Sorting Receipts From Multiple Years
by Kaila
(Fort McMurray, AB)
What is a good method to sort and organize business receipts from multiple years?
Hi there:
I'm a new bookkeeper on QuickBooks Premier and using it for the very first time.
I didn't realize that bookkeeping could be so tedious.
Right now, I've been given a great big mess by a client to try and sort out and enter - I guess all bookkeeper face this kind of mess at one point? - and I already feel too overwhelmed with it. I've been literally thrown a gazillion receipts and a bunch of bank and credit card statements.
I've hit a dead-end and am completely stuck on what to do. I am really pressed for time with this client's work which is also making me panicky. So far I've spent 37 and a half hours sorting the receipts and it has gotten me nowhere.
I still can't piece together what's going on by looking at all the receipts - I can't see the big picture. I think it's because a lot of personal stuff has been put in with the mess such as grocery receipts, hygiene product receipts and other personal stuff - you name it, it's probably in there.
To be honest I am disorganized myself which is why I don't know how to sort out things or the best and most efficient way to do this.
I've tried using envelopes as mentioned on the website to sort out. I already have 6 envelopes stuffed with meal receipts. I think if I keep on going at my pace with telephone expense next on my list I will be sorting until next next Christmas 2013!
From the receipts only, I can't tell if it has been paid with cash, credit card, debit etc.
If it gets like this, do you usually just enter by the bank and credit card statements instead of entering all the receipts in Quickbooks Premier? I will probably enter duplicates if I enter all the receipts first to start off.
PLEASE HELP!!!
Hi Kaila,
A couple of things:
1. You mention you are pressed for time? Why? It is not your fault or problem that the small business owner did not take care of their record keeping which is required according to law.
You didn't say how many years you are sorting. If there are five years of receipts and statement to sort, why would you expect the job to be a breeze?
Your first step is to organize the receipts by year ... no envelopes, no folders ... just sort into piles.
After you have processed everything, you can determine how you are going to file it. When there are a lot of transactions, hanging file folders in a box for each year (may need more than one box per year) is a good option. Modify the portable filing system discussed under "Systems".
You may even want to consider scanning the receipts and statements.
2. You also say you are new bookkeeper using and learning QuickBooks for the first time ... and are having trouble seeing the big
Before you decided to enter the bookkeeping field as a self-employed practitioner, did you get any formal education? Did you obtain any previous work experience by working for a bookkeeper or accountant ... or in an accounting department ... or as an employee for a small business?
If not, how have you brought yourself up-to-date on accounting and tax requirements? How do you know what expenses are deductible ... and what are not? How do you know what qualifies as a reasonable expense?
3. Have you familiarized yourself with:
- Basic accounting concepts and principles
- Books and record retention guidelines
- Internal controls to put in place to avoid entering expense or income twice?
- How to do a month-end ... or in your case a year-end?
- Tested your bookkeeping skills prior to taking on clients?
Why am I going about knowledge and experience when you asked about sorting receipts and data entry?
It is one thing for a small business owner with no bookkeeping to take on their books when they are starting out. They are learning their business, learning the paperwork behind running their business, learning how to make good business decisions. The risk is all theirs to take.
It always concerns me when the decision is made to do books for small business without prior experience. Caution needs to be on your radar due to third party civil liabilities.
If you choose to enter the bank and credit card statements instead of the receipts, be aware of what constitutes a legitimate receipt.
The problem with entering data from the bank or credit card receipt is that you are not preparing audit proof books.
The bank or credit card statement is just verification from a third party source. The owner still needs to provide proof of purchase receipts and proof of payment receipts.
Often times, the problems, short cuts taken or lack of knowledge only becomes apparent when the small business owner gets audited three or four years down the road. Some business owners lose their business due to tax penalties and interest charges along with back taxes owing.
The only way to get through the paper is to continue sorting. You decide what kind of bookkeeper you are going to be Kaila. You decide what quality of product you are going to produce.
I hope some of the links help you make the decisions you need to complete this engagement. Good luck Kaila!
P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.
I apologize to my readers ... but while converting this submission to upgraded software, I lost all comments associated with this posting. The post was originally submitted in September 2011. Lake
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