A general receipt is a document that will serve as a proof that a person has received money or property in exchange for a sale or a transfer of goods, or payment for a service rendered. It contains the date when the transaction has been made. It will also contain the sales tax or vat that will be added to the original amount that the customer will have to pay for the bargain.
In some countries, releasing a receipt to a buyer is considered obligatory. However, it doesn’t necessarily have to be machine-generated, like the receipts that we receive after buying from a grocery store or a clothing boutique. To avoid wasting paper and ink for printing, or for postal services for transactions not personally conducted, some businesses provide online receipts that will be sent to the customer by mail. Unless, of course, a printed receipt is demanded.
Businesses don’t simply produce receipts just because they feel like doing so. It plays an important role in the relationship of a customer and a seller. In fact, receipts are considered principal in every major transaction that the laws of some countries have deemed them a requirement. You may also see payment receipt examples.
Below are four reasons why receipts are considered necessary.
This is a receipt’s main purpose. It effectively communicates to the customer a summary of the transaction that has taken place. It shows them the products they have purchased and the services rendered, the unit price for each, a subtotal, the taxes they paid, and the total amount of it all. The date of the transaction is an important part of the official receipt. It’s often used by businesses for recording purposes.
A receipt may also contain the company’s policies for the knowledge of the customer, and any discount that may be available for the next deal.
A receipt is also a reliable tool that is indispensable for tracking sales and revenues of the business, which is why the issuer keeps a personal copy of the receipt as well.
Since it includes the basic information of the transaction, and especially if it’s computer-generated, it’s authenticity doesn’t have to be questioned. It can effectively serve as a reference should there be a question that may arise during the auditing process conducted by the company’s accountants. It can also serve as a proof for the Internal Revenue Service who may ask about the business’s tax returns. You may also see company receipt examples.
Basically, receipts can help a business settle any financial issues during every auditing period.
There are business establishments who offer a return and exchange policy for their customers should they have any issue with the products they have purchased, and receipts are a requirement for this option.
The customer will show the simple receipt to the retailer to be able to return the item. Without a receipt, the customer may only have to exchange the product with an item with a similar price. There is a limit to this alternative, however. The customer is often only given a limited number of days to return the item. This detail is also written on the receipt.
For those who donate items to charitable retail stores or nonprofit organizations also need a receipt. The receipts will help to accurately calculate the donations for tax purposes, and for auditing purposes, of course.
Keeping a clear record of your business’s expenses is a sure way of controlling your financial system. It can also keep you from unnecessary panicking that may come during tax preparation time since you already have everything categorized and maintained. You may also see hotel receipt examples.
Keeping a filing system that will include receipts is not that difficult. All you need are folders, a pen, and a filing cabinet, and to follow these steps:
To manage your generic receipts more easily, it’s best to file them as they come. Instead of waiting for the end of the month to manage a tall pile of them, do it every day instead. This can also avoid misplacing any receipt since you’re tracking them down after every business shift. You can also take notes on the receipts for cases where the purpose of the transaction is not exactly clear.
Since we’ve already started the whole organizing gig, let’s just go another extra mile. Categorize your receipts based on their purposes. This can make them easier to manage during your auditing.
You can place your receipts inside folders, folders inside files, and files inside your filing cabinet. Label the files with the receipts and their types of expenses so they will be easier to locate.
Once you’ve labeled every folder, arrange them in alphabetical order with the most recent ones in front. You can personalize this part of the organization process as long as you’re consistent with your system. You may also see service receipt examples.
Every year, you will want to clean your filing cabinet for another cycle of receipt-keeping. But it would still be best not to throw away the previous year’s set of documents since you may still need them in the future, especially for tax-related purposes. Set up new files and folders for the year, but keep the old ones accessible. You may also like sales receipt examples.
Receipts are a great way to keep track of the goods and services that come and go. They are the most basic type of financial document present in the business setting. However, receipts don’t only take one form. Depending on their purpose, they actually have different requirements, and different names. Let’s get to know four of them:
A full invoice is useful for every kind of transaction. However, it is most utilized for those that involve larger sums. They also aren’t the most convenient form of receipts since they require the customer to fill in a lot of information in the form. A full invoice includes the following:
Also known as a sales receipt, this type of invoice is perfect for smaller transactions and smaller businesses. It contains fewer information that the full invoice, but that doesn’t compromise its ability to serve as legal receipt. It’s greatest advantage, compared to the full invoice, is the fact that it needs fewer information which will keep the customer from spending too much time filling out forms. The details included in a simplified invoice are the following:
This type of receipt is one that serves as a request for a return of money. It can only be used for transactions where there is a debt obligation. They are really just a form of accounting formality for charting money.
A seller may issue a debit note to remind a buyer about a particular payment that has not been invoiced yet, but the payment will only be expected if an official invoice has already been issued, which means that a debit note works along the path of a loud reminder. You can use it for bookkeeping purposes and to make sure that your customer knows you haven’t been paid yet.
A credit note works similarly to a debit note. The only difference is that the former is a confirmation that payment has been made, which means that the debit note has been effective. Business owners differ on their reason for sending business notes, but they are similar in the way that they are sent for an error in the original invoice, or a refund request.
Credit notes are useful for helping you record any return of money so that you won’t have to pay taxes for that transaction. The details included in a credit note are similar to those in a full invoice.
Good record-keeping is the ability to hold on to basic receipts. Although it may sound easy (because how hard could it be to keep these lifeless pieces of paper?), keeping receipts is actually a lot of work. If you don’t have a strict culture of managing them in your business, they could slip right out of your hands and you won’t even notice it until it’s time to count taxes. By then, it would be too late.
So for you to know just what types of receipts are crucial to your business, here is a list of the transactions you could do well to keep a record of:
It’s best to keep a record of the materials that you may have purchased to create the products you sell. You should keep any document that shows the amount you’ve paid for the purchase, the person or entity you paid it to, and the date the transaction occurred as a proof that a payment has indeed been made. You may also see transfer receipt examples.
Anything in your business that you use every year such as your vehicles, gadgets and computers, any type of machinery, and even furniture is considered an asset. So if you ever need to have your computer fixed, or have your vehicle upgraded, make sure you keep a receipt of whatever service was rendered. And if you ever choose to sell one of your assets, keep a record of it as well. You may also like photography receipt examples.
Most of your business’s expenses will fall in your category. Basically, any expenses that you want to take out of your payable tax should be documented. Which means that every tiny proof, such as a basic receipt, is invaluable to your cause. Some of the transactions that may fall into this category include the following:
Ideally, you should keep your receipts for as long as the Internal Revenue Service or your local department of revenue requires you to. It takes them around 3 years from the day you filed your tax return to finish auditing. However, for unwanted circumstances such as fraud or tax underpayment, you may have to keep your receipts for as long as five to six years. You may also check out order receipt examples.
On the plus side, you won’t have to keep the original paper where your receipt came in. Six years worth of receipts is a lot. Plus, the paper may no longer be in a presentable quality. You can digitize your receipts instead or file them away in other form that will suit you best. You might be interested in catering receipt examples.
What people don’t tell you about not having the right records to show during the tax season is that it doesn’t simply leave you with a ton of paperwork. It also leaves you with a lot of explaining to do with the Internal Revenue Service (aka the IRS). You may also see lease receipt examples.
Aside from keeping the receipts we have enumerated in this list, it would also be best for you to consult with your in-house accountant regarding this matter. After all, when it comes to financial-related issues, it’s always better safe than sorry.