You may be working on your taxes right now, and hoping that you remember all of your income and expenses from last year. Keeping good records of income and expenses will make it easier to file your taxes next year and ensure that you do not miss any tax deductions to which you are entitled. Even more importantly, knowing where your money is coming from—-and where it is going—-will show you how profitable you are and which of your activities are most profitable.
Here are some ways to get your records organized.
Start simply. Get a supply of large envelopes or folders and always have at least one in your car. Put any paperwork from a shop in the envelope right away. Paperwork may include your notes, receipts, business cards and other documents related to the shop. Keep a notebook in the car for recording mileage and small expenses for which a receipt is not required, such as tolls and parking meters.
Have a system for recording income and expenses. You can use a program such as Quicken, an Excel spreadsheet or a ledger or notebook, whatever works for you. Keep track of the details of each shop: The mystery shopping company, client, date, location, mileage, expenses, reimbursement, fee and expected pay date. Note when payment is actually received so you always know how much money you are owed.
Don’t fall behind in your records. It is easy to let envelopes of receipts pile up without entering them into your accounting records. When tax time rolls around you will be glad you took the time to update your records at least weekly. Plus, by keeping on top of things you will always know exactly where you stand. How much have you earned? How much have you been paid? How much are you owed? Are you more profitable than you were last year at this time? How do your expenses compare?
Purge your files. Most mystery shopping companies recommend that you keep your shop records at least until you are paid. I would recommend keeping most records at least six months, and financial records (such as receipts) even longer. Anything related to taxes should generally be kept at least seven years, because that is the period for which you can be audited. You do not, however, need to keep shop notes, copies of reports and other documentation that long. At least once or twice a year get rid of anything more than six months old.
Digitize your records. Keeping years of receipts, mileage logs and other records can take up a lot of space. Consider scanning your these documents and keeping them on your computer. Keeping digital records makes it even more important that you have good computer backups. Using an external hard drive that you keep next to the computer is NOT a good system. If anything happens to the computer (e.g., fire, flood, theft) it will probably happen to the backup, too. Keep an online backup or make a copy of the files and store them offsite, such as a safe deposit box or other secure location.
Keeping good financial records will help you to make better decisions and make more money.