how a receipt works
receipts are used to document payments and business transactions companies and other entities use receipts to track their cash flows reimburse eligible payments or claim certain benefits on their taxes in some countries businesses are required to provide a receipt for each transaction each receipt should include the date of the transaction in most cases they include other details such as the nature of the transaction details of the vendor method of payment and any additional taxes or costs in some cases they may require a signature while receipts were once written out by hand today they are automatically generated at the point of sale types of receiptsin addition to showing ownership receipts are important for other reasons for instance many retailers insist that a customer must show a receipt to exchange or return items while others demand that a receipt generally issued within a certain timeframe be produced for product warranty purposes receipts can also be important for taxes because the irs requires documentation of certain expenses the internal revenue service irs suggests that the following types of receipts if generated be retained by small businesses origin of receiptsthe practice of retaining receipts for tax purposes is thought to originate from ancient egypt farmers and merchants sought ways to document transactions to avoid tax exploitation papyrus was used instead of paper in more modern times london banks used the printing presses of the industrial revolution to print receipts with their own brands thermal printing is the most commonly used form of physical receipt printing because it is low cost and easy to use today however paper receipts are increasingly giving way to electronic receipts in the form of emails or other digital record irs requirements for digital receiptsdigital receipts are becoming the norm since 1997 the irs has accepted scanned and digital receipts as valid records for tax purposes revenue procedure 97 22 states that digital receipts must be accurate easily stored preserved retrieved and reproduced the business owner must be able to supply a copy to the irs digital records are not subject to wear and tear as are physical receipts but they can be lost if a hard drive fails it s thus wise to store them on the cloud or somewhere where they can always be accessed paper receipts can be stored digitally using desktop scanners and mobile phone apps this type of technology can organize create expense reports and integrate data with bookkeeping software for tax audit purposes not all documentation is valid the irs accepts various documentation as long as it details the amount place date and type of expense 