Expenses receipts: complete guide on proof of purchase for businesses

Have you ever been left scrambling to approve expenses without a proper proof of purchase receipt? It’s a frustration that finance managers, business owners, and executives are all too familiar with. Without proper purchase documentation, the company risks compliance issues, financial inaccuracies, and delayed reimbursements.

Expense receipts are crucial for businesses of all sizes. They serve as a tangible record to track purchases, ensure accurate employee reimbursements, and maintain compliance with tax regulations. Proper receipt management prevents financial discrepancies, simplifies audits, and keeps expense tracking transparent and efficient.

This guide will cover everything you need to know about expense receipts, from their importance, to IRS requirements, to best practices for managing them efficiently and helping your employees keep them organized. 

What is an expense receipt?

An expense receipt is a document that verifies a business-related purchase, serving as essential proof for reimbursement and tax purposes. These receipts detail the transaction by including:

• Date of transaction: When the purchase occurred.
• Vendor information: Name and contact details of the seller.
• Itemized list of purchases: Descriptions and quantities of goods or services acquired.
• Total Amount Paid: The complete cost, including taxes and fees.

For instance, if an employee buys office supplies out-of-pocket, they must provide an expense receipt containing these details to receive reimbursement. This practice ensures financial accuracy, supports compliance with tax regulations, and maintains transparent business records.

The importance of expense receipts

Effectively tracking and managing expense receipts is important for a few reasons. Below are some key advantages:

Compliance with tax regulations

Expense receipts serve as crucial documentation for tax reporting and audits. Regulatory authorities, such as the IRS, require businesses to maintain detailed records of their expenses to support deductions and verify transactions. Proper receipt management helps companies avoid tax penalties, demonstrate financial legitimacy, and streamline the auditing process.

Simplified reimbursement process

For businesses that reimburse employees for work-related purchases, maintaining accurate expense receipts ensures that reimbursement requests are processed smoothly and accurately. A well-organized system minimizes disputes over claims, expedites approvals, and enhances transparency between employees and finance teams.

Accurate financial reporting

Expense receipts contribute to precise financial reporting by providing a clear record of business expenditures. They help finance teams categorize expenses correctly, track spending trends, and ensure that financial statements reflect the true state of company finances. This accuracy is essential for budgeting, forecasting, and strategic planning.

Valid proof of purchase: 4 key elements of an expense receipt

1. Vendor name and contact information

The receipt must include the vendor's full name, address, phone number, or email. This information verifies the transaction's legitimacy and allows for easy reference in case of disputes.

2. Date of purchase

The purchase date is essential for tracking expenses within the correct reporting period. It helps businesses maintain accurate financial records and ensures that expenses align with tax and reimbursement policies and schedules.

3. Description of goods or services

A clear itemization of the purchased goods or services must be included on the receipt. This description confirms that the transaction aligns with company policies and supports audit reviews.

4. Paid amount

The total amount paid, including taxes, discounts, and additional fees, should be listed on the receipt. This detail ensures that reimbursements are processed accurately and prevents errors in financial reporting.

Special requirements for different expense types

The type of expense determines the specific documentation required for valid proof of payment. Below are key business expenses and their corresponding receipt requirements:

Meal expenses

For meal expenses, a valid receipt should include the restaurant name, date of the transaction, total amount paid, and a breakdown of items ordered. If the meal was for business purposes, some companies may also require the names of attendees and the purpose of the meal.

Transport costs

Transportation receipts must clearly state the travel date, the service provider (e.g., taxi company, rideshare service, airline), the total fare, and payment confirmation. For flights and long-distance travel, boarding passes may also be required as supplementary proof.

Mileage costs

Employees who use personal vehicles for business travel must submit mileage logs instead of traditional receipts. These logs should include the date of travel, the starting and ending locations, the total miles driven, and the business purpose of the trip. Some companies may also require odometer readings.

IRS requirements for expense receipts

The IRS requires businesses to keep detailed records of all expenses to substantiate deductions and maintain compliance with tax laws. Companies must retain receipts for expenses over $75, though it is advisable to document all business transactions regardless of the amount.

Businesses must maintain receipts for travel, meals, and entertainment expenses that detail the date, location, amount, and business purpose. Failure to provide proper documentation can lead to disallowed deductions, penalties, or even audits. The IRS generally requires companies to store expense records for at least three years, but businesses may need to keep them longer depending on the type of expense and the potential for audits.

Non-compliance with IRS receipt requirements can result in financial penalties, loss of tax deductions, and increased scrutiny during audits. Proper receipt management not only safeguards against these risks but also ensures smooth financial operations and accurate tax reporting.

How to request an expense receipt from employees

Employers should implement a structured process to ensure employees provide proper expense reimbursement receipts. Below are key steps to streamline this process:

Step 1. Establish a clear expense submission policy

Develop a well-defined expense reimbursement policy that outlines which expenses are eligible for reimbursement, the type of documentation required, and any necessary approval procedures. Employees should have easy access to this policy to prevent confusion and ensure compliance.

Step 2. Set deadlines for receipt submission and reimbursement claims

To maintain an efficient workflow, establish firm deadlines for submitting expense receipts. Encourage employees to submit receipts promptly after making a purchase to avoid delays in processing reimbursements.

Step 3. Communicate submission requirements to employees

Clearly outline how employees should submit receipts for reimbursement, whether through an expense management platform, email, or physical copies. Providing employees with detailed submission guidelines helps prevent errors and ensures that all required information is included.

