MBA1024 Get A Handle on Tracking Your Expenses and Receipts

Hey O. Welcome to the Hundred Dollar MBA show, the business podcast that makes things a little bit easier for you in the world of business with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher, Omar Zenholm. I'm also the co founder of the Hundred Dollar mba, a complete business training and community online. And in today's lesson, you will learn how to get a handle on tracking your expenses and receipts. This can be super overwhelming in business. You're paying for a service online, you buy something in a physical store. You want to make sure all the things that you pay for to run your business is tracked. So one, you can know all your expenses and of course you need it for tax time, for tax deductions. But how do you keep track of all this even when you have an accountant? You need to give this to the accountant in a format that they can understand. I'm sure many of you are listening are like, tell me about it, brother. I was feeling super overwhelmed about all of this a few years ago. Then I learned how to put together a pretty cool system. And this system uses three simple tools. Three tools we could all use to just track everything that is going out of our business, have an easy way to save and keep track of receipts and be prepared come tax time so you're not digging up receipts in shoeboxes. This is not fun and sexy stuff, but it has to get done in your business. So I'm here to make your life a whole lot easier with these tools and the system. So let's get into it. Let's get down to business. Today's episode of the 100 RBA show is brought to you by Long Tail Pro, a step by step system to help you quickly discover thousands of profitable, easy to rank keywords for almost any niche. Visit longtailpro.commba and use coupon code MBA for a free trial and 30% off your subscription forever. Again, that's longtailpro.commba use code MBA all right, let's jump into today's lesson. And I want to start by saying this can be super overwhelming. Profits and expenses and receipts and taxes and all this stuff can really make you just say, I want to go take a nap. But don't worry, I'm going to give you a very simple system. A system that was prescribed to us, our business, by our own accountant. It's going to make your life a whole lot easier and it's not going to cost you a whole lot of money. So there are three pieces of software you're going to use to make your life easier. And they all work together. Now the first piece of software you're going to need, and this is kind of like the home where everything lives, where everything gets tracked. And that software is Xero Xero. Xero was a sponsor of our show back in the day. May want to try their link. They might have a special offer, Xero.com MBA but when they were a sponsor, I learned about them and I mentioned it to my accountant and he said, yeah, I highly recommend Xero along with these other tools that I'll share with you to create the system to make your life sane when it comes to tracking your expenses and receipts. So what Xero does is it tracks all your expenses as well as your revenue. What it does, it hooks up to your bank account, your business bank account. It takes about five minutes to set up and basically it knows exactly when money gets deposited and when it gets withdrawn. Now if you use anything else other than your business bank account or business bank account, ATM card or debit card, then you need to add that to 01, whether it's a business credit card or anything else. Why? Because everything that gets tracked in Xero is going to be so much easier. So you can label it as an expense or profit or revenue. Xero is going to do half of the work for you. Now the cool thing is, is that once you actually label things your first month on Xero, let's say I label payroll as payroll and that's an expense and a deposit from Stripe, which is our payment processor, as revenue from memberships. Xero will remember your selection. So the next time that deposit or that withdrawal happens, it's going to label it properly so you don't have to kind of do it every month. Yeah, it's a little bit like machine learning. Pretty cool. Right now there might be some anomalies, things that Xero won't pick up, but that's just here and there and it's not such a big deal. Now the foundation is Xero. Now Xero is going to pick up anything that you use with any of your accounts. So if you have a regular membership charge for your hosting, I'm talking about like your website hosting or you're using a software for customer service and that gets billed every month, or email marketing software, all that kind of stuff gets charged to your account. Xero picks it up, sees it as an expense and labels it based on what you label it the first time around. So pretty straightforward. So that's tool number one and that's the core of the system. Tool number two. Now, not everything is going to be electronic, whether you're buying it online and it's a reoccurring membership. Sometimes you're going to buy things at a physical store. Sometimes you're going to pick up a tab for a lunch meeting and you have a physical receipt. Sometimes you're going to use a different card by mistake or intentionally that is not hooked up to Xero. What do you do then? You have a physical receipt now in your hand. How do you make sure that it gets counted as an expense? Well, there's this brilliant app called Receipt Bank. You can check it out in the App Store or the Android Store. And basically what Receipt bank does is it allows you to scan a receipt with your phone camera and it will take all the information off that receipt. It will read it automatically and put it into your Xero account. You hook it up with Xero. Now there's tutorials online how to hook up Receipt bank with Xero. Or you can get your accountant to do it. Our accountant did it for us. Pretty straightforward. Once you have a Receipt bank account, which is free, you can do this over and over with physical receipts. You can also just email your receipts to your special Receipt Bank. Email. It's a special type of email they give you that's hooked up to your account. And you could just forward the receipt to Receipt Bank. This works for physical receipts that you scan. Also works for maybe a receipt that you got for a flight that you bought. And it's in your email. You can forward that email to Receipt Bank. Receipt bank extracts all the information from the receipt, it processes it, and then it dumps it into Xero in your account. So it counts as an expense to me. This is like magic. This is awesome. Receipt bank takes maybe about an hour or two to do all that magic, but it does it in the background and you have to worry about it. Now, this saves you all the headaches of physical receipts. Now, Receipt bank has a