Expense receipts: What are valid proofs of purchase?

Accurate expense reporting is a necessity for any business—too lax, and the company haemorrhages money, too strict, and employees become frustrated navigating expenses themselves. Having a system for tracking expenses is critical for financial recordkeeping, tax deductions, and expense management. And it all starts with proper documentation. 

But what exactly counts as valid proof of purchase? In this guide, we'll break down everything you need to know about expense receipts—what information they should contain, why they matter, and what happens when recordkeeping falls through.

What’s an expense receipt?

An expense receipt is a document that serves as proof of a business-related transaction.

Employees must provide proof of purchase to receive prompt reimbursements, and valid expense receipts are necessary for employers to track spending and properly file taxes. Similarly, in tax audits, accounting teams rely on proper documentation to verify business expenses and ensure compliance with financial regulations. 

What can you use as a valid expense receipt?

A valid proof of payment for a business expense needs to record the details of a purchase clearly. Acceptable types of expense receipts include: 

• Physical receipts from stores, restaurants, and service providers
• E-receipts or email confirmations from vendors
• Invoices detailing the cost and nature of a purchase
• Proof of online transactions, such as PayPal or credit card statements

For an expense receipt to be valid, it must be legible and complete. Essential details include: 

• Date of purchase 
• Amount spent
• Name of vendor or service provider
• Itemized list of items or services purchased
• Payment method 

Missing or incomplete receipts can create reimbursement problems or tax compliance issues. Keep in mind that bank statements may not include an itemized receipt with detailed information about a purchase, so it pays to keep other records available. To avoid confusion, employers should clearly outline in a travel and expense policy what types of receipts are acceptable and establish guidelines for expense documentation. 

Why do you need receipts for expense reports?

Keeping track of receipts is more than a formality—it’s necessary to track corporate travel expenses and remain tax-compliant. Here’s why they’re important: 

• Expense validation: Employees don’t have a blank check for travel purchases—they can expense a business lunch but not souvenirs for family members. Receipts confirm that employees expensed valid purchases, including items within their per diem budgets, such as meal allowances, and travel arrangements. This ensures every expense claim aligns with travel policy guidelines. 
• Clear record keeping: Expense receipts create a clear, organized record of business travel expenses. This makes it easy to track and categorize costs for both internal audits and tax purposes. Plus, it helps create a predictable framework for future travel budgets, potentially spotting areas where travel managers can save money. 
• Accurate reimbursement: Without physical or digital receipts, employees might inadvertently underestimate their costs. A clear proof of payment reduces the risk of errors, maintaining a fair and efficient reimbursement process. 
• Maximize cost efficiencies: The most overlooked types of expenses are often the ones that lead to the greatest accounting shortfalls. To get the maximum out of your company travel budget, it helps to take note of common costs and attempt to minimize them.

Proof of payment for different types of expenses

Some receipts require more explanation than others—especially if there’s an audit or miscommunication with accounting. A missing itemized hotel receipt or incomplete mileage log can slow down reimbursements and create unnecessary back-and-forth. 

To avoid turbulence, here’s what you need for different types of expenses. 

Meal expenses

A paper receipt or credit card charge is often acceptable for a solo meal expense. However, if the meal includes clients or partners, provide additional details. Along with the receipt, employees should record guest names, companies, titles, and the meal’s purpose to ensure compliance and smooth tax reporting. 

Mileage costs

When employees use their personal cars for business trips, they often need to provide more than receipts from the gas pump. A detailed mileage log includes travel dates, odometer readings at the start and end of the trip, the purpose of travel, destinations, and total miles driven. This information helps employers properly reimburse and apply for deductions on their tax returns. 

Transportation costs 

Similar to mileage logs, employees should provide detailed information about transportation expenses that don’t include their personal vehicles. Whether providing proof of payment for a flight, cab, or bus pass, include the purpose of your travel and your destination. 

Accommodation expenses

Employees must provide clear proof of payment for lodging during a business trip or assignment. This might include a printed hotel booking confirmation with payment details, a signed rental agreement, or a receipt from a property management company or service provider like Airbnb. Employees should provide the dates of their stay, accommodation address, total cost, and payment method used. 

Consequences of non-compliance

When an audit rolls around—whether it’s from the IRS or your company’s internal team—organized receipts and expense reports save you time. These records are vital to verify your business expenses and deductions, proving that everything is in line with what’s reported. 

The IRS does make exceptions, which include expenses less than $75 or hard-to-prove transportation costs. However, the IRS can still sometimes demand explanation of expenses under $75, requiring supporting documentation to prove a reimbursement is legitimate. Discrepancies uncovered during audits with the IRS may lead to adjustments in owed taxes or even penalties. 

In addition, audits tied to business mergers, sales, and other major company-wide transactions require detailed documentation to avoid complications. This is why a comprehensive Travel & Expense policy that establishes a clear process for documenting and submitting expenses is a lifesaver.

If you’re wondering how long to keep receipts, the IRS recommends three years from the date you file your original return or two years from the date you paid taxes. 

Save on business travel expenses with Engine

Engine is your ally for smart corporate travel management. We help save you money on accommodations, flights, and rental cars—all while keeping track of and earning you travel rewards. Plus, with our all-in-one platform, Engine consolidates invoices and simplifies billing, helping companies control business expenses and stay on budget.