Gone are the days of storing 24 pocket file folders in your desk or work truck. New ways to save and track transactions have emerged with online payments, e-mail and text receipts, and smartphone cameras. Keeping track of transactions is crucial, and this month’s blog suggests modern ways to do it.
First we’ll explore the benefits of going digital with not only receipts but other financial and business records.
What Records to Keep and Why
Business transactions to keep records of include any debt or credits to a business account. The following is a list of major categories and the benefits of saving records for each:
- Bank statements – these show cash flow and can help verify both debt and credits from your accounts.
- Goods and Services Tax or Harmonized Sales Tax (GST/HST) reports – Used to verify calculations for remittances to back up reports.
- Sales invoices and contracts – Used to verify reported revenue.
- Purchase invoices and expense receipts – Supports all expense claims.
- Payroll records – Supports any enquiries into remittances of source deductions.
Save to: Desktop
One option is to use the experience and knowledge gained from successfully organizing physical records to create digital databases that are familiar. In the simplest form, digital transaction records are saved into monthly or annual terms or folders on a work computer.
Digital records can remain digital, removing the need to convert online records to physical documents. Someone can easily digitize paper records using a scanner or smart phone camera and save them into the appropriate folder. With digital copies of POS receipts, you also reduce the risk of wear and fading that can happen with paper.
Another benefit for digitizing records is that businesses can reduce the need for physical space while making them more readily available. If saving records to a physical device, we recommend regular data back-ups using an external hard-drive or cloud based storage.
Save to: Google Drive
Business suites like Google and Microsoft offer digital storage for files that can be directly linked to your e-mail. Some examples of cloud-based systems are Google Drive or Microsoft Teams. Digital records can be saved in the file format they are received or processed in and physical documents can be uploaded using the camera on a smart device or scanner. This helps eliminate the need for storage on business computers. These cloud-based systems can save time and money while increasing accessibility to documentation.
Attach: File or Image
Your Bookkeeping software may already offer receipt management functions. If using Quickbooks Online (QBO) or FreshBooks, this looks like an attachment option next to each transaction. Using the app, you can choose an image, file, or take a photo then upload the document and complete some basic details about the transaction. Records are assigned to transactions to allow teams to verify records more efficiently by combining bookkeeping with digital record management.
Share: CRA
The largest benefit for keeping complete and organized records is in the event of a review or audit by the CRA. Having digital files for all business transactions means the CRA can easily locate the documentation they request. This can save the business significant time while also reducing the need to find and send physical files. Similar to paper records, a business should keep all receipts and documentation to support tax records for a minimum of 7 years.
Before going digital, we suggest having a plan in place for how the digital records are stored and accessed. The system and method chosen is dependent on consistency and accuracy. Join us in exploring the digital era of records management for your business in Grande Prairie – contact McNabb Lucuk LLP today.
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