![]() ![]() If you only have a few receipts each month and prefer a low-tech option, labeled envelopes for each week or month is fine. Whether you choose to keep physical records or digital, find one method that works for you and stick with it. There are several perfectly effective ways to save your receipts, though the shoe box method mentioned earlier is absolutely not one of them, (your small business accountant will thank you for it). Any payment you make for your business, whether it's a service, such as paying someone to design your business logo to simply buying coffee for a client should have a receipt with it. Having receipts for your business purposes helps you keep accurate records for your taxes, speed up your bookkeeping, and lend credence to your tax reporting. With a business bank account and a business-only credit card, you know that every purchase made and every transaction is solely related to your business, making your financial and tax reporting easier and more accurate. Was the Office Depot purchase on your statement for school supplies for your kids or your supplies for your home office? Or, did you combine it all into one purchase? Was the Starbucks purchase for you and your spouse, or did you meet a prospective client and treat him or her to coffee? Having a combined business and personal bank account makes you more likely to be flagged for an IRS audit, and, it's so much harder to track and log your expenses and maintain financial statements. After all, you're the only one in the business, and it's easier than having to transfer money from your business to your personal account to pay yourself, right? Many independent contractors and single service providers, such as in-home day care providers or independent landscapers, may not see the reason behind separating their business and personal bank accounts. To make it easy, we'll share some of our best practices. In return, you'll save yourself ample time, money, and stress at tax time. However, tracking your expenses can actually be very simple and only require a few minutes of your time each week. You've probably heard horror stories of shoe boxes filled with receipts and IRS audits. We know small business accounting and bookkeeping may not be what you dreamed of when you decided to go into business for yourself, and you may even be overwhelmed by the idea of it. Congratulations on starting your own business! Whether you're an independent contractor or a new start-up, you have a lot on your plate as you establish yourself and your business, but one thing you need to consider, if you haven't already, is tracking your small business expenses.
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