Keeping track of receipts?

Tax, SDIRAs & Cost Segregation
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Keeping track of receipts?

Carrie A.
Dubois, IN · Member since 2016 · 120 posts · 16 votes

I was wondering if there's a better way to keep your receipts together? Is better to keep them together by month, by vendor, or something else? I want to work smarter, not harder!

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Pauline Zhao
Accountant · Charlotte, NC · Member since 2018 · 29 posts · 21 votes
7y

This is a great question and it is very important to keep record of the invoices. Usually we recommend invoices should be kept for at least 5 years, and legal documents should be kept permanently. It will come in helpful if you use a software to help you, but there are so many to choose and it can overwhelming to try out one by one. Here are a few options I think works very well depends on what type of investor you are:

Stessa - If you are a buy and hold investor, you don't have an LLC and you have a property manager takes care of the rents collection for you. You can use Stessa. It is free to use.

Cozy - If you are a buy and hold investor, but you manage the property by yourself. 

Quickbook - If you are an active investor (Flipping house, Airbnb, construction, etc.), or you have an LLC. I recommend quickbook.

Hope that's helpful.

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  • Will Fraser
    Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
    7y

    Hi @Carrie A., this is a good pro-active question.  I use Expensify to keep track of all my investment receipts and it works awesomely.  Keep in mind that the deepest purpose of these records is a trail of evidence for you to use in the event of an audit.  When that happens we will all be thankful we kept our records with more specifics than less.

    Best of luck out there!

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  • Carrie A.
    OP
    Dubois, IN · Member since 2016 · 120 posts · 16 votes
    7y

    @Will Fraser thank you so much! I'll look into it!

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  • Christopher Smith
    Investor · brentwood, CA · Member since 2016 · 1k+ posts · 730 votes
    7y

    Another good job to delegate to your stop shelf PM (and any "credible" PM should be doing this automatically).

    0Reply
  • Carrie A.
    OP
    Dubois, IN · Member since 2016 · 120 posts · 16 votes
    7y

    @Christopher Smith we'll just say, I'm the whole "company"!

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  • Ronnie Hiles
    Home Insurance Underwriter/Etail Biz Owner · San Antonio, TX · Member since 2014 · 10 posts · 7 votes
    7y

    I use Neat with a Fujitsu ScanSnap S15000 scanner.  All text & amounts are searchable through a search box.  It auto enters most information such as the vendor name, date, amount, etc and you can enter other info such as project, client, class etc.  You can filter on all that information to see only receipts/documents matching the filters.  You can even email receipts directly to Neat.  I have my employees email their receipts to it, and they sit in an inbox until I review and file them.

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  • Billy Linn
    Investor · Green River, WY · Member since 2017 · 122 posts · 59 votes
    7y

    There is software that will let you track where the receipt is from, how it was paid, what it was for, a tax category, and the date. Then you can find receipts and look up totals from a variety of different perspectives, e.g. how much did you pay vendor X in 2018, or per month, or by unit, etc.

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  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Carrie A.:

    I was wondering if there's a better way to keep your receipts together? Is better to keep them together by month, by vendor, or something else? I want to work smarter, not harder!

    I don't keep ANY. The charge goes into my property management software as an expense. And is reconciled against a real life bank account. So no need to keep the piece of paper 

    1Reply
  • Carrie A.
    OP
    Dubois, IN · Member since 2016 · 120 posts · 16 votes
    7y

    @Cody L. What do you do if you get audited and they want copies of receipts for proof??

    0Reply
  • Carrie A.
    OP
    Dubois, IN · Member since 2016 · 120 posts · 16 votes
    7y

    @Ronnie Hiles sounds like something to look into! Thanks!

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  • Carrie A.
    OP
    Dubois, IN · Member since 2016 · 120 posts · 16 votes
    7y

    @Billy Linn thanks for the info!

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  • Charles Ganimian
    MA (massachusetts) · Member since 2018 · 4 posts · 0 votes
    7y

    @Cody L. What SW are you using?

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  • Maurice J.
    Investor · Otsego, MN · Member since 2014 · 45 posts · 29 votes
    7y

    @Carrie A.

    I use cozy.co to market, list, accept payments, manage and keep track of receipts. It is free for landlords and so far has been great!

