Around this time every year, I wallow in that grand freelance ritual of tallying receipts for my tax return. As a self-employed person, I can deduct a number of things as business expenses, and given that I live in an extremely high tax state and city, it really behooves me to do so.
Of course, that knowledge doesn’t mitigate the fact that I really hate doing this. So every year, I face a dilemma. Do I log my receipts diligently as I go? Or stick them all in a pile, and then log them all at once?
I used to think that the former option was the more virtuous one. Do a bit at a time and the task never gets overwhelming. That sounds like something Benjamin Franklin would say. But then in 2009, I decided not to bother. The receipts piled up and I had to log them all at once.
But you know what? It wasn’t that bad. It took me 5 hours (I’d check receipts against my work calendar and credit card statements to confirm what any ones I’d forgotten were for). There were hundreds of receipts, which means that if I’d logged each one individually, even if it only took 2 minutes each time to open that computer program and then file the receipt, it would have taken me more than 5 hours over the course of the year to keep on top of them. And I’m guessing it might have taken more than 2 minutes. Once we use the mental energy to start a task, it’s hard to get back into the flow of work (even checking your email often involves a 20-25 minute break from the flow of your main project).
The downside is that I may have missed receipts, so that would have cost me money. The question is how many receipts I missed, and the dollar amount I thus owe in additional taxes, and the amount of time I save by not logging frequently. I’m not entirely sure how this calculation would turn out, but in general, batching tasks is more efficient. You focus on one thing, get it done, and move on.
I agree, batching saves valuable energy and time…and if you feel the need you can batch and then delegate. Especially for those things that have to be done but perhaps not by you.
Batching is probably better right? It also helps you focus on good enough … b/c when you do things bit by bit you tend to be more detail focused, whereas when you say ok I’ve got six hours to plow through this you get synergies and start to go more big picture… the problem is all the distractions and day to day stuff… like I’m sure it takes discipline for you not to check your email to see if you got some plum writing assignment while doing that other important but mundane task.
a dilemma I face regularly as well, with credit card receipts, as I charge everything to get the cash back bonus, but always put the cash with the receipt.
It has helped me to sort the receipts as they come in, but tackle them in bunches. I keep a coupon-type filer, that I’ve labeled alphabetically. (some stores like Target and the supermarket have their own label) I put all the receipts in their place, then when I batch them they are easy to find. Since we budget with a sort of envelope system I also mark the receipt with the envelope label -“gift $”, “food $”
I too have come to realize that doing all of them once, rather than one at a time, has made things easier.
Batching every month or two rather than doing the whole thing at the end of the year also works well: you’re less likely to have lost receipts or forgotten what they’re for, and it takes a solid chunk of time but not a whole afternoon (or day!).
@Nadia- also a good idea. There is probably a middle ground between once a year and every time I get a receipt.