How to organize business receipts with automation

As your business grows, so does your spending. And when spending increases, you’re suddenly faced with the burden of managing more and more expense documentation. If you’re still manually organizing paper receipts for expenses, you should know automation software makes the process much easier.

Automating the expense management process improves efficiency, saves precious time, and significantly reduces the risk of human error. This can help eliminate financial discrepancies down the line, especially in the event of an audit.

In this article, we outline a practical, step-by-step guide on how to organize expense receipts, including both digital and paper formats, compliance requirements, and how automation can help streamline the process.

Why should you keep track of business receipts?

Business receipts play an essential role in many financial processes. That’s why an organized system for managing receipts is critical for businesses of all sizes. These are just a few of the most important reasons for tracking your receipts effectively:

• Tax deductions and compliance: The IRS and other tax authorities require accurate documentation of all business tax deductions. If you’re not careful with your expense receipts all year, the IRS could reject the deductions you claim on your tax return come tax season. This could potentially result in fines, penalties, and a lengthy tax audit.
• Financial audits: Whether it's an internal review or an external audit, receipts are key for validating business transactions. Auditors will scrutinize large expenses and use your saved receipts to confirm the charges are legitimate and properly recorded. Missing receipts can lead to failed audits and serious consequences.
• Expense tracking and budgeting: Receipts help track and categorize your business expenses. A centralized system for organizing small business receipts provides real-time visibility into all your spending activity, enabling more accurate financial planning and budgeting.
• Expense reimbursement: If your employees routinely make purchases on the company's behalf, you need their receipts to reimburse them properly. Receipts ensure fair and transparent expense reimbursement, helping you maintain accurate financial records.

Staying organized can also help address common pain points like lost receipts, inefficiency associated with manual data entry, potential errors, and IRS-related stress. An organized receipt tracking system lets you quickly retrieve crucial documentation, protecting your business from fraudulent claims or billing errors.

Not only that, you open your business up to financial and legal risks if you don’t maintain accurate and thorough records. This could lead to tax audits, fines, penalties, and, eventually, cash flow issues.

What types of receipts should you save?

The short answer is that when you're making business purchases, you should save every receipt. The IRS outlines the documentation required for tax purposes, as well as proof of purchase. These are some of the most common expense categories you'll want to save receipts for:

• Travel expenses such as transportation, meals, and entertainment
• Office supplies
• Software subscriptions
• Inventory purchases
• Marketing or advertising costs
• Rent, mortgage, utilities, and any other property or maintenance expenses
• Client expenses

Receipts are particularly important for tax deductions and as necessary documentation in the event of a tax audit. Save all receipts for business expenses you claim on your taxes.

Digital receipts are acceptable if they’re accurate and readable. Often, they’re necessary when the transaction involves cash or online payments. For recurring expenses, keep a record of each month’s transactions.

Paper receipts vs. digital receipts

Paper receipts and digital receipts both have their pros and cons when it comes to staying organized:

Paper receipts:

• Pros: Universally accepted; tangible; sometimes required for certain audits
• Cons: Easier to lose; vulnerable to damage; not eco-friendly

Digital receipts

• Pros: Easier to store, organize, and back up; searchable; legally acceptable if they are legible and accurate; potential for security with encryption
• Cons: Require reliable technology; potential for hacking or data breaches; may need enhanced security when sharing personal information

When scanning and storing physical receipts digitally, follow these best practices:

• Use a scanning device: Digital receipts need to be readable, so make sure to use either a proper desktop scanner or a smartphone camera with high resolution
• Get a receipt scanning app: There are receipt scanning apps designed just for this purpose. Look for one that integrates directly with your expense management software and features OCR technology. Besides Ramp, QuickBooks, and Expensify are popular receipt scanners.
• Standardize naming conventions and folder structure: Digital receipts are only useful if you can locate them when needed. Ensure that you name files consistently and create a clear, easily searchable folder structure.
• Encrypt the files: For added security, consider adding password protection or user access levels, and ensure regular file backups.

How long to keep business receipts

According to IRS guidelines, it’s best to keep documentation of your expenses for at least 3 years and up to 7 years, depending on the type of expense and your tax situation.

Setting a retention policy will make sure you hold onto all the documents you need for the appropriate periods of time:

1. Learn IRS and local requirements
2. Understand your business needs
3. Build a retention schedule
4. Implement security measures
5. Back up your files
6. Create policies for destroying old records
7. Regularly review and update your retention policy

Of course, there are advantages and disadvantages when deciding whether to stick with physical receipts or go digital for long-term retention. Digital storage is generally a better option because it saves physical space, is easier to access and back up, and allows for integration with expense management tools.

However, it’s important to follow best practices for digitizing and retaining records. Some physical records need to be kept safely and securely for legal reasons.

How to organize business receipts in 5 easy steps

Step 1: Collect receipts consistently

The best way to stay organized with your receipts is to be consistent when collecting them at the point of purchase. Whether they're digital or paper receipts, sticking to the same routine every time makes them less likely to be lost or damaged.

