April 18th is fast approaching and your accountant has asked you to turn in receipts for all the business expenses you want to claim. You have been keeping up with those receipts, right? Or are you turning your house upside down, digging through drawers, dumping out your purse, and searching all the pockets of the jacket you could swear you wore to that one business lunch you paid for last spring?
You know you should keep track of these things and every April you resolve to keep better records. However, like those New Year’s resolutions you made a few months earlier, this one only lasts a few weeks before the efforts of actually running your business distract you from saving and organizing all those little slips of paper.
Fortunately, there’s a handy little tool to record all your business expenses automatically and provide you with a complete and comprehensive summary of those purchases at the end of every year: the business credit card.
Now, if that conjures up the image of a fancy gold card with a company name and logo printed on it and you’re just a freelance contract worker operating under your own name, don’t worry – there are no complicated requirements for a business credit card in this context. It’s simply a credit card that you use exclusively for work-related purchases. You decide exactly what kind of card works best for you – you can apply for a new one or simply choose one that you already have – and use it anytime you buy something for your job.
Now it doesn’t matter if you remember to hang on to those receipts because someone else is keeping up with your spending. Not only that, they’re reporting it to you regularly through a document you should already know: your monthly credit card bill. If you manage all of your banking online and don’t receive statements in the mail, you’ve eliminated paper from the entire ordeal.
Every time you receive a statement, save it as an expense report and transfer the number to your business banking software. Now you and your accountant can also see how much interest you’re paying on those expenses.
Even if you don’t have an accountant and e-file your own tax returns, most tax preparation programs can actually download your statement and annual purchase summaries directly from your credit card company, saving you even more trouble.
So go ahead. Quit the annual paper chase and let that little piece of plastic save you time and money.
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