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 purchase was made
- Show who owns a warranty that came with the product
- Enable the return of a product
- Have for a company’s tax and accounting records
You should make a receipt whenever you want to get or give 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
The primary difference between a receipt and an invoice is the document’s purpose. A receipt is a document issued after payment or services are made. It is meant to document that a transaction has already occurred.
An invoice is issued before payment. It’s a request for payment for goods or services that have to be rendered. With an invoice, no payment has yet occurred.
Types of Receipts
Some types of receipts include:
Acknowledge the receipt of a cash payment for a transaction with a cash receipt. Issue a cash receipt to a customer once they’ve paid and keep a copy for your records.
Use an expense receipt to record the monthly, quarterly, or annual expenditures made by an employee that the business will cover. An expense receipt provides evidence of the employee’s purchase that they can reclaim from the company.
A sales receipt documents a sale. It shows proof of goods or products someone purchased, and the seller generates it.
Contractors, laborers, and freelancers use a service receipt to record the payment of services they offer.
Charities and nonprofit organizations use donation receipts to notify donors that they’ve received their gifts. These receipts are useful for tax credit purposes.
Landlords generate rental receipts when their tenants make their rent payments.
How to Write a Receipt
Follow these steps to write an accurate 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, ensure to 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:
- The business address
- A telephone number
- A fax number
- An email
- 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 different location than 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 was sold and purchased. It should also include essential information such as:
- 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 can help determine the total amount the customer owes.
Step 7 – Explain the Receipt of Payment
The receipt should indicate how much money was received. The total amount should identify the date it was paid and the method of payment, such as:
- Money order
- Credit or debit card
- Mobile payment service
How to Scan a Receipt
Scanning a receipt lets you keep a copy of it more efficiently for your records.
You can scan a receipt 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.
Review our receipt template below, which you can download as a PDF or Word file:
Frequently Asked Questions
How long should I keep a receipt?
The Internal Revenue Service 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 make your own receipt using a template. You can fill in the blanks to record the details of a specific transaction.
Why are receipts important for bookkeeping?
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.