You don’t necessarily have to be an organizing mogul to track construction receipts and keep your profit and expense information ready for tax time. Contractors track receipts in several ways, and you’ll eventually find the method that works the best for you. But, you’ll want to get your business off on the right foot by keeping your receipts filed from the beginning so that you can find them when needed and tweak your organizing method as you go.
Create a Preliminary Organizing System
First, you should find a system that works for you to start organizing your receipts. Your business isn’t necessarily the same as other contracting companies; what works for one company may not work for yours. Still, it’s important to get all your employees on board with using an efficient tracking system that becomes second-nature.
You may want to start with a detailed filing system as the first step in your receipt tracking. Many contractors track receipts by creating folders for each particular job and keeping all receipts, signed paperwork, work orders, and invoices in each folder. Store the folders alphabetically by your clients’ business name or last name and keep them separated by year for easy access when tax time comes. You may also want to keep detailed notes for each receipt explaining what the cost is for so you don’t have to guess when it’s time to file taxes.
Use a Tool That Helps Contractors Track Receipts
The internet and cloud systems have made it easier than ever for business owners to track their receipts, income, fees, and other expenses. According to the IRS, you need to keep receipts for any deductions or expenses you claim on taxes for up to six years, depending on the type of transaction. The following tools can store your receipts in the cloud for easy access whenever you need them.
Neat is a company that offers software and scanners that help you scan and organize your business receipts. Neat also partners with other companies that provide scanners you can use to scan receipts and send them electronically to your Neat software. Or, use your mobile device to take a photo of your receipt to send to your account. Neat’s smart software analyzes your receipts and inputs your information without you having to enter it manually.
Neat also integrates with top accounting software, like QuickBooks so that you can send your expense information along for easy updates. With bank-style security and encryption, your information stays safe in the Neat system.
Shoeboxed is an online filing system that takes your receipts and turns them into accounting data to make your receipt tracking process more streamlined. Scan your receipts using your mobile phone and the Shoeboxed system makes them automatically searchable and categorized so that you take less time organizing your expenses. Shoeboxed even auto-imports receipts it finds in your Gmail inbox.
Expensify is an attractive option to track receipts for those who want a straightforward and quick way to keep track of receipts on their mobile device. The Expensify app is available for iOS and Android and lets you either enter your receipt information manually or snap a quick photo for the app to decode your information itself. You can also enter expenses without a receipt, like mileage expenses, which you can even add using a GPS element.
You can choose to subscribe to a team plan, which costs $5 each month per active user on your account. But, this allows your employees also to have a hand in your organization system, leaving some of the work off you.
Have a Backup Plan to Track Construction Receipts
Receipt tracking tools are beneficial to business owners, but no tool is foolproof. It’s good practice to have a backup plan to track your receipts to ensure that no expense gets lost in the shuffle and that you’re always able to substantiate any claims you make on your taxes. Some backup practices that may come in handy include:
Stick to credit, debit, and checks for purchases. Cash may be fast and convenient to use, but it doesn’t leave a paper trail like electronic payment methods. You’ll have an easier time finding proof of purchases when you use an automated method because you can then rely on bank statements for backup.
Taking a photo of each receipt with your smartphone. Use your phone to snap a quick photo of a receipt as soon as you have it. You can download and subscribe to an app like Dropbox to store your receipt in organized folders in the cloud, or use Google Drive’s free app and service to do the same.
Keep an accounting journal. At the close of business every day, write a blurb in your accounting journal that provides more information on your receipts for the day. You can even copy your receipts and staple them to each day’s page for easy reference. Use a new journal for each year and store it with your other yearly paperwork.
Conclusion: Helping Contractors Track Receipts
Accounting may not be a fun process, but you can certainly make it easier on yourself. Tracking apps and software like those mentioned can automate your receipt organization process and keep copies of your physical receipts handy. But, it’s also important to have an in-office organization method and backup procedures in place to ensure that you accurately report, and can verify, your expenses every year.