How Organised Is Your Record Keeping System?
Holding onto your small business receipts allows you to claim for expenses that could ultimately reduce your tax bill!
Do you find yourself turning down the offer to have a receipt printed in a shop? As a customer, this might be understandable. It’s one less thing to have to empty out of your pockets later, and you’re doing your bit for the environment too, right? But as a small business owner, you’ll know that the cardinal rule of bookkeeping is that you keep all your receipts! The purpose of doing so is to allow you to keep track of allowable business expenses so that ultimately you can pay less tax the next time you’re filling out a self-assessment form! But staying on top of an entire year’s worth of receipts might sound daunting, so here are some tips to get you started!
Which Receipts To Keep
If you carry out an activity that is vaguely business-related then keep the receipt. You can always go through the receipts at a later date to determine if you’re actually allowed to claim this activity as a business expense. A professional firm of accountants in Peterborough give the example that if you were to travel to meet a client or B2B contact for a business meeting, then you can keep receipts for petrol and lunch meetings. Just remember that you’ll need to create a record to go with this receipt to remind you of the date, time and nature of the appointment along with how many miles were travelled.
Running Your Business From Home
Many small businesses start out from around the kitchen table. If this is the case for you, then you may be able to overlap some of your home bills with those required for running your venture. If you use electricity to plug your laptop in, or the phone line to take business calls, then you may have a case for claiming some of these utility bills back as expenses, but you should always seek professional guidance to determine how much will be allowed.
Receipt Collecting System
Start as you mean to go on by keeping track of your receipts from the beginning of your launch as this makes it much less challenging to get on top of later. Get into the habit of sorting your receipts as they come in, organising them into envelopes or folders for each category of expense, for example: Tech, Travel, Utilities, Entertaining. Alternatively, you might choose to log your receipts chronologically as you go along. Whatever your system, remember to stick to it and make sure you don’t cut any corners. If HMRC were to audit your small business, it’s a lot easier if you have everything clearly in place. They do accept scanned copies of receipts too though if you prefer the idea of keeping digitised records of your accounts instead.
Storing Your Receipts
At the end of the tax year after you’ve filed your return, you’ll need to clear out your receipt records so you can start afresh. But don’t throw out last year’s receipts in case the HMRC need to see them at a later date!
It may seem frustrating to have to keep hold of every little receipt that forms part of your business, but remember that staying abreast of your business expenses is a top way of reducing your tax bill so a little effort should be worth it in the long run!