hotel Bellhop or $3 donut and coffee – Roach Coach)
The envelope system works equally well for cash receipts (if you sell merchandise for cash.) I’d use a separate envelopes, one for receipts and one for expenses.
This way we account for everything using one simple system.
Method # 2 – The Notebook System
Anyone who has been reading my tips for any length of time knows I’m a big fan of little 3 x 5″ spiral notebooks. You can buy them from Staples like 5 for $2. So if you used one notebook a month it would cost under $5 a year. (I love simple cost-effective things)
The beauty of these notebooks is that you can quite literally carry them with you at all times. You can use these to write non-receipt items down. Plus you can elaborate on the description as much as you want. You can also take notes or jot down ideas, which really comes in handy.
I usually write my notes from the back forward and write financial information from the front back, so it’s really easy to find.
I know you’re probably thinking, “Can’t I use my smart phone for this?”
The answer is yes you can, but I find filing the notebooks with my monthly documents convenient. Plus I still think it’s easier writing a note with a pen than typing on a phone. (but you should do what works best for you)
Method # 3
Lastly I wanted to mention a choice I’ve made a while ago. I use one credit card for all business activity. I use a card that puts 1% of the purchase amount into an interest bearing savings account that I could withdraw any time I need to, but you could get any rewards you want. (you have to spend the money anyway so you might as well take advantage.)
Should you use a personal or a business card? I don’t think it matters as much, I use a personal card because a like the rewards and it’s covered by the CARD act. (This offers certain protection and disclosures to personal cards that aren’t required for business cards)
Using a separate card for business activity helps in a couple of ways.
First, you’re not co-mingling your spending. It becomes very problematic (especially with Uncle Sam) if you co-mingle your business and personal spending and funds.
Second, most credit cards offer a pretty comprehensive year-end statement, broken down by categories. This is a very useful report to have when preparing your year-end financial books. (this report get less and less useful the more you co-mingle personal and business expenses on the card.)
So there are 3 methods I use keep my receipts organized. Do you have to pick just one and only use that one method? Of course not, I use a combination of all 3 to manage my business. I use a lot of the same methods to manage my personal life.
Use whatever combination works well for you.
Visit my site and let me know the ways you keep organized!