A receipt is just a small piece of paper where your purchases or transactions are reflected. Most of the time, these receipts find themselves inside the trash can because business owners prefer to take a mental note of the
transactions instead of diligently filing these receipts. While one purchase is easy to remember, you can get sidetracked by other obligations. That single purchase can easily slip your mind when you have many things to take care of.
As they say, you will never know what you got until it is gone. The same is true with keeping receipts. They may not seem to be valuable, but they are part and parcel of record-keeping. They play a part in monitoring your expenses. If you take the time to capture receipts paid with cash, it will be easy for you to know how much you are spending on a daily basis.
Capturing your business expenses is a daunting task unless you make it a habit to reconcile your bank account. One mistake that business owners make is mixing personal expenses with business expenses. This is a bad practice because it makes the monitoring process more difficult than you know. As your expenses increase, the process of assessing your spending habits becomes a challenge.
Keep in mind that the purchase includes GST and ignoring it can spell trouble for you. Miscalculating your expenses can also hurt your taxes in more ways than one. While the damage is reparable, you will need to pay for penalties and late fees. The payment for these fees are often taken from your cash flow. When your cash is spent unnecessarily, opportunities become limited.
Two ways to capture business expenses:
1. If you have paid your transactions by cash, be sure to collect receipts or even capture information. Using a smart phone app, you can take a photo of your receipts. This way, you will have an instant copy of every transaction you make. This is a smart habit for those who tend to forget keeping a record of receipts during lunch meetings and business travels. There are many apps you can download, which will enable you to snap a photo of receipts and send them in just a few taps.
2. Use your business account for paying business expenses. If you have made a purchase of your office supplies, never attempt to use your personal account for paying them. Pay for your purchases by transferring private funds into your business account. It is easy to monitor your expenses when you have your own business account.