So you decided to tame your shoebox full of receipts. You've done the bookkeeping for your small business, you scanned all your receipts so that you can keep an electronic record, and now you're going to get rid of the paper. And it's gonna feel soooo good to get rid of the clutter.
Hang on a sec. I don't want to be the one to rain on your parade, but there are a couple of things you should check on before you burn your paper trail.
Small businesses in the U.S. can, in fact, get rid of paper receipts in some situations. According to the IRS (details here as of October 2010), as long as you can "index, store, preserve, retrieve, and reproduce the electronically stored books and records in legible, readable format" you're good. Specifically,
The original hard copy books and records may be destroyed provided that the electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements for an electronic storage system and procedures are established to ensure continued compliance with all applicable rules and regulations.
So there's the hitch. You can get rid of your paper receipts if your data storage system is deemed to be in compliance with the IRS, but you'll need to have your system tested by the IRS to determine whether you're in compliance. Want more info? Here's the 40-page PDF from the IRS.
If you destroy your records but are not in compliance, "you may be subject to penalties."
Small businesses in Canada have it easier, in the sense that there's no vagueness. I spoke with a representative of the CCRA, who told me that electronic records are not considered substitutes for paper records. The only time CCRA accepts electronic records is if that was the way you received the receipt in the first place. (i.e., your vendor emailed you a receipt instead of giving you a piece of paper.)
If you know what the rules are in any other country, please let me know so I can pass the word along to other Wave users.