So what is it? It’s the practice of throwing everything that might be important, like invoices and receipts, into a box and giving it to your accountant to sort out.
When someone refers to the “shoebox” in relation to your accounts or finances it means that the person has procrastinated doing their accounting by simply dumping the paperwork into a single place (better than scattered, but only barely) and deciding that they will address it at a later date, at which time it will likely be too late to fix any problems and bills which may be incorrectly billed for example. The implication is that the business suffers as a result because performance isn't being measured and problems aren't being addressed.
The other implication from the accountant's perspective, or even yourself if you are doing your own accounts, is the time to sort it all out can quadruple compared to being given all that information in order; say date order.
So how do you avoid becoming a shoebox culprit? You may enter your invoices and receipts into myob or xero yourself, or have a book keeper do it or hold it all for your accountant to do. Whatever your method is, a little foresight and time attention goes along way; both in time and cost. It’s as simple as buying a ring binder and hole punch. When you get a bill or receipt, punch it and stick it in the folder. Get into a routine of doing that every day or at least once a week. It will take discipline but will also save some serious headaches, and potentially financial losses, at tax time.
A good start to managing your financials is by downloading our Free Your Money Sense e-Book: “6-steps to Financial Security”.
So, are you a shoebox culprit?