While reconciling bank accounts are important, you need to have proof of receipts for all your transactions, even the credit card transactions. Today, we will talk about the importance of keeping receipts for credit card statements and ways to organize your credit card transactions. Follow along and get your credit card receipts in order before it is too late.
The importance of keeping credit card receipts.
Most small businesses have one or more business credit cards (CC). Keeping these receipts is important because it shows your CPA and any tax agency the details of the business-related purchase. It will also help the accountant or bookkeeper when reconciling the credit card statements.
Check out our post that talks about how to make bookkeeping a priority in your business.
Now that you understand the need to keep receipts organized, let’s talk about organizing CC receipts.
What kind of receipts should I keep for my business?
The IRS lists a variety of receipt types you can keep for your business. Check out the page here. In this post, the main receipts we are talking about are CC receipts from purchases for business expenses.
How to organize credit card receipts?
Use an accordion folder to organize receipts.
If you have particular receipts, you can sort them by category and add them to a receipt size or a large letter size accordion folder. The thirteen tab version works for the optimal amount of dividers. Paper accordion folders may tear over time so using plastic ones work better. Pick ones that have a cover to protect the papers in the tab sections. See these options I found on Amazon (affiliate).
Use a letter-size No. 10 envelope and add the receipts to them.
If you do not use credit cards often, a simple white letter-size No. 10 envelope will work. At the end of each month, you can pull those receipts and staple them to the credit card statement. This is a super easy method. If you are primarily at home, you can store this credit card envelope in a drawer near your desk. Below are the ones I found on Amazon (affiliate).
Use a large yellow envelope and place large bills in them.
When traveling, using a large yellow envelope and storing it between your car seat and the console will keep it safe and protected. Below are envelopes I found on Amazon(affiliate).
Scan credit card receipts.
If you prefer to scan the credit card receipts, create a folder that will house the PDF versions of the receipts.
Name the main folder the credit card name so you can find it easily, like American Express Business Credit Card.
Then there should be subfolders that say the name of the 12 months. Similar to these: January, February, March, April, May, June, etc…
Within the month folder, label the PDF files for the receipts as follows: Name of the store – date of receipt – what was it for?
Using this system will help you retrieve the file quickly. Also, save a PDF of the credit card statement for that month inside the month folder. Then you will have everything you need in one folder.
At the end of the year, you can set up these folders for the entire next year to make it easy to add the CC statements and receipts.
If you prefer to get your receipts emailed to you, be sure to download them and rename them with the above format so you can retrieve them easily.
Visit our post for tips on going paperless: Going Paperless – Tips and Apps No Small Business Owner Can Do Without
You can save these files on your computer or the cloud. But be sure to use the structure I mentioned above to keep organized. Taking a few minutes every time you add the receipts will save you frustration later at tax time.
Other tips on credit card receipts:
When you are about to place the credit card receipts into the accordion folder, take a moment and write down the purpose for that credit card receipt. This way, when you are looking back on it a year from now, you will know exactly what it was for and where it goes on your tax return.
Make sure the credit card receipts are legible. It’s your issue, not the IRS’s, if they have a question about a receipt.
If you have more than one credit card, be sure to keep the receipts separate. This will make for an easy review when it is reconciling statement time. Receipts should be separated by credit card name folder in this scenario.
Have a commonplace for the monthly statements and receipts. Keep all these credit card statements/receipts for the entire year in one place to make it easy to compile at the end of the year.
I hope these tips help you keep your receipts in order when tax time comes around. If you need help setting up a receipts system, feel free to contact us.
Below I found several additional resources to help you organize your business receipts. Feel free to check them out.
I’m Being Audited. What If I Don’t Have Receipts? from H&R Block
How Long Should I Keep Business Records from our blog
The above links from Amazon (affiliate), if you click through and buy something on Amazon, I will receive a small referral fee at no cost to you. Thank you for supporting my small business.