For some people, receipts are meaningless pieces of paper that clog up their wallets and purses. But if you run a business, receipts are vital pieces of information that you must keep track of! Not only will you need receipts to maintain accurate bookkeeping, but you can also get tax reductions from the Income Tax Department if you have your physical receipts.
If your business is audited, you will again, need to have a copy of your receipts. You should keep the receipts in a safe place and make sure they are organized so you can actually refer back to previous transactions! Plus, how will you adjust your business habits or make a profit if you don’t know where your money is going, or who much you are making? If you are new to the business world, you may not realize that there are many different types of receipts. Each receipt has its own purpose, and should be used for certain transactions- take a look:
Sales Receipt:
As the name implies, this receipt shows when your business made a sale. Businesses will make a record of whatever goods were purchased, the amount of that purchase, the location of the purchase, and the method of payment. Sales receipts are especially important in retail businesses since customers like to make exchanges and returns. A customer’s sales receipt will prove that their products were actually purchased from that particular B&M business.
Donation Receipt:
Nonprofit organizations and businesses give these kinds of receipts because customers can use them to get a tax deduction. For instance, businesses like Goodwill Industries will give these receipts for household items and clothing donations. However, as of June 2011, the IRS now requires donations to be worth more than $250 in order for customers to get this kind of receipt. These receipts should include the name of the donor (to avoid fraud), the donation’s exact or estimated market value, and anything the donor received in return. The receipt should also verify your business’s nonprofit status.
Petty Cash Receipt:
Many businesses have a petty cash reserve. This money is kept in cash since it’s used to make small company purchases and give reimbursements. Since theft is prevalent with petty cash, most businesses require a receipt so that they know where the cash is going. If a manager asks an employee to make a small purchase with their own money, the manager would be required to reimburse the employee with money from the petty cash fund. A petty cash receipt should tell people who is in charge of the cash fund, what business items the cash was used for, people who used the cash, and the total amount spent.
Service Receipt:
You will need to use this kind of receipt if your business performs a specialized service–like an auto repair shop, or a consulting firm. You may charge your services by hour, or other factors, but many businesses try to standardize their services so that the prices can be added up more easily. This receipt should definitely include your business’s contact information, a fairly detailed list of the services the customer bought, and the total sum of those services.
A Receipt Template:
Since every receipt has a slightly different format, this can be a big headache for businesses to keep track of, and to create! But a receipt template can really save time because it would include essential elements that you may forget. If you have a small business, a receipt template can be a great way to reduce costs since you can print them on just about any kind of home printer! Again if you are new to the business world, then a receipt template will give you a good idea of what information your accountants and customers will need.