One way is to use a receipt scanner every time you make a transaction. A dedicated receipt scanning app helps you digitize, store, and organize your receipts.

Step 2: Digitize and store receipts

The next step in staying organized is digitizing and storing your receipts. Scan paper receipts using either a desktop scanner or your smartphone's camera, which should be capable of taking high-resolution images.

Alternatively, if you use a receipt scanning app, you can digitally capture and categorize receipts, making tracking and retrieval easier. Prioritize these factors when evaluating these tools:

• Compatibility with your accounting software
• User-friendliness
• Optical character recognition (OCR) technology
• Pricing
• Reputation

Step 3: Create a naming convention for receipts

Your captured receipts are useless if you can’t easily search for and access them when needed. This is where a consistent naming convention is crucial. Your file names should include dates and brief descriptions for easy identification.

Here are a few examples of potential naming conventions:

• Date first: 20250327_Marriott_Conference_Hotel.pdf
• Vendor first: Amazon_2025-06-09_Office_Supplies.pdf
• Category first: Utilities_Electric_20250101.pdf

Step 4: Categorize and organize receipts

The goal of a receipt filing system is to maintain an organized and efficient recordkeeping process. This allows you to easily retrieve and access essential business receipts.

First, categorize receipts based on expense type. Some common categories are utilities, office supplies, and travel expenses.

Next, create file folders corresponding to your various business expense categories and organize them by year or month for efficient retrieval. You can use tags by expense type, date, or project.

Where you store your receipts depends on your business needs, but a hard drive, in the cloud, or within receipt management software are among the most popular options.

Step 5: Automate receipt management

Automated expense management tools such as Ramp can both scan and process your receipts so they fully integrate with your broader expense management process.

Receipt capture automation uses OCR technology to extract and digitize information from paper or electronic receipts. With this software, you can automatically capture receipt details such as date, amount, and vendor.

Automatic syncing, categorization, and integration with accounting software enable you to streamline your entire workflow from start to finish.

Tips for staying organized

Once you know how to organize receipts, there’s an equally important sixth step: implementing your plan so you stay organized. Here are tips to remember as you put your plan into action:

1. Schedule regular reviews: When you’re busy, it’s easy to forget about your receipts. So, you need to be intentional about creating a review schedule. Add it to your calendar weekly, monthly, or quarterly, based on what works for you.
2. Back up digital receipts: No digital system is infallible, so always have a backup. As part of your review cadence, schedule backups for your documents, either to the cloud or to an external drive.
3. Educate your team on receipt policies: When multiple people make purchases, things can quickly become disorganized. Establish expense and receipt policies to help your team stay organized. And communicate your policies so everyone is on the same page.

Use a dedicated business credit card

When you pay for everything with a card, your expenses are all in one place. Your credit card statements become a convenient way to track and organize expenses and receipts.‍ A dedicated business card also helps you maintain separation between your personal and business accounts.

Business cards can also integrate directly with expense and receipt management platforms. When you make a purchase with the card, the receipt is automatically sent to your tool to process the expense.

How Ramp eliminates manual receipt management

Imagine this scenario: Your team travels to a conference for three days. While there, they have expenses for registration fees, meals, hotels, transportation, entertaining potential clients, and various other conference costs.

Receipts will probably come in many forms on a trip like this, meaning some are digital, some will be crumpled up in someone’s wallet, and others might be lost. And now your conference team has to figure out how to submit them by your deadlines, and your finance team has to chase down missing documentation and manually match receipts to transactions.

Ramp's automated receipt capture changes this dynamic. When employees make purchases with their Ramp cards, our modern expense management platform automatically captures and stores digital receipts directly from merchants.

Everything flows straight into your expense management system. For times when automatic capture is unavailable, employees can simply snap a photo using the Ramp mobile app, and OCR technology extracts key details, such as merchant name, amount, and date.

The platform automatically pairs receipts with their corresponding card transactions, eliminating the tedious manual matching that typically falls on your accounting team. When discrepancies arise—say, a tip added to a restaurant bill—Ramp flags these for quick review rather than letting them slip through unnoticed.

Beyond just organizing receipts, Ramp enforces your expense policy in real time. Set custom rules for different spending categories, and the system automatically checks each transaction against your guidelines. If an employee attempts to expense a first-class flight when the policy dictates economy, they'll be aware of it immediately.

Set your receipt management on autopilot

Managing receipts is one of those necessary evils that eats up hours of your team's time. But organizing receipts doesn’t have to be complicated. Following best practice and automating the process increases efficiency, reduces potential errors, and keeps you prepared come tax time.

Ramp’s modern finance operations platform simplifies the process, saving you time and money. More than 40,000 businesses have saved $10 billion and 27.5 million hours with Ramp. What could your team do with that kind of time savings?

Try an interactive demo to learn more.

Like this post? Read more small business management tips from Gary on Ledger Lab's blog.