Whilst many people go about their day to day lives not worrying about their receipts, for business owners, it is an entirely different story. Receipts help business owners like you claim back money for expenses, as well as helping to lower the rate of tax you’ll pay when January 31st comes around. Without receipts, you could end up paying much more tax than you need to, which is money that could be better spent on your business.
This guide gives you some simple ways you can record your receipts more efficiently for a nicer looking tax return at the end of the year.
Firstly and most importantly, you must keep everything. Even the silliest little expenses could add up in the long-term and cause you to be out of pocket. No matter how small or unimportant the expense may be, always ask for a receipt, always keep it and always record it.
Make Notes On Your Receipts
You can either do this yourself or kindly ask your clients to do so when it is appropriate. It’s always best to make more descriptive notes or add times and dates to receipts if they aren’t already on there. Making notes about an expenses particular business purpose will help you to justify it to the tax office each year. This is especially important for dining or entertainment expenses, as they are often harder to justify. Detailed notes will help to legitimise your receipts, should you ever be questioned on your spending.
Stick To Card Payments
Cash is very difficult to track and even with a receipt you may find yourself in all kinds of trouble if your expenses are brought into question. To keep expenses easy to track, both for you and for the tax office, you should stick to card payments. This will be much easier if you have a separate business bank account, so if you don’t already have one it makes sense to set one up ASAP.
But Don’t Rely On Them
Whilst card payments are easy to track and show exactly how much money you have spent on goods or services, they don’t offer a breakdown of what that money was spent on. Therefore, bank statements alone are not sufficient when proving what business expenses you have. A combination of detailed receipts with bank statements to back them up is the most efficient way of recording your expenses.
Keep Printed And Digital Copies
Whilst it might seem rather over the top, keeping both paper and online copies will help you to record your receipts more efficiently. Unfortunately, you can’t rely on either medium wholly as things may get deleted or chucked in the bin by accident. If you’re serious about your expenses and potentially saving money, you’ll take the time to create online copies of your receipts and back them up with printed versions.
As tax evasion and far from perfect accounting becomes a bigger issue in the UK, you’ll want to make sure that your books are up to scratch. If you’ve covered every base, then you’re unlikely to have your expenses questioned and when done properly, receipt recording can save you a lot of money.