A Guide on How to Fill Out an Official Receipt and Sales Invoice
When operating a business, there's a good possibility a vendor has said, "I'll send you your invoice after you've settled your payment," one way or another. In the Philippines, you might notice many places hold a sign that reads, "Ask for Receipt."
The terms "receipt" and "invoice" are frequently used interchangeably. But understanding the distinction between a sales invoice and an official receipt is crucial for business owners. The distinction between them is in what they are issued for, even if both have the same function—that of recording a transaction. Purchased goods require a sales invoice, whereas paid-for services require a receipt.
The Bureau of Internal Revenue (BIR) will impose penalties and fines if you fail to provide your customers with a sales invoice or an official receipt. You and your team must be able to properly fill out a sales invoice or an official receipt in order to issue them to customers in order to prevent this. When you need to update your books, doing this is also helpful for bookkeeping.
How to Fill Out an Official Receipt
Proof that a consumer has acquired a service worth more than ₱25 from your business is an official receipt (OR). As stated in Section 237 of the Tax Code, the legislation in the Philippines requires the issuance of OR.
An example of how to complete a formal receipt is provided below:
1. Calculate and collect the sale
Prior to creating the receipt, it's crucial to ascertain which paperwork is required to complete the transaction. For instance, if a customer uses a discount card during the transaction, you can start by confirming the card while you wait for the client's check to clear or you can issue a BIR-registered acknowledgment receipt first.
Depending on the sale, your business might additionally need to calculate the net amount collected.
Without withholding tax that can be credited, the entire sum will be collected.
With creditable withholding tax Determine the gross sales and the corresponding withholding tax rate where there is creditable withholding tax. Determine the net amount by subtracting the withholding tax from the gross sales (gross sales multiplied by the appropriate withholding tax rate).
2. Write down the specifics of the sale
Writing down the following information is necessary whether you are physically or electronically filling out an official receipt:
Name of the customer – Simply write "cash" if the customer prefers not to give their name.
Address – Include their whole address here, or at the very least their city.
Business style –In addition to the taxpayer's actual registered company name, this is the business name that is registered with a regulatory body, such as the Securities and Exchange Commission (SEC), and is used by the taxpayer.
Tax Identification Number (TIN) – Leave it blank if the client can’t provide it.
In the sum of – This is the total amount to be paid written out in words.
Amount – This is the amount to be paid but written in numbers.
In full or partial payment for – Indicate if the customer is making a full or partial payment. Indicate the specifics of the sales collection for partial payments, such as if the down payment is 20%, 50%, or another amount.
3. Classify and compute the amount collected
The breakdown of what went into the total amount paid is often located on the left side of the receipt. The following information is included:
Total sales or amount due – The price of the service rendered, including the value-added tax (VAT).
Less: VAT – The 12% tax added to the total amount.
Less: SC/PWD discount – The 20% discount granted to senior citizens (SC) and persons with disability (PWD).
Less: Withholding tax – The amount of withholding tax (if applicable). If your client is a business included in BIR’s list of the top withholding agents, they must deduct 2% of the service price rendered from your company as their local supplier.
4. Review all details and sign
Verify again that all the information and calculations are accurate. Give the buyer their receipt after signing it.
How to Fill Out a Sales Invoice
For clients who spent more than $25 on goods, a sales invoice is sent. Even though the Tax Code only requires this for transactions totaling the above-mentioned amount, businesses may nonetheless issue sales invoices for the sale of goods or products, even if the amount is less, to ensure process uniformity throughout all sales operations.
Below is a step-by-step guide on how to fill out a sales invoice:
1. List the client’s information
Full name
Address – Shipping and billing address (if applicable)
Business style
TIN
Payment terms
Email address (optional)
Contact details (optional) – Telephone or mobile number
2. Give a unique invoice number
An invoice number makes it easier to keep track of transactions for bookkeeping and improved document organization.
You can choose how to construct your invoice numbers, but a smart place to start is by using letter abbreviations for the item, the transaction date, and the number it occurs in a sequence with.
For instance, your invoice number may be RL1092022-05 if you sold red lipstick on September 9, 2022, and this was your fifth red lipstick sale overall.
3. Itemize products sold
Quantity – how many products were bought. If you sold numerous items, put similar products together and tally the number of purchases.
Description – The name of the items. It could also include the item code.
Measurement – the dimensions of the items, if relevant. Here, you might fill up the dimensions for a desk the buyer purchased, for instance.
Unit price – The cost of each product.
Total amount – The total cost of all items.
4. Breakdown the total amount due
If there are mixed transactions, it is crucial to have a breakdown of all the sums involved. Sales that are VATable, zero-rated, exempt from VAT, and subject to 12% VAT are all included.
Keep in mind that the words "THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX" should be included in large letters at the top of non-VAT sales invoices. The word "EXEMPT" must be prominently shown on the document for transactions that qualify for VAT exemption.
5. Check all details and ask for the client’s signature
Ask the client to sign the invoice once you've made verified all the information is accurate.
Issue Official Receipts and Sales Invoices Right!
To facilitate bookkeeping, every official receipt and sales invoice must have all necessary information. It avoids client misunderstandings, BIR fines, and anomalies while accounting for all of your transactions.
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Disclaimer: This article or blog is only for general knowledge and guidance and is not a substitute for an expert opinion. For technical advice, please consult your tax / legal advisor for your specific business concerns. For comments, suggestions, and feedback, feel free to email us at jac@upcloudaccounting.com
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