Sorting Receipts From Multiple Years

by Kaila
(Fort McMurray, AB)

What is a good method to sort and organize business receipts from multiple years?

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.


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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
... and didn't realize how tedious bookkeeping could be.

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

Comments for Sorting Receipts From Multiple Years

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Oct 25, 2013
You Need a System
by: Vickey

(I couldn't find the date for this posting so hopefully this advice isn't coming too late.)

Hi Kaila,

A good bookkeeper is a systematic bookkeeper.

Maybe try something like this:

Separate everything (and I mean every piece of paper) by year, placing each year in it's own large envelope.

Separate each year into months, starting with the most recent (it's sometimes easier for a CPA to file the most recent year's taxes and work backward from there).

For bills and bank and credit card statements separate each month by vendor, alphabetically, making file folders for each one. For the small receipts, separate cash from credit purchases. You only need to enter the cash receipts.

This should give you a really solid foundation for a filing system that you can use with any client.

Best of luck!

Oct 25, 2013
Credit Purchases
by: Lake

Hey Vickey,

Just curious ...

Why would Kaila not need to enter her credit purchases from small receipts?

Oct 25, 2013
You need a system
by: Vickey

Hi Lake,

I sort of skipped a step there - sorry. I assume that everyone's in my head along with me.

If Kaila's using online downloading, the credit purchases will already show up in the accounts. Even if she enters all of the transactions manually, the credit purchases will already show up in the account registers.

To enter the transactions again fro receipts would be a redundant waste of time.

Hope this clarifies!

Oct 25, 2013
Caution About Downloading Transactions
by: Lake

Ahh, I get it.

I just have one caution for all bookkeepers and small business owners who download transactions.

It is not enough to just download the transactions. You also need to ensure you have the source documents to backup the transactions being booked ... that is IF you want a set of audit ready books.

That is why sometimes it makes sense to still input the credit purchases and let your accounting software automatically match transactions for you ... unmatched transactions let you know what paperwork (hardcopy or electronic) you need to track down.

It's a nightmare to try and collect the paperwork once you've been notified of an audit three years later. While it is still a hassle, it is so much easier to ensure you track down the paperwork as part of your download procedures.

Mar 04, 2015
Help Your Bookkeeper With Your Backwork
by: Lake

Okay I'm annoyed today as I make my way through some backwork. Most small business owners that have backwork are in trouble with the CRA which is why they are finally getting around to having their books done.

If you want to help out your bookkeeper (and reduce the cost of processing your backwork) it would be great if instead of handing over envelopes full of cash, credit and debit receipts ... you first made sure all the receipts were laid out flat not folded up. Then it would be great if you at least did a basic sort into 5 categories:

(1) meals
(2) auto expenses
(3) supplies
(4) utilities
(5) other

It would also be great if you pulled out all your PERSONAL expenses and placed them in one envelope. Just because you are running a business does not mean you can run your personal expenses through your business and expect to claim them as a deduction.

I'd also like to remind everyone that generally any expenses to do with your personal hygiene or clothing your body are considered PERSONAL expenses that are not deductible.

Think of it this way if you are in doubt - if you were an employee, would you submit that receipt to your employer to get reimbursed? If no, it's likely a personal expense.

If you you answer yes to the above question and would submit the receipts, how likely would it be that your employer would approve / agree to reimburse for the expense? Again if the answer is not likely, then it is most likely a personal expense.

The other thing that always strikes me when doing backwork is how undisciplined business owners are in taking draws for themselves. They would rather just run personal expenses through their business than stop and make a regular draw to cover their personal expenses. It makes no sense to me how you can expect to run a successful, profitable business and be so casual and cavalier in how you handle your business finances.

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