What’s a Receipt Management App?

One of the best pieces of small business accounting advice is to always keep receipts of any business expenses. However, it’s also likely one of the most ignored bits of bookkeeping wisdom, especially by very small or new businesses. When tax time rolls around and you can’t back up your filing with documentation, you risk paying too much in taxes, receiving penalties, and potentially getting hit with an audit.

Recording receipts is not just important for the Internal Revenue Service—it’s also crucial for your company’s internal accounting.

You might groan at the idea of maintaining envelopes and file folders full of receipts, and your recordkeeping can get even more complicated if some of your receipts are digital. Fortunately, accounting software and apps make tracking receipts as simple as possible. Here are some considerations for tracking best practices before you sign up for a receipt scanner.

Should I Scan My Receipts?

Because the technology is so accessible, you should probably be using a receipt scanner or document scanner app of some type to track your business expenses. This could be an actual scanner or your smartphone’s camera—but a dedicated receipt scanner and organizer app will reduce your workload. Many accounting software options include both receipt scanners and receipt organizers, so all your business expenses are recorded in one place and backed up with documentation automatically.

What Should I Expect From a Receipt Management App?

When deciding between your receipt scanner options, you should keep a few features in mind, especially if you’re spending money on an app.

Receipt Scanning

A receipt scanner app’s most important feature: it scans your receipts and stores a digital copy. Ideally, an app does more than just use your phone’s camera to snap a photo—a good scanner app should also adjust the image quality to make the document more readable. The top-quality apps even pull data from the receipt images to autofill the expense amount. In most cases, though, you’ll have to input some data, like the total amount of an expense, and store the receipt image as a backup.

Receipt Organization

Beyond simply scanning receipts, a good bookkeeping app will allow you to organize and categorize your receipts easily into different expense classifications. The IRS, for example, will want you to list expenses from business meals and utilities distinctly because the tax write-offs for those categories work slightly differently. A good app will let you categorize expenses within a few seconds of scanning a receipt.

Digital Receipt Collection

In today’s business environment, you often receive a digital receipt instead of a paper one, whether you’re buying items online or via a mobile payment processor like Square that emails you a digital receipt instead of printing one out. These still count as business receipts, so the expenses still need to be recorded and categorized. Good receipt organizer software allows you both to scan paper receipts and collect digital ones. Your books will require all of these receipts to be accurate.

Storage

Quality bookkeeping software will simply—and permanently—store the digital copies of your receipts at a readable resolution without taking up too much space on your device’s hard drive. If this still isn’t feasible, you can store your receipt scans on a device with lots of hard drive space, an external drive, or in the cloud. It’s wise to back up your receipt scans in at least 1 other location, either using cloud storage or a back-up hard drive. Some accounting software will do this for you—if not, you can configure your device or computer to back up these receipts automatically.

Mobile Use

Most of the time, you receive paper receipts while you’re out and about. This can make receipt scanning a chore—you have to store all the receipts and then spend some of your valuable time scanning them when you remember. Good receipt scanner apps allow you to scan receipts on the go so you can record expenses anytime, anywhere.

What’s the Best App for Scanning Receipts?

The best app for scanning receipts is any app that allows you to scan, track, and categorize your receipts easily. Having photos of your receipts is not very useful if they’re not categorized. Your receipt storage doesn’t have to be complicated, and the best software integrates into the rest of your bookkeeping.

Can I Throw Away Receipts After Scanning?

The idea of maintaining a growing pile of paper receipts can be daunting—each receipt is thin and tiny, but a huge pile that grows year after year seems like a storage nightmare. It may seem like a receipt scanner is the perfect solution, but it’s ultimately a personal choice.

In many cases, you can toss out receipts after scanning them and keeping a digital copy.

The IRS accepts digital copies of receipts so long as they’re legible and easily accessed. This is why it’s worth it to research, invest in, and reliably use bookkeeping software that scans receipts. In the case of an audit, these digital scans are considered valid by the IRS.

However, depending on your style, you may want to keep both physical and digital copies of your receipts. Even if you back up all of your receipt data on an external drive or on a cloud server, data can be corrupted, damaged, or erased. You might want to keep both physical and digital copies of receipts to be extra safe—though physical receipts also corrode with time. Many small businesses maintain physical receipts for a certain time frame, like 1 to 3 years, and then rely on digital. It ultimately comes down to your comfort level.

Either way, excellent bookkeeping software like Lendio’s software makes maintaining your expenses and scanning receipts easy enough for everyone.