A receipt is a legal acknowledgment that payment was received 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 or other proof of a transaction.
Recording your transactions helps you manage your business and prove you made payment. You can download our free receipt template below or even build your own with our step-by-step builder.
What is a Receipt?
A receipt is a written record of a transaction between two or more parties. It outlines the details of the purchase and includes information about it like the purchase price, date, and payment method. It is meant to acknowledge that a purchase was made for back-end records. 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 return of a product
- Tax records
- Accounting records
You should make a receipt any time 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. Using receipts is an important way to protect your rights. The easiest way to create a receipt is to use a free receipt template, which you can download below.
Difference Between a Receipt and an Invoice
The primary difference between a receipt and an invoice is the purpose of the document. 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 is a request for payment for goods or services that have to be rendered. With an invoice, no payment has yet occurred. There are many types of invoices that may help you request payment.
Types of Receipt
There are numerous different types of receipts and use cases, our free receipt template can be used for many different scenarios, such as a cash receipt template or as an expense receipt template. Some types of receipts include:
Acknowledge the receiving 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 recordkeeping.
Use an expense receipt to record the monthly, quarterly, or annual expenditures made by an employee that will be covered by the business. An expense receipt provides evidence of a purchase by the employee that they can then reclaim from the company.
A sales receipt is used to document a sale. It is used as proof of goods or products purchased and is generated by the seller and can be used for a variety of payment methods.
Similar to a sales receipt, a service receipt is typically used by contractors, laborers, and freelancers to record the payment of services provided.
Typically used for tax credit purposes, a donation receipt is used by charities and non-profits to notify a donor that their gift/donation has been received.
Rental receipts are generated by landlords when rent has been paid by the tenant.
How to Write a Receipt
Writing a receipt is a straightforward process but is even simpler when using a free receipt template. This is where Legal Templates can help you create a customized receipt to fit your specific needs. When writing a receipt, you should include at least the following information:
The date of the transaction is critical information. It shows when the transaction occurred or when it was paid for. This may be crucial evidence if a dispute would arise or when determining other rights—like any right to return within a certain number of days.
2. 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, but it is important for every business. This helps you keep more accurate records and better organize your financial documents.
3. Account Number and Purchase Order Number
For transactions that have identifying account numbers, this should be included on the receipt. This is common for pre-existing business relationships or long-term contractual agreements.
If the receipt is for a transaction that fulfills a purchase order, that purchase order number should also be included on the receipt.
4. Seller Contact Information
The receipt should include the identifying contact information for the seller. This should include:
- The business address
- A telephone number
- A fax number
- An email
- Other contact information if applicable
5. Billing Address and Delivery Address
This section should include the customer’s name, address, and telephone number. It should also include a section directing it to a certain individual’s attention, especially if the customer is a business.
There should be a separate section for a delivery address as well. Where the product is to be delivered may differ from the billing address. This section should also include the shipping date.
6. Description of Goods or Services
This section should include a description of the goods or services rendered to the customer. This may be for an individual item or a list of all goods or services provided. The description of goods should be sufficient to identify what was sold and purchased. It should also include key information such as:
- The quantity of particular goods sold
- The unit price for each good
- The total cost of the goods sold
This section should also include a subtotal, sales tax section, and a section related to any shipping costs. It should also include any additional costs or discounts to determine the total amount owed.
7. Payment Received
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
Here’s a free receipt template which can be downloaded in PDF and Word format:
Why Do You Need a Receipt for Your Business?
There are a number of benefits to using receipts, including:
- Keeping accurate records
- Tracking expenses
- Settling sales transactions professionally
And using a free receipt template can save you time and ensures each receipt looks professional and consistent.
How long should you keep a receipt?
The IRS says a business should keep its receipts for three years. If a business claims any loss during that tax year, the receipts for that year should be kept for seven years.
What information must I put on a receipt?
A receipt should include important information like:
- Date and time of purchase
- Amount paid
- Payment method
- Description of items
- Shipping information
How can I make my own receipt?
You can make your own receipt by utilizing a receipt template. By using a sample you can just fill in the blanks to make your own receipt with ease. Creating receipts is even easier if you use our step-by-step document builder.
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.
How do I create a receipt in Word?
You can easily create a receipt in Word by using our Word receipt template. Just download our receipt template and fill out the blanks to create your receipt.