Step 4. Use digital tools to streamline receipt collection

Leverage expense management software that allows employees to upload digital receipts easily. Automation helps reduce paperwork, minimizes the risk of lost receipts, and simplifies the approval process for finance teams.

Step 5. Monitor compliance and provide feedback

Regularly review submitted receipts to ensure they meet company policy requirements. Offer employees guidance and feedback when necessary to maintain accurate and consistent expense reporting.

Implementing these steps can help businesses create a seamless process for requesting and collecting expense receipts, improving financial accuracy and operational efficiency.

How long to keep expense receipts

The length of time businesses must retain expense receipts varies based on tax regulations, the type of expense, and potential audit requirements. The IRS generally recommends keeping records for at least three years from the date of filing the tax return associated with the expenses. However, certain situations may require longer retention periods:

• Seven years: If a business claims a loss on its tax return, receipts should be retained for up to seven years in case of an audit.
• Indefinitely: If fraud is suspected or no tax return is filed, the IRS does not impose a statute of limitations, meaning records should be kept indefinitely.
• Asset-related expenses: Receipts for business assets, such as equipment and property, should be retained for as long as the asset is in use, plus additional years as required by tax regulations.

Beyond tax requirements, keeping receipts for an extended period can help businesses maintain accurate financial records, ensure compliance with company policies, and provide documentation in case of disputes or financial reviews. Leveraging digital storage solutions can simplify receipt management, making it easier to organize and access records as needed.

By following proper retention guidelines, businesses can protect themselves from compliance risks and maintain transparency in financial management.

Expenses receipt management: 5 tips

To streamline expense receipt management and ensure compliance, businesses should implement the following best practices:

1. Use expense management software

Automating expense tracking with expense management software reduces manual errors, improves organization, and ensures receipts are stored securely. Many platforms allow employees to scan and upload paper receipts in real time, simplifying the submission process and reducing paperwork.

2. Establish clear expense policies

Setting well-defined expense policies regarding reimbursable expenses, documentation requirements, and submission deadlines helps eliminate confusion. Employees should be aware of what qualifies as a business expense and how to provide appropriate proof of purchase.

3. Categorize business expenses

Properly categorizing expenses by type (e.g., travel, meals, office supplies) makes it easier to track spending, analyze financial data, and prepare tax filings. Implementing standardized categories across departments ensures consistency in reporting.

4. Maintain digital backups

Storing digital copies of receipts helps protect against lost or damaged paper records. Cloud-based storage solutions or expense management systems provide easy access to receipts and improve record-keeping efficiency.

5. Conduct periodic audits

Regularly reviewing submitted expense report receipts helps identify discrepancies, ensure policy compliance, and detect potential fraud. Conducting internal audits ensures that expenses align with business objectives and financial regulations.

Effortless expense receipt management with Rippling

Managing expense receipts manually can be time-consuming and error-prone. With Rippling’s expense management software, businesses can automate their expense reporting with real-time policy checks, seamless approvals, and direct accounting integrations.

Why Rippling?

Rippling's expense management software consolidates all company spend—including corporate cards, invoices, and expense management—giving finance teams full control and visibility over spending patterns. Unlike traditional expense management solutions that rely on basic approval chains, Rippling enables companies to implement hyper-custom policies tailored to employee attributes, specific vendors, expense categories, and dollar amounts.

Key capabilities of Rippling expense management:

• Automated approvals: Route expenses and bills to the correct approver every time, reducing processing delays.
• Policy enforcement: Flag out-of-policy expenses automatically based on vendor, transaction amount, or category.
• Real-time visibility: Gain insights into company spending trends with AI-powered transaction categorization and seamless integration with accounting systems.
• Regulatory compliance: Maintain organized, IRS-compliant records with a centralized and auditable expense and receipt tracking system.

A smarter way to manage expenses

Most expense management tools operate separately from broader financial workflows. Rippling integrates expense reimbursements, vendor payments, payroll, and corporate cards onto one intuitive platform, ensuring companies have unprecedented control and visibility over their financial operations.With Rippling, businesses can automate approvals, set dynamic policies, and streamline reimbursements, ensuring compliance and efficiency at every step of the expense management process.

Expenses receipt FAQs

Can employers accept digital receipts instead of paper copies?

Yes, digital receipts are widely accepted and often preferred due to their ease of storage and retrieval. Many expense management systems allow employees to scan receipts for digital upload, ensuring compliance and reducing the risk of lost documentation. However, businesses should ensure that digital receipts contain all required details—such as the vendor name, date, and transaction amount—to be considered valid proof of purchase.

What should employers do if an employee loses a receipt?

If an employee loses a paper receipt, companies may allow alternative forms of verification, such as a bank statement showing the transaction, an affidavit explaining the missing receipt, or a duplicate copy from the vendor. However, businesses should establish clear policies regarding lost receipts to prevent fraudulent claims and ensure accurate financial reporting.

Are credit card statements enough to validate expenses?

No, credit card statements alone do not provide sufficient details to serve as proof of purchase. While they confirm that a transaction occurred, they do not include specific information about the goods or services purchased. For compliance and reimbursement purposes, a detailed receipt is required to verify that the expense aligns with company policies.

This blog is based on information available to Rippling as of March 14, 2025.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.