copy of your physical receipts in there. But personally, I like to have a scanned digital copy of the receipts in my archives in my folders. So I have it so I can toss the receipt in the garbage so I can completely forget about this physical receipt. And this brings me to tool number three, and that's Dropbox. Dropbox has a great feature where you can have the Dropbox app on your phone and you can scan a receipt. It will just automatically know the dimensions of the receipt. It will block out everything else, like the restaurant dining table that's behind the receipt. Then take that image and then upload it to your Dropbox account. Now, we share a special folder that has many folders inside of it, but that folder is shared with our accountant. So we share this Dropbox folder with our accountant so that he has access to all our physical receipts as backups come tax time, just in case he needs them. Just in case, you know, the government asks for one or two receipts, he has an archive. And it's good to keep organized with these folders so you can have like a folder for accounting. And inside that folder you have expenses and the year those expenses happened. Depending on what country you're in and how tax time works, you can just say the time period of when those receipts should be counted for that tax year. And inside, you can organize them into separate folders inside that year. It could be like invoices, payroll, hosting. It can even be companies like Amazon or categories like Dining, Travel. This makes your life a whole lot easier and your accountant's life whole lot easier because you'll find files a lot easier. Now you could probably make do with Dropbox's free account, given that these files, these scans are not going to take a lot of room. They're not videos, they're PDFs. So we have three different softwares that work together. In our system we have Xero, which is home bases, where everything gets kind of accounted for. We have receipt bank that allows us to scan and send it straight to Xero, so that gets counted as an expense. And then we have the archive, the, the actual vault where all our physical receipts, or even PDF receipts, we like to put in our Dropbox. So even if I get a receipt from Amazon for hosting, I like to pop it in there so we have it for reference. Now, in order for this system to work, you got to form good habits. Luckily, it's not that many habits you have to form, so I'm going to show you that in a minute. But before that, let me give love to today's sponsor. One of the first things you got to do when you start a business is acquire a business address. You needed to register your business. You needed to open up a business bank account. You even needed to register for email marketing. Yes, you need an address on the bottom of your email marketing newsletters. But if you work from home, like a lot of us do, you don't want to put your home address and have your customers show up to your door. And you don't want to spend the extra money every single month on having a Business office. This is where Earth ClassMail comes in. They hook you up with a swanky business address and all the mail that gets sent there gets scanned and uploaded to your account in the cloud. That means you never have to check physical mail ever again. You could see it anywhere, anytime, from your phone or your laptop. Pretty cool. So cool. We signed up. We absolutely love it. And we've been using Earth ClassMail for over a year now. And Earth ClassMail wants to hook you up with a free month so you can get started with your business address. Just go to earthclassmail.com mbamonth and use coupon code MBAMONTH. Again, that's earthclassmail.com MBAMONTH coupon code MBAMONTH. Alright, to make this whole system work, you gotta keep up with your receipts. You gotta have good habits. The first one is very easy. Anytime you get an email confirming for payment of any kind of service with your business, say for example, you get an email from Amazon, hey, thanks for using our web hosting. We received your payment. Or an email from mailchimp, your email marketing service, saying, hey, your payment has been received. Anytime you get that email. Soon as you see that email, you open it up and you download a PDF of that receipt. Once you download it, just drag it into your Dropbox folder for that category software, for example. That's plain and simple. You get that email, you don't ignore it. In fact, I would flag it and then unflag it. Once you've done that, once you've dragged that PDF receipt into your Dropbox folder, second habit you want to form is physical receipts. Whether you just finished having a business lunch or you just bought a new microphone at the electronic store, take a step aside at that electronic store on the counter, the next person go and just take a scanned copy of that receipt. You have a phone, it's super simple. You could do it in Dropbox. You do the same thing with Receipt Bank. It's going to take you literally 30 seconds and you're going to be sorted. And in fact, after you do that, you could toss that receipt in the garbage on the way out. If the store, if the vendor offers an email receipt like Apple does, tell them to email you. Then you can forward that receipt to your special Receipt bank email and you can also download that receipt and pop it into your Dropbox folder. These habits are actually easy to form because once you start doing it once or twice, you'll be mindful that every time you pull out your credit card and pay for something, all right, that wraps up Today's lesson. I hope you found it useful. This system really works. It really helped me lower my whole worry and anxiety about the whole subject. It just keeps things organized for everybody, including our accountant. Tomorrow is Q and A Wednesday, where we answer a question from one of our listeners. Tomorrow's question is, where can I hire great remote players? This person is looking for highly talented people that are willing to work remotely from anywhere in the world. Where can I find the best talent? We're gonna be sharing that information in tomorrow's episode, so make sure you hit subscribe so you don't miss it. So it downloads automatically to your device right now. All right, before I go, I want to leave you with this. If you find all this stuff a little bit boring and you have to motivate yourself to scan these receipts and get organized and get all the software I mentioned. Motivate yourself by thinking about all the money you're going to save when you do your taxes. All those receipts can be tax deductible for your business. That means more money for you and your business. And with these tools, it makes it super simple so we all have no excuse. Alright, I'll check you in Tomorrow's episode, Q and A Wednesday. I'll see you then. Take care. Of sam.