Financial Records for Medical Transcription Work
Your medical transcription business recordkeeping is only as good as the paperwork that stands behind it. That’s true whether it’s the physical documents or electronic versions. Things to hang on to include
Receipts, invoices, and account statements related to your business expenses
Bank and credit card statements that include business-related items
Payment stubs from checks you receive
Contracts you sign with clients or service providers
Copies of insurance policies and warranties
Look at Schedule C to help you identify the types of things you should be recording.
If you receive electronic instead of paper statements, download them to your computer. Then back them up or print out and file them (or do both). Don’t count on a financial institution to serve as your long-term document vault.
You’ll also want to start a mileage log to record business-related driving. Those trips to the bank, post office, training seminar, or client’s office are all potentially deductible. In 2012, the standard business mileage rate was 55.5 cents per mile.
That may not sound like much, but over the course of a year, it can really add up. Your mileage log should include the date, destination, distance, and purpose of each trip. Make it easy on yourself: Store a pocket calendar in the glove box of your car or use a smartphone app — whatever’s easiest for you.
You may have a lot of stuff to keep track of, but with minimal organization you can easily manage it. You really only need a few file folders. If you’re the high-tech type, scan everything into your computer and use electronic folders.
How far you subdivide things is a matter of personal preference, but a basic set may include
Business expenses (invoices, receipts, statements, auto mileage)
Home office deduction expenses (more on this later)
If you’re planning to take the home office deduction, dedicate a folder to that rather than lumping it in with your general business expenses folder. It goes on a different form than your other business expenses, and keeping the supporting documents together makes things easier come tax time.
If you intend to hand the actual receipts over to an accountant (rather than reports from your bookkeeping software or the data file), organize your expenses into categories as you file them. Otherwise, you’ll just have to do it later when it’s harder to remember what they were for (or pay for the accountant to do it for you).
For simple all-in-one record storage, consider using an accordion-style folder. If you don’t have the energy to label the sections yourself, pay a little more and get one that’s already pre-labeled and divided for you. Each year, start a new one and store the old.
If you opt to scan your receipts and toss the originals, make sure you organize the scanned copies and make regular backups to an external device. If your hard drive heads south and takes your tax records with it, you’ll need those backups.
Even if you’re a compulsive cleaner, there are certain things you should never toss:
Tax returns. (You can discard supporting materials like receipts and logs after seven years, but keep the actual returns forever.)
Records pertaining to improvements you made to your home. (You’ll need them when you sell it if you took the home-office deduction.)
Insurance policies that are still in force.
Warranties that haven’t expired.