Do you buy business items with your own non-business funds i.e. your cash? Do you include these purchases in your accounts? Surprisingly, some of our clients don’t think that they can or should include cash receipts in their books. This is not the case!
The point of this post is to alert clients (or those of you processing your own books) to the fact that you need to keep all of your receipts for items purchased via your own funds. Remember by “cash” I mean any personal funds so these can be cash, personal credit card, personal savings/cheque account etc.
Okay, so you’ve got a heap of these sorts of receipts – what’s the best way to handle them? Here are my 5 steps to getting organised with cash receipts:
Empty your wallet or bag of all receipts every week and keep them in an easily remembered and accessible place.
Make a time during the week or before your hand over your data to your bookkeeper, to go through these receipts. Organise the receipts into these groups: "Credit Card", "Cheque Account", "Savings Account" and "Cash".
Scour each receipt for items you believe are business-related and mark them with a highlighter pen. Make notes next to items that require special attention especially if you think the bookkeeper needs to be made aware of special circumstances regarding particular transactions. Mark items that you think might be business-related but aren't sure if they are - your bookkeeper will be able to assist you with these items and you never know, an item that you thought would not be tax deductible, just may well be!
Attach each group of receipts to their respective bank statement/s to make the bookkeeping process easier.
Gather the "cash" receipts together and place in an envelope and mark the envelope "Cash Purchases". This will alert the bookkeeper to the fact that these receipts are not connected to any bank statement you may provide.
So don’t forget your cash receipts people! Not only do they help to paint the picture of your business “story” but they often include items that are tax-deductible, thereby helping to reduce your overall tax debt. Also, if you are registered for GST, then they assist in reducing your BAS liability – every little bit helps! It’s so easy to forget those receipts swimming around in the bottom of your bag or squished into the corner of your wallet! Try utilising my tips above and see if you can’t just get a little bit more organised! Remember, good record keeping will make your bookkeeper’s job easier which in turn will save you dollars on bookkeeping fees!