How to Make a Receipt? The Complete Guide

Receipts act as proof of payment to a customer and a record of sale for any business. So, as a business owner, you must have a receipt book to issue your customers whenever they make a purchase. You can write receipts on paper or create them digitally using online templates or a software system. 

All business owners must know how to properly write and issue a receipt on each purchase. It also serves purposes like tax filing, proper documentation, and protection for you and the customer. Keeping paper trail or digital copies is part of business operations because if a customer returns a product only a receipt can prove they purchased from you. Recording receipts also helps with accurate inventory, and during tax time, expense receipts are recorded as claimed expenses. 

Above all other uses or receipt types, they’re valuable in maintaining accurate records and tracking your business activity toward success. With that in mind, you must know how to make a receipt digital or paper. In this insightful guide, Foundeck shows you how to make a receipt.

What is a Receipt?

A receipt is a printed paper or electronic transaction record known as proof of purchase. The receipt shows that a customer purchased an item or service, the amount they paid for it, and it was delivered to them. But what details should a receipt display?

1. Company details 
2. The date of purchase
3. Receipt number
4. A brief description of the product or service delivered
5. Amount paid for the goods or services
6. Sales tax charged, if any
7. The payment method - How the purchase was paid for- credit card, cash, or online payment method
8. Appropriate language “Receipt” for anyone to know what they have at hand.

It’s not a federal requirement to issue a receipt to your customers for every purchase. However, your state might require you to record the sales tax you're collecting. A business can use receipts to track inventory and calculate tax, while customers can use them for accounting purposes. 

Customer information is DELICATE, and as a business owner, you need to treat it as such. How do you protect customer data? You can abbreviate or shorten customer details like credit card number, credit card information, and hide expiry dates. Careful handling of these customer details ensures that sensitive information doesn’t fall into the wrong hands of cyber frauds. 

Depending on the state your business operates in, other regulations and statutes might apply, like how to collect sales tax on every item. If you’re unclear on how to go about your state tax filing, check to understand what items are exempt from taxes. Once you understand your state tax rules and their impact on your business, your business will comply with the law. 

How Receipts Work

Businesses use receipts to document payments and transactions. 

Other entities use receipts to keep track of their cash flows, refund authentic payments, or claim certain tax benefits. Some countries require all businesses to provide a receipt to all customers for each transaction. 

Every receipt should include all necessary transaction details like the date of purchase, goods or services, total cost, payment method, and a signature. Although receipts can be handwritten, today, e-receipts are popular and are generated by a POS system. 

The Importance of a Receipt

Receipts are important to any business and the customer, too. Depending on the Point Of Sale (POS) you use in your business, you can use digital or paper receipts. You should issue receipts for these reasons: 

1. Returns and exchanges are easier for the seller and buyer with a receipt. If a customer returns without a receipt, the refund is denied. The consequences here are dire; the customer walks away disgruntled, and you lose them for good. Therefore, issue a receipt for each sale to stay safe and ensure customer retention. 
2. Tracking sales is much easier when tracking the products or services your customers purchase regularly. Knowing what you have in your inventory will ensure you always have enough supply and your target audience gets what they need. 
3. Basket size tells you how many items of a particular product you sell, assess which ones generate the most income and lean on it in your marketing campaigns. 
4. Bookkeeping is done right with all receipts in one place to document business sales and revenue to balance profit-and-loss statements.
5. Business taxes are completed using receipts issued to customers. Thus, the IRS audits of your business will involve all receipts to verify the transactions. From the receipt copies in your business, the IRS has proof of the money your business made, plus the sales taxes you collected. However, if you’re running a business in Delaware, Alaska, New Hampshire, Montana, and Oregon, the IRS might never knock on your doors to audit sales tax because these states don’t collect it. 

How to Make a Digital Receipt

There are different ways to create a receipt; digital or physical receipts on paper. Whether digital or physical, both receipts contain the same details and serve the same purpose. Let’s discuss each receipt independently. 

1. Find a Receipt Template Online: You can use a free online receipt generator or customize a template by adding all business details to save time. A receipt generator is an affordable and easy-to-use method to make and issue receipts. Softwares like Microsoft Excel, Microsoft Word, and Canva have free receipt templates you can customize as your business receipt. 
2. Input the Sales Information: Add the sale details to the receipt; total amount, items sold, card information, or payment method. Ensure the receipt has a number for tracking purposes. 
3. Pass the Receipt to Your Customer: Your receipt is almost ready and you should give the customer their copy via email or text from your POS system. Some customers might decline to collect the receipt, but send it anyway for the sake of your business. 

How to Fill Out a Receipt Template

Handwritten receipts are prone to errors; anyone writing them must be meticulous to avoid them. Automated receipts, on the other hand, have little or no chance of errors because they’re avoidable. These tips will guide you when filling out a receipt template:

1. Whenever a customer makes a purchase, there should be two copies of the receipt: you retain one for your records and the other for the customer as proof of purchase.
2. Use an ink pen (blue or black) to fill in the details, not a pencil, because it’s erasable. 
3. Ensure the areas you fill manually are legible for you and the customer to clearly see the transaction details. 
4. Sign every receipt to make it official, even copies. 
5. Crosscheck the receipt to avoid errors like date or receipt numbers. Leaving out vital details of the receipt can make a transaction look shady even when legit. Plus, tracking payment on a receipt you need details on is challenging. 

