Receipts aren’t that important, are they?
The answer is no, unless you get audited (if you can’t prove it, you can’t deduct it), loose all your bookkeeping files or some other hazard. Then you will probably wish you’d had saved every scrap of paper you’d ever received after a transactions, if only to ease your mind. So now you are thinking “Ugh, I already have too much paper lying around, in my purse, my wallet, on my desk and in file folders.” Here is where the digital age comes to the rescue. Not only can it save you from the tidal wave of paper, it can ease your mind that your receipts are safe, reproducible and adequate for the powers that be!
IRS Revenue Procedure code 97-22 provides guidance for taxpayers for maintaining books and records digitally. Electronic systems must meet these requirements:
- The taxpayer can scan complete documents and store them electronically;
- The taxpayer must ensure the reliability and integrity of the system;
- The taxpayer must be able to reproduce legible and readable hard copies;
- All documents must be accessible electronically;
- The taxpayer is responsible for making any backups of the data either electronically or hard copies offsite.
If these requirements are met, the electronic storage will be treated as in compliance with IRS code. Once the taxpayer has tested the electronic storage system and confirmed that readable hard copies are available, the original receipt can be disposed of!
Now you are wondering, where do I get such a system and when am I going to have time to scan all those receipts? Ahh, ye of little faith. That smart phone with the camera will save you. My favorite online receipt storage system — the one I use for my business — is Receipt Bank. My second favorite is Lemon.com. It has gotten a little pricey in the past six months for larger businesses, but I think its still a great value, and they do have a free account without some of the bells and whistles. Another option for receipt storage (and you can store more than just receipts) is Shoeboxed.com. There you can also store business cards, contracts or any other paper. It will also do expense reporting and contact management. There are a lot of options out there. The great thing about Receipt Bank though is that it integrates with my accounting software, Xero, and I can see the transaction and the receipt all in one place (and so can the IRS, should they come a knocking).
I love snapping my pic of the receipt, making the required notes (don’t forget you still need to know who, what, when, where any why) and tossing that paper in the trash. Just be sure not throw out any receipts until you have tested the system, you are sure you are going to keep using it or you can get copies out if you want to switch. Receipt storage doesn’t have to be painful.