If you were asked to name the three most frustrating bookkeeping-related tasks, storing receipts would be one (if not the first!) of them.
Even on a personal level, keeping receipts of every transaction made and organizing them so that your finances are sorted before tax season is no fun. And when it comes to doing the same for your business, it’s a tedious and time-consuming job.
But does organizing receipts have to be such a headache? Aren’t there easier ways to do it?
The good news is, yes, there are!
Physical vs. Digital:
Earlier, sorting, filing and storing paper receipts was the norm. These included sales and purchase invoices, bank statements, expense receipts, payroll records, etc. Such receipts could run into hundreds and thousands in number, adding to the clutter in the office. They were constantly in danger of being damaged, misplaced or even stolen. Many times, the print on the receipts disappears after a few weeks. Keeping in mind the CRA’s rule to store all documents for at least six years from the date of your last tax filing, this could pose problems in the case of an audit.
But now, even the CRA has embraced the convenience of technology. Gone are the days of cabinets and drawers full of receipts! Now, all you need is a smartphone, and most of your receipt-keeping woes are sorted. There is no clutter of paper, no fear of damage, and extra protection from prying eyes—all in the form of digital receipt-managing apps and software.
Before You Begin:
Storing your business receipts in digital format requires three main things – (i) a smartphone or any other device that can scan the receipt, (ii) cloud storage or any other storage device, and (iii) an app that suits your business requirements. To know which app or software fits your needs best, ask yourself these questions:
-Do I need an app that only scans my business receipts, or do I want one that helps organize them better?
-Will a basic, free app suit my purposes, or should I invest in an advanced one?
-Will I be the only one using it? Or will multiple people need to have access to it?
A smartphone will suffice for a business owner who prefers manually organizing receipts into folders and spreadsheets and taking backups. But if you are thinking of streamlining all bookkeeping, accounting, and bank processes into one comprehensive system, you might need a better app. Some banking apps offer helpful, simple bookkeeping options. Any receipts you have thus stored can also be directly shared with your accountant as and when required.
Having identified your business requirements, you can start with the actual process.
Three Steps to Storing Business Receipts:
- Scan: Every time you get a receipt in hand, bring out your phone and take a picture of it. Ensure you get the whole receipt in the picture, along with the seller’s name, the date, the amount, and even the address. In the case of a multiple-page document, lay them down side-by-side and try taking a picture of them all together. Ensure the picture is clear, and the smallest print is visible.
- Save: After scanning the receipt, save it as a .jpg or .pdf file. A good habit to teach is to rename the picture with a name and date to help you identify what it is at a glance. For instance, a purchase receipt for office stationery could be saved as “Stationery June 2025.” While this may seem tedious, the more precisely you name it now, the easier it will be to look for it in case of a CRA audit.
- Store: Having renamed the picture, store it on cloud storage such as Google Drive or OneDrive. You can also store it offline or on an external storage device (in case of confidential documents). Since you’ll be storing many more business receipts similarly, making month-wise folders on your preferred cloud storage would be a good option.
And that’s it! It’s that simple!
Doing More with Digital Business Receipts:
As mentioned before, apps do much more than just store records. Here are the other advantages of organizing your receipts in a digital avatar rather than the traditional paper filing method:
Automated data extraction
Many apps use a specialized technology called Optical Character Recognition (OCR) that can read and extract details from the scanned receipt, such as the name of the supplier, date and amount of purchase, currency of the purchase, and even tax paid on it (if any). These details are then summarized and stored alongside the receipt image in the cloud. It saves time by eliminating the need to fill in details into the system manually.
Integration with other services
Such receipt scanning and storage apps can be connected to other essential financial services apps, such as your business’s banking app or accounting software. How does this help? Every time you scan and store a receipt, it automatically enters your books of accounts and bank records. This automatic streamlining of the various financial processes helps quickly identify any discrepancies in amounts.
Security control
Physical financial documents, even if kept under lock and key, are always in danger of being stolen or leaked. However, receipt-organizing apps give the business owner the option of password protection and control over sharing. You can decide who in your company can access the documents and who can manage the app in your absence. Also, real-time notifications and alerts can keep you posted on any activity around receipt organization happening on the app.
Digital receipt organization is much more cost-effective, labour-saving and faster than the old method of saving physical receipts. All it takes is a little training and getting into the habit of scanning and storing receipts as soon as you get them. Considering the wide variety of apps available for such purposes, consulting an expert to understand which app suits your business needs the best before investing in it would be preferable. At the end of the day, the secret to smoothly running a business is staying organized. And when it comes to better organizing, getting a professional bookkeeper is a smart investment.
Contact Edelkoort Smethurst CPAs LLP in Burlington for Your Bookkeeping Needs
Hire a professional bookkeeper to outsource your bookkeeping requirements so that you can give your business the attention it needs. To learn more about how Edelkoort Smethurst CPAs LLP can provide you with the best bookkeeping expertise, contact us online or by telephone at 905-517-2297.