Here’s a common problem I find when organizing paperwork: People don’t know what to do with receipts, but they don’t want to throw them out. Some save them in envelopes, some in hanging files, some even gather them all together and throw them in a box or drawer. But then what?
When clients ask me, how do I keep my receipts? I answer back with a question (not to be a smart alec but the answer is really “it depends”) What are you going to do with them if you save them?
All receipts are not equal in importance. Receipts for cash expenditures for example don’t need to be saved UNLESS you want to be reimbursed or it’s a TAX DEDUCTIBLE expense or you want to closely watch your BUDGET. So there, one receipt fall into 3 different categories!
Here’s a few of the most common reasons for saving receipts and suggestions for how to keep them under control. Note well that throwing them all into one box or drawer is not a permanent solution that any organizer (or accountant for that matter) would recommend. It may be a temporary solution to get them out of your purse & pockets and gather them all into one place & then sort into smaller categories later.
TAX PURPOSES -This is the most important reason people save receipts, because the IRS requires them. So before you start saving know what is deductible for your circumstances. Medical expenses, business expenses, and charitable contributions are some of the most common. So create a hanging file for each category and toss in receipts all year. At the end of the year gather them together, total them and keep them with your tax filing information. Mark them with the TAX YEAR and save for 7 years. No need to make new hanging folders each year, just re-use the same ones.
BANKING – Another type of receipt is your debit card or ATM card receipts for money withdrawn from your bank acoount. These are important to keep your account balanced. You can tuck them in the folder of your check book ledger and discard after you balance your checkbook with your statement each month. You are doing that, right? If there is a discrepancy, you now have a record that you can take to the bank. Shred after you balance.
BUDGETS – Some families and most small businesses have budgets that they want to track. For this reason you may want to save all your receipts and categorize expenses. You can do this manually or electronically with a receipt scanner like NEAT RECEIPTS. If you have a lot, try the electronic it’s much more efficient and fun! You can take your receipts from one month, scan them all in and the system categorizes them for you! You might even get one of your kids to do this once you set it up. (Go to www.neat.com for more information.) To save the receipts until you scan, have an envelope or hanging file for each month and empty it monthly. Shred after you scan and check.
CREDIT CARDS- Even if you’re not tracking a budget in detail, you may want to check your credit card statements against the receipts you have saved for a given month. To do this, you just need a hanging folder for each of your credit cards. Toss the receipts in and when the statement comes in, check it staple receipts & statement together and keep in the file for a year. This serves 2 purposes: 1. making sure you’re not over paying for items on credit and 2. giving you a place to easily find receipts in case of return.
RETURNS – If you are giving lots of gifts (like around the holidays in December) or buying lots of home products (after a move or renovation) you may want to create a subject file like “Home Improvements Receipts” or “Christmas Receipts.” Keep them for a month or so, and then you can shred. Of course it’s always smart to get a gift receipt and just tuck it in the present so you don’t have to worry about someone else’s returns. For your own personal purchases, keep receipts either in your credit card file as mentioned above, or in a special envelope. When the envelope gets packed, clear it out and shred!
WARRANTY – For big ticket items like appliances, it’s a good idea to keep the receipt stapled to the warranty/user manual. That way if the item breaks within a year, you have a proof of purchase. Two options for where to keep these booklets/receipts: 1. close to where the item is stored (like a kitchen cabinet for instance) or 2. in a file marked “Warranties.”
Okay, I hope that helps. You can use one or all of these suggestions to keep your receipts under control. If I missed a category, please chime in!