Do I need receipts for business expenses?
Companies with staff who incur business expenses and subsequently claim for them can face a significant administrative burden if the volume of expenditures is anything other than trivial. One challenge is in collating and reconciling paper receipts in order to produce them for HMRC, should they be requested.
Length of time
Self-employed individuals are required to keep receipts for five years. Everyone else has to keep them for six years; a total of 72 months. This is because HMRC can decide to look into your tax affairs for a period which may go back as far as six years. If they decide that you are worth investigating, then you will need at least six years’ worth of receipts to show that all those expenses you claimed were above board.
How to store receipts?
Paper receipts don’t last long as everyone knows. Just think of how long a restaurant receipt lasts in your wallet or pocket. If a receipt can’t be easily read, then it’s not worth the paper it’s printed on. This means that while you should keep all the hard copies of the receipts for the expenses your business incurs, you should also scan them and keep them in digital form just in case.
If you don’t own a scanner, then a photo is also perfectly legal, provided that it is legible – just make sure that you take a copy of any reverse side if there is important information on it, such as the supplier’s VAT registration number or address. There are also apps available that enable you to scan your receipts and back them up for later on. Remember that your records should be complete, accurate and readable.
Using accounting software
The days where everything is entered into a spreadsheet or physical ledger are becoming a thing of the past. While many people still prefer this form of accounting, cloud-based software is an excellent way of making life easier. Even in its most basic form, you’ll be able to connect your business bank account, automatically import and categorise all your transactions, store invoices and upload scans and photos of your receipts.
Do little, but often
While you may be inclined to leave everything to the last minute, try to fight that temptation. If you put aside one day a month to upload all your receipts, create an expense report and reconcile everything with your bank account, then you’ll have a workload that remains manageable and an up to date view of your expenses.
Organising receipts with an expense management system
While HMRC recommends that you keep all your receipts, there will be occasions when receipts get misplaced, lost or even destroyed. This is when a prepaid business card such as the one offered by Soldo comes in handy. Each company card is managed from a central integrated dashboard used by the business owner or a finance department. From here, management can see real-time transactions, approve and reject purchases and impose limits and spending rules, all via the Soldo dashboard.
Each prepaid company card starts off with a balance of zero, which can be topped up as and when needed by the administrators. Most importantly, our system enables the recording of all expenses, which are uploaded and stored in the system’s database. All the individual staff member need do is take a quick snap of the receipt and upload it via the Soldo app. Our system enables management and finance teams to see how and where the money is being spent, resulting in much more effective future forecasting and control.
The dashboard also works with all the major expense management software including Xero, Concur, Expensify, together with major accounting solutions such as Sage.
For more information on prepaid business debit cards visit us here, or to learn for more about how your company can benefit from Soldo’s comprehensive spending management solution, click here.