A receipt is an acknowledgment that a party received payment for a transaction. You can use a receipt in your business to show you or your customer purchased goods or services. It may also acknowledge receipt of an item of value for safekeeping.
What Is a Receipt?
A receipt is a record of a transaction between two or more parties. It outlines the purchase details and includes information like the purchase price, date, and payment method. The purpose of a receipt may also be to:
- Prove that a buyer made a purchase.
- Show the owner of a warranty that came with the item.
- Enable the return of a product.
- Have for a company’s tax and accounting records.
You can create a receipt whenever you give or receive something of value. A payment receipt lets you effectively track your purchases or sales. It also provides evidence in case of a future dispute about the purchase.
Receipt vs. Invoice
Explore the differences between a receipt and an invoice:
- Purpose: A receipt acknowledges that the buyer paid and signals that the transaction has been completed. It acts as proof of purchase for the buyer. An invoice requests payment from the buyer for the services or goods the seller provided.
- Details Included: These documents include similar information, such as the goods/services rendered, the date, and the cost. An invoice will include the due date and the seller’s contact information, while a receipt will include the payment method the buyer used to complete the transaction.
- Timing: A seller distributes an invoice before payment, while they distribute a receipt after payment.
Types of Receipts
Some types of receipts include:
Cash Receipt
- Purpose: Acknowledges the receipt of a cash payment for a transaction.
- Contents: The transaction date, the amount paid, clarification that the buyer made the payment in cash, a description of goods/services provided, the name of the person who made the payment, the name of the entity receiving the payment, and a receipt number.
Sales Receipt
- Purpose: Documents a sale right when it occurs and shows proof of goods or products someone purchased.
- Contents: The date of purchase, an itemized list of products/services sold, prices, the total amount paid, the payment method, seller’s details, and buyer’s details.
Donation Receipt
- Purpose: Notifies donors that an organization received their gift and shows proof of a donation to a charity, which is a tax-deductible expense.
- Contents: The transaction date, recipient details, donor/payer information, amount, a description of the contribution, and a statement confirming that the donor didn’t receive any goods or services in exchange for their donation.
Rent Receipt
- Purpose: Acknowledges a tenant’s payment of rent.
- Contents: Date of payment, the rental period covered, the amount paid, the property address, landlord/property manager’s name, tenant’s name, and payment method.
A rent receipt is useful for landlords to maintain a professional appearance and avoid disputes about payments.
Service Receipt
- Purpose: Documents the payment of services contractors, laborers, and freelancers offer.
- Contents: The date of service, service provider details, client information, a description of services, the total amount paid, the payment method, and client information.
How to Write a Receipt
Step 1 – Record the Date
Recording the date when the transaction occurred can help ensure you have the proper evidence if a dispute arises. For example, you can confirm a buyer’s right to return an item within a certain number of days.
Step 2 – Designate a Receipt Number
Receipts should have a unique identifying number to help separate them from other transactions. This is especially important when receipts look identical or similar between customers.
Step 3 – Include the Account Number and Purchase Order Number
If a customer on a transaction has an identifying account number, include it on the receipt.
If the receipt is for a transaction that fulfills a purchase order, you should also include that purchase order number.
Step 4 – Record the Seller’s Contact Information
The receipt should include the following identifying contact information for the seller:
- Name
- Business address
- Telephone number
- Fax number
- Other contact information, if applicable
Step 5 – Write the Billing Address and Delivery Address
Write the customer’s name, address, and telephone number.
There should also be a separate section for a delivery address, as the customer may want the business to deliver the product to a location different from the one on the billing address.
Step 6 – Provide a Description of Goods or Services
Include a description of the goods or services rendered to the customer. The description of goods should be sufficient to identify what the customer purchased. It should also include essential information such as the following:
- The quantity of particular goods sold
- The unit price for each good
- The total cost of the goods sold
You can also include a subtotal, sales tax information, relevant discounts, and shipping costs. Accounting for all these costs and fees lets you determine the total amount the customer owes.
Step 7 – Explain the Receipt of Payment
The receipt should indicate how much money the seller received. The total amount should identify the date it was paid and the method of payment, such as:
- Cash
- Check
- Money order
- Credit or debit card
- Mobile payment service
How to Scan a Receipt
Scanning a completed receipt lets you keep a copy more efficiently for your records.
You can scan paper receipts in one of two ways. The first way is to use a designated mobile app, which can allow you to capture an image and convert it to your desired file type.
The second way is to use a physical scanner to save the image to your computer. From here, you can also convert the image to your desired file type.
Receipt Sample
Review our simple receipt template below, which you can download as a PDF or Word file:
Frequently Asked Questions
How Long Should I Keep a Business Receipt?
The Internal Revenue Service (IRS) says a business should keep its receipts for three years. If a business claims any loss during that tax year, the business should keep the relevant receipts for seven years.
How Can I Make My Own Receipt?
You can create professional receipts using a template. Download our free receipt template and fill in the blanks to record the details of a specific transaction.
Why Are Receipts Important for Bookkeeping and Filing Taxes?
Receipts are important for bookkeeping because they keep clear records of your purchases and expenditures, which helps you comply with IRS rules. Correctly documenting your receipts for all your transactions can help your business maximize its possible tax reductions.
Ensure to save receipts for items you will deduct from your income when it’s time to file your taxes. If the IRS conducts an audit on your business, you can show that the amount you deducted came from allowable expenses.
What Is the Invoice Number on a Receipt?
The invoice number on a receipt is an identifier that links the receipt to the original invoice that the seller distributed to the buyer.
When Should I Issue a Receipt?
You should issue a receipt immediately upon receiving payment in any form, whether via cash, credit card, PayPal, or another method. You should also issue a receipt any time a customer requests one.