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  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    7y
    Originally posted by @Carrie A.:

    @Cody L. What do you do if you get audited and they want copies of receipts for proof??

     Exactly. I was audited back in 2010 & 2011 & all they wanted was receipts & to which property they were applied & for what & had to show a copy of said receipt. CC statements were not accepted so thankfully I had Neat at the time & the reports with the scanned receipts were my savior. Now I scan in every receipt (HD emails them as do Lowes) & file it under a property folder with expense details. 

    Here's a Sobering thought... IF you combine the words THE IRS it spells THEIRS !!!

    2Reply
  • Carrie A.
    OP
    Dubois, IN · Member since 2016 · 120 posts · 16 votes
    7y

    @Pat L. Thanks!

    0Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    I'm old school.  I sort the receipts by property and keep them in a folder with a binder clip for each tax year.  There aren't too many of them, aside from when I do renos.  I also write on the receipt what it was for if it isn't obvious.

    1Reply
  • Billy Smith
    Shawnee Mission, KS · Member since 2016 · 719 posts · 313 votes
    7y

    I keep a folder for each house ,when I spend money on it goes into the folder for that house .Come tax time I simply hand over the folders .The trick is not wait to put the receipts in the folder,I file it  that day or next .

    1Reply
  • Heath M.
    Rental Property Investor · Chattanooga, TN · Member since 2017 · 203 posts · 188 votes
    7y

    I use Cozy to upload and sort all my receipts.  I attach the scanned copy to Cozy as well as keep a copy in a folder on my computer so I have a backup.  Cozy has a download that auto sorts everything for end of the year that matches up to your tax documents.

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  • Roni E.Pro Member
    Specialist · Earth 2.0 · Member since 2019 · 598 posts · 271 votes
    7y

    @Carrie A.

    Get a scansnap scanner, QuickBooks and you should be good

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  • Jim Walters
    Rental Property Investor · Conover, OH · Member since 2016 · 55 posts · 48 votes
    7y

    @Carrie A. I use LandlordStudio. It’s cheap and it makes it easy to keep track of all your expenses including mileage. Plus you can take pictures of your receipts and they store them on the cloud.

    Also when you get a new property, it’s easy to add it.

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  • Tim DelaneyPro Member
    Buffalo, NY · Member since 2018 · 790 posts · 530 votes
    7y

    @Carrie A. Definitely keep them sorted by property. I use Dropbox for electronic storage which comes with a scanner in the phone app, so I can scan immediately on the go and then ditch the paper. I then track those expenses in QuickBooks.

    Alternatively there is a bookkeeping service called Waveapps.com that does a good job and also has an app that will read the receipts you take a picture of and id the vendor, amount, date and then suggest an expense category. It’s free too.

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  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    7y

    I’m old school. I jam them in the folder for whatever property and write on a paper the date and expense. Takes two seconds. I only have 7 properties so it’s super easy and fast to do it this way.

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  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Carrie A.:

    @Cody L. What do you do if you get audited and they want copies of receipts for proof??

    I've been audited.  And passed.

    Why would I need a home depot receipt when I have a copy of the charge in my bank, and it's accurate recorded in my system and assigned to my property.  Ditto all my utility bills, mortgages, and payroll / contractor payments.  I guess the only "cheat" I could do is buy something at Home Depot for my house, and charge it to my property.  But even if I kept the receipt, and it was for "ceiling fan" no way they'd be able to tell if it was for a property or my house.  But hell, even if I did want to try to buy stuff for my house from depot and charge to properties, how much could I possibly buy like that anyway?   

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  • Mo Terazzo
    Member since 2019 · 4 posts · 1 vote
    7y

    FYI Ikea uses disappearing ink so scan the receipt and put that in the folder.  😬

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    I have 1 credit card, and 1 bank account for business purposes. That helps to keep track pretty easily.

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  • Alex KhanPro Member
    Specialist · Southeast Michigan · Member since 2015 · 300 posts · 244 votes
    7y
    Originally posted by @Carrie A.:

    I was wondering if there's a better way to keep your receipts together? Is better to keep them together by month, by vendor, or something else? I want to work smarter, not harder!

    Po# is pretty useful. Different one (first 4 digits of address is what I do)  

    Put the po# on each expense/ receipt. Many vendors will have this option as well. 

    248-979-8119
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