2013 Organization of Your Business Tax Receipts

Posted by on Mar 19, 2013 in News Updates | 0 comments

Ledger DocsI came across a recent article regarding the organization of your business tax receipts, felt is was informative enough that I  thought I would share it with you. It was written by Dene of www.ledgerdocs.com.

It is simple enough to misplace your receipts and documents throughout the year, especially when your business is booming. With this said, there can be drastic consequences to misplacing those pesky receipts and documents.

Both the IRS and the CRA will generally deny any expense claims against your business if you are unable to provide documentation that supports your claim. It is important to note that the use of a credit card can create an audit trail, and can also help in duplicating receipts, but is not considered sufficient evidence to support a tax deduction against your income. The only way to ensure that you take full advantage of your claims is to utilize a document management system throughout the year, organizing your files in an efficient and understandable manner.

There are many ways to organize your files, both traditionally and digitally. Keeping your documents organized in your office’s filing cabinet can be an effective way of storing your documents. Organizing files in relation to the date, job, and contract it is associated with allows you to quickly find specific files when needed.

With this said, a traditional filing cabinet has limitations. By storing your documents in a filing cabinet, you generally only have a single copy of the document. This can lead to confusion when you share the material with your bookkeeper or accountant, and can also open up problems in the case of a flood or fire.

In addition to the traditional filing cabinet, businesses are able to store files digitally, on their home or office computer systems. Although there is an added step of scanning the various files into the computer system, scanned documentation ensures that you have a digital copy of your documents on hand.

Similar to the traditional filing cabinet, creating a digital copy of your receipts and documents allow you to organize your documents in various folders, relating the receipts and documents to the specific date, job, and contract. Although this is a great way to reduce the risk of losing valuable receipts, there is still risk involved. Not only can fire and water damage wipe out your computer systems, they can also be vulnerable to computer crashes and viruses.

The last option is to store your files on a cloud-based server. Similar to storing your files on your home or office computer, cloud servers allow you to upload your documents into the system, where you are able to manage, organize, and collaborate on them.

This once again ensures that you have a digital backup of your hard copies, and also gives you the peace of mind that your information is encrypted and hosted on a secure server managed and backup up by system administrators. This technology gives you the ability to access information from any location, at any time (as long as you are connected to the internet).

When looking for a document management system, take some time to define your business needs and objectives. There are many examples of cloud-based document management systems, including DropBox and Google Drive, whom offer its customers a basic storage system designed around satisfying a generic user-base’s needs.

There are also more specific document management systems that have been designed around niche users, such as small businesses and bookkeepers. An example of this would be LedgerDocs, a document management system designed around the management, organization, and collaboration of documents between businesses and bookkeepers.

The LedgerDocs system allows for users to upload their documents via mobile, email, or scanner, and creates a space for important documents to be shared between users and easily retrieved at any time using its powerful search feature in a secure environment.

In conclusion, the traditional “filing cabinet” strategy has worked for years, but can leave businesses vulnerable to losing essential information. By creating a digital copy, you are able to access and send information quickly and efficiently, while also creating a secondary copy of your important documents.

The next step is to utilize a cloud-based document management system, allowing you to store your encrypted information on a secure and remote location. This ensures that your information is safe, while giving you the ability to access your documents at any time, in any location. By defining your business needs and goals, you will be able to develop a document management strategy that works for you, and once again focus your attention on your day-to-day business operations.

QuickNotes: www.quickbookstrained.com is now mobile friendly. From the web address you can choose Options/Mobile formatted and the site will appear in its entire living colour for you to view. Check it out.

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