When I first started my business, I knew that I had to keep all the receipts I gathered if I wanted to be able to deduct business expenses on my income tax. So I did - stuffing all my business receipts into a drawer of my desk.
This was a fine system until the time came to do the bookkeeping, and I bitterly discovered that having a disorganized mass of receipts was almost as much trouble as having no receipts at all.
Over the years I developed a much better filing system for receipts, a filing system that makes data entry easy and allows me to retrieve a particular receipt with some hope of success if I ever need to go back and find one.
What I do to keep my business receipts organized is keep a series of file folders labeled by month and year, such as "Receipts November 2003". The two most current file folders sit on top of my desk, so when I collect receipts on my various rounds, it's easy for me to pop them into the correct monthly folder.
Then when I do my monthly data entries, I take the appropriate monthly file folder and sort the business receipts into piles based on their income tax classifications. For instance, I paperclip together all the software receipts, all the food and entertainment receipts, and all the automobile-related receipts.
When I'm finished entering the data, I put the receipt folder of the month in the appropriate place in a drawer of one of my filing cabinets. As you know, you have to keep business-related receipts for six years, so I have several drawers full now, but at least the receipt folders are easy to find if I need to review any of the information!
My filing system isn't perfect, but it makes it a whole lot easier to enter the monthly receipt data and gives me a whole lot less paper to sort through if I actually have to go looking for a receipt later.
