sify all of your receipts under the “misc” category, you won't know where in the business
you are making or losing money. Keep your receipts in a common place, such as a paper
bin, file folder, or even a coffee can. You will then be able to refer to them as you balance
your checkbook in your accounting software and classify them correctly.
Most likely there will be times when you use your business funds for personal use. I mean,
it's your business, right? Well, that's OK, but you will need to claim personaluse receipts
as income, rather than expenses. Yes, this can get complicated.
Additionally, you may take business trips. If you plan on reimbursing yourself upon your
return from a business trip, I suggest the use of expense reports for these occasions. You
should report each expense under the specific date when the expenditure occurred. Auto-
mobile mileage or flight expenses should be reported on the specific days of departure and
return. For example, you should record the expense of your departure flight on the day you
leave, then write down the price of the return trip when you return. Record all expenses in
succession on the expense report. It helps to arrange your receipts by day ahead of time,
which can save you time. You will need to write in specific dates on the expense report,
as these spaces are usually blank. Finally, add the sums of daily expenses vertically, then
calculate your totals for each type of expense horizontally. Subtract any advance payments
you may have taken from the business (i.e., cash) from those that are due you and write
yourself a reimbursement check.
Make sure you double-check your calculations before filing your expense report. And as
usual, refer to your CPA for specific instructions to create a personalized plan for you and
Paper Files: A Necessity
There just is no substitution for a good old-fashioned paper filing system; however, we
have come a long way in the business world in the direction of a paper-free workplace. I
suggest that you keep what you must keep and shred the rest.
If you're worried about pitching documents that may be needed at some point, you're not
alone—many home-business owners decorate the living room with archive storage boxes
or large file cabinets stuffed with old bank statements, tax returns, and pay stubs. (All right,
maybe you keep this stuff in the garage or in a storage facility!) But as your CPA finishes
up your tax returns this year, take the opportunity to organize your paper files and keep
them neat. You must keep copies of your tax returns, your business licenses, all of your
receipts, and basically anything that has your original signature on it. But if you're willing
to use online banking and create a digital archive of crucial records (I always keep a digital