How to Manage Receipts for Creative Types

Congratulations! If you're a hobbyist who has turned a profit you can pat yourself on the back. You can also get ready to start keeping better track of your receipts. Although I worked in an accounting office for a year, when I first started pursuing my hobby as a business I did not take my own bookkeeping seriously. When you do what you love and you're suddenly making money at it, it can be hard to start looking at what you're doing as a business. But you should. It will make your life and tax season easier. If you have specific questions about what you can expense or other tax questions always consult a professional CPA.

If you're unsure if what your doing is defined as a business or a hobby, read the IRS' explanation.

How to Manage Monthly Receipts

I've tried many different methods, from monthly envelopes to big folders and I even tried scanning in receipts. It seems like those receipts you receive when buying miscellaneous office supplies, ink, paper, publications and postage are overwhelming. Ultimately you need to find a system that work for you. This is what works for me.

* Purchase a stand-up expanding divider with at least 12 sections. I buy the small ones, not the ones intended for full pieces of paper. I also keep a one dollar zipped binder pocket for receipts that I need to record at the end of my work day. If you're in a creative filed doing paperwork does not always mesh with the bookkeeping. If it works best for you to take care of it before your creative work day begins, schedule time in the morning.

* Corral receipts as you shop - I keep a small notebook in my purse where I tuck my daily receipts if I am out and buying stuff I need that is related to my business. This keeps them all in one place and my wallet does not overflow with papers.

* Record Expenses Daily - At the end of each day I record my expenses on a Profit and Loss sheet. I found a basic spreadsheet template on Google Docs. I purchased a bookkeeping notebook but it had daily sheets and was more appropriate for retail stores that had employees. On my Profit and Loss sheet there's a column on the left with expense categories. Across the top of the spreadsheet I put numbers for dates. I enter each expense under the right date with the right category. On days when life and family obligations eat into my work time I don't always get to record my expenses. I have a separate zipped envelope for those receipts and make sure they are recorded within the week.

* Recording payments - Because I am paid a couple of times a week I tend to record my earnings when I receive them. I could do this at the end of the month when I reconcile my payments with my monthly report from PayPal. However, I find it easier to manage my work flow weekly when I know my earnings. I don't always know how much money I will earn in any given week. I do know that if I earned less than expected last week I can do more work and earn more this week.

* Printing E-bills - I prefer receiving all of my bills via email. Some companies do not email you an actual bill. If I want to view my electric bill, for example, I need to log into my account. Two years ago I discovered some companies only store the past six months of bills in your account. If you need copies of these bills for any reason, you should print them out monthly.

Tip: If you don't want to use the paper, save the documents to a file on your computer. Keep a copy on a flash drive. Keep an additional copy on an external back up drive or on a secure web-based file storage site.

At the end of each month I review the receipts and run a monthly payment report. I reconcile my sheet and print it. I keep the receipts stored in the small accordion folder and buy a new one each year. Taking control of pesky receipts is one small step the self-employed to make the business end of things run more smoothly. Come tax time, the hardest part of organizing my paperwork for my accountant is already done.