The administration of running your business can seriously take the fun out of being in business altogether. Consider putting some simple systems and processes in place to keep things organized.
Obviously getting paid is the biggest pain … and next? For most of my clients, it seems to be keeping track of your receipts. At the end of the week there they are, stuffed in your wallet, in the console of your car, in coat pockets … sound familiar? If you don’t have a system to record and file them you run the risk of losing out on valuable deductions come tax time and remember, you can’t claim an expense on your tax return without a supporting receipt.
All those little expense receipts for parking and stationary add up over the course of the year. If you just stuff them in a bag or a shoebox, waiting to deal with them when you get around to it, the pile can quickly become overwhelming.
So, here is my strategy for dealing with expenses:
It’s probably not on the top of the list of fun activities for most people but one of the best habits of successful business people is the ability to stick to a routine. Make dealing with your expenses part of your weekly routine. For example, on Friday mornings (or whenever you set aside time specifically to work on your business), develop a checklist of all those boring but essential jobs you know you need to do like invoicing, chasing cash and yes, administering your expenses.
Always make sure you ask for a receipt and gather them in one place while awaiting recording. For example, I use a clear, zipped wallet which I keep in my day bag. If you put them in a folder, one on top of the other, you won’t have to go through them a second time to sort into date order.
Some of my clients start with the best of intentions with a spreadsheet or paper-based expense claim form. If that works for you AND you can keep it up, great! However, there is a lot of technology out there that is easy to use to help you keep track. We can get you set up with a simple Excel spreadsheet to track your expenses, or you can use a variety of approved apps to capture and record your expenses on the go.
KEEP EXPENSES SEPARATE
It is really important to distinguish between personal and business expenses for tax purposes. Using separate bank accounts for your debit and credit cards can make this much easier to track come tax time. Trust me, it will simplify things in the long run.
CAN YOU CLAIM IT?
Are you wondering if an expense is claimable for your tax return? Visit our website (**Probably links page) to download a handy reference sheet.
KEEP YOUR RECORDS
Be aware that you need to keep copies of your receipts for at least seven years. You are allowed to keep digital copies provided they are in a CRA approved software or format. You may want to use an approved app that is designed for this rather than something you have to create yourself. This allows you to access your records at any time! Remember CDs? In seven years, will you still have a computer that can read one?
Now, if you are reading this and staring down a massive pile of unrecorded expenses, don’t panic; we are here to help. Just bring your expenses to our office and we can start you on your organizational journey, or alternatively, compile and record you receipts for you!