Organizing Those Pesky Receipts
By Diane Hatcher, Timesavers Services

Years ago you could save every receipt ever received for purchases, total up the sales tax and write it off on your taxes as a deduction. No more. Times have changed. But old habits die hard and many people tend to hold on to more receipts than they need. In fact, 80% of what is filed is never referenced again!

Excess paper receipts equal clutter. Being in control of your clutter helps you feel in control of your life. This proven fact is reinforced consistently by my clients’ comments to me.

Three issues must be addressed to organize receipts: 1) knowing which receipts you need to keep 2) where to keep them and 3) being able to retrieve them easily if needed. Do you have a plan for dealing with each receipt brought into your home or business that addresses these issues?

I’m not talking about the shoe box method. You have resolved the second issue only if you throw all your receipts into a box or a big envelope.

Do you know how much money your accountant is charging you for organizing all the disorganized receipts you give him/her? Although most accountants I know aren’t collecting your receipts anymore, they are depending on you to report the bottom line to them. So how much time and money are you spending getting your receipts in order so that you or your accountant can do your taxes?

Compute the value of your hourly rate and multiply it by the number of hours you spend organizing your receipts. Wouldn’t you rather spend your time more productively or relaxing?

Follow these simple steps for the solution. Organize your receipts as you get them, on a daily basis. Anything done in small pieces is easier to accomplish than approaching it as one huge, time-consuming (dreaded) project.

In reference to the 3 issues above, let’s resolve them one step at a time:

1) What receipts do you need to keep?
Items that may be returned. In the case of clothes, toss the receipts when the return date passes.
Items paid for with a credit or debit card. When your statement comes, match them up. Then throw out the receipts, or contact the bank to resolve any disputes.
Large purchases that have warranties.
Paid bills for utilities until next month’s arrives, or save one year then purge all but December’s to start the new year.
Receipts or cancelled checks for charitable donations.
All business-related receipts (including utilities if applicable).
Consult your tax professional, financial adviser or attorney regarding financial and legal papers.

2) Where do you keep them? There are several workable systems so choose the one below that suits your style. (If you claim business expenses, set up a second system. NEVER mix business and personal).
Get a monthly-labeled accordion file and maintain as just described. Accordion file fits comfortably in a file drawer.
Another method is to make up envelopes by month and insert receipts daily, newest ones in front. Keep the current month envelope in a convenient, consistent place. At month’s end, store the filled envelopes in a file folder chronologically in your filing drawer
An alternate method is to file saved receipts, paid bills and invoices alphabetically by name of company you paid (ex.- Burdine’s, FPL, Mastercard, etc). Again, always put newest ones in front so they remain chronological.
A fourth method is to purchase a bill-paying kit, available from catalogs or online. Consult their instructions.
For business, file receipts in categories based on Schedule C or your accounting system.

3) How do you find them? What was previously difficult is now easy.
If filed monthly, figure out about what month the item was purchased, and if later in the month it will be toward the front of the envelope or monthly divider, etc.
If filed alphabetically, look in the letter of the company you paid, and then toward the front of the category if the item was purchased later in the year, and on back toward the time of year purchased. The receipts will be chronologically by date within the correct alphabetical listing.

Maintenance
In order to maintain this system in a workable fashion, you’ll need to purge these envelopes or files at least annually. Keep the ones you’ll need for taxes in a tax file, etc. and reuse the space set up initially.

Another issue altogether is how long to keep certain receipts. There may be exceptions in many cases. The experts even vary greatly in this area. The above are merely guidelines to help you alleviate some of the clutter you may find in your life. When in doubt, DON’T throw if out. For specifics, contact me for a variety of retention schedules or consult your tax and financial experts.

Diane Hatcher is a professional organizer, and owner of Timesavers Services in Cooper City. She can be reached at 954-252-7511, or at diane@timesaversusa.com.