How to Make Paper Receipts

Different POS devices have varying methods of creating receipts, but there are basic steps that cut across the board. Below is a demonstration of the basic steps of creating paper receipts.

1. Find a Receipt Printer

Find a receipt printer system that’s compatible with your POS and ensure they have the following: 

• Printing paper and ink
• Carbon paper and pressure
• Thermal paper and heat

Typically, you may not find a printer individually to work with your POS. It’s for this reason that POS vendors offer printers that are compatible with their checkout system. 

2. Pair Your POS with the Printer

A POS makes custom receipts and then prints them seamlessly. Shared the receipts via text message or email to the customer. Begin by plugging the printer into a power source, then connecting it to your POS using Bluetooth, LAN, or Wi-Fi.  

3. Create the Customer Order

Once logged into your POS system, add your customer’s order to the home screen. You can do this by searching them or scrolling down the list of products in your system. After adding all products to the customer’s order, click   “Checkout.” Select a payment method and follow the on-screen guide to complete the sale.

4. Generate and Send the Receipt

Once the payment goes through, the message “Payment successful” will show on the screen. You can print, text, or email the receipt to the customer. 

IRS Requirements of Receipts

Digital receipts have become a norm for close to three decades. The IRS accepts scanned and e-receipts as valid records for tax purposes. Digital receipts must be accurate, well-preserved, and easily stored and retrieved. The business owner must be able to produce a copy of the receipts to the IRS whenever there’s a need.

Unlike physical receipts, digital records don’t wear out but can be lost if the hard drive fails. Thus, it’s wise to secure storage in multiple locations like the cloud for easy access if anything ever goes wrong. Paper receipts can also be digitized using mobile phone apps and desktop scanners. By using technology like bookkeeping software, you can organize documents, create expense reports, and integrate data. 

Types of Receipts

Receipts also serve other purposes besides a show of ownership or proof of transaction. For instance, a retailer requires any customer who wants to return or exchange an item after purchase to show a receipt. 

Some retailers will only accept a receipt within a specific time frame, explaining the product warranty. Receipts are also vital for filing taxes with the IRS, as the documentation is required for specific expenses. According to the IRS, the following receipts must be generated and retained by small businesses:

1. Cash Register Receipts are the small printed piece of paper you’re issued after purchasing an item. These are mostly issued in grocery stores. 
2. Service providers mostly use Handwritten Receipts in a retail setting. 
3. Retailers send Packing Slips to accompany a purchase and the customer finds it in the package. It contains additional information like the warranty and return policy.
4. Carbon Copies are handwritten on receipt notebooks. They have a carbon layer at the back of each receipt, allowing the details to be traced on the layer underneath. The carbon copy remains with the seller. Other receipts are produced as documentation for specific expenses, explaining why small businesses must retain them to keep track of business operations. These receipts include: 

• Gross receipts are the most popular and are issued on cash registers or receipt books
• Raw materials and purchase receipts confirm if the specific business purchases were necessary and if the amounts spent are worthwhile. 
• Credit card statements and receipts are given to a customer who pays using cards.
• Cash register tape receipts.
• Small businesses use petty cash slips.
• Invoices 

Form Your LLC with Foundeck Today

Foundeck offers a range of fast and efficient online company formation services, allowing you to register a business structure of your choice quickly from anywhere and keep it compliant. To get started, kindly contact us here.

Frequently Asked Questions

What is a receipt format?

A receipt format is how the details of a purchase appear on the receipt. The details include date, business name and address, purchased items, customer name, and the amount paid. 

How can I tell if a receipt is detailed?

A detailed receipt is also known as an itemized receipt with lists of every purchase. Taxes, discounts, and other expenses like shipping fees and labor should also be added. 

How can I write a receipt?

Write a receipt by placing the item name on the left side and the price on the right-hand side of the receipt. If the sale involves various items, list all their prices and total costs before taxes and additional charges.

In Summary

Receipts are basic documents all businesses issue customers as proof of purchase and payment. Besides issuing a receipt as proof of purchase, businesses can use receipts to claim tax deductions, document company expenses on their income statements, and prove the existence of assets on their balance sheets.

Today, digital solutions are on the rise, making paper receipts look outdated. E-receipts or e-invoices are more convenient for customers while keeping a receipt book is efficient for the business owner to keep track of business financial records.

The IRS recognizes a paper receipt for accounting and tax purposes, but now a digital receipt is also viable for tax audits and filing. Thus, you may still need to fill and retain a receipt book as a business owner. 

As you issue a receipt to a customer, ensure it has all necessary details like date, receipt number, item purchased, price per item, and the total amount of all products. Leaving out details on a receipt can cause inconveniences like the inability to track a sale, refund, or exchange of goods a customer purchased and wants an exchange. Therefore, it’s crucial to issue a well-written receipt with all details placed for anyone to understand and verify.