The purpose of receipts is to represent proof that a transaction is made between a buyer and a seller. Every product, goods, and services in shopping centers, restaurants, or even on online shopping platforms includes tax for every purchase you make. Now, every transaction requires and includes either a sales invoice or official receipts depending on the type of transaction or purchase you’ve made. It upholds businesses a strict mandation of tax compliance through sales invoice or official receipt to its customers required by the income tax government. In the Philippines, the Bureau of Internal Revenue (BIR) which is the tax sector of the national government. In this article, you will learn the difference of sales invoice and official receipts and why it is essential to differentiate them for your business. Before going into sales invoice and official receipts, let’s first talk about taxes.
What is Value Added Tax (VAT)
Value Added Tax (VAT) is the tax imposed on the consumption of products, goods, and services. Typically, when a buyer purchases products, goods, and services from a seller or a service provider, the value added tax equates to 12% to the selling price which can be seen to the receipt of the transaction. These value added taxes are imposed on official receipts on your daily purchases such as groceries, fast food & restaurant chains, retail, and any form of consumer oriented purchases.
What is Non-Value Added Tax (Non-VAT)
Non-Value Added Tax are taxes imposed on businesses, entities, or companies that are engaged in trade or transactions that require their profession imposed on the service provided. Typically, if a business exceeds the VAT threshold of ₱3 Million on their annual sales, a business or a corporation is in the criteria of Non-VAT taxpayers.
What are Taxes for
The purpose of imposing tax for daily consumers, professionals, and businesses or corporations is the contribution to finance government expenditures for projects and activities.
Sales Invoice & Official Receipt
Now, you might be wondering why we’ve discussed tax in the earlier section of the article. It is because taxes are an integral part of issuing sales invoice and official receipts for businesses to customers. In this section, you will learn the difference between a sales invoice and official receipt and why it is critical to know the difference for your business. But before we jump right into the difference, let’s talk about their definitions first.
What are Sales Invoice
Sales invoices are issued by a seller to a transaction whether it’s goods, services, or properties done by a business whether it’s through cash, cheque, or credit. Sales invoice refers to the transaction between two parties that refers to how much amount the buyer owes the seller. On paper, sales invoices are issued either before or after the goods or services have been delivered to the customer. For example, if you’re a digital marketing agency that offers marketing services for other businesses, sending them a sales invoice allows you to project the total price of your service to the customer.
Sales invoices are also issued when the transactions are in large quantities. For example, if you’re a wholesaler, manufacturer, distributor, or supplier, your customers would typically order in bulk.
What are Sales Invoice for?
Sales invoice serves more than just providing your customer the information on how much they owe you or on what type of payment method they need to fulfill in order to pay for the goods or services. Sales invoices are also an essential part of your business documentation process for your quarterly or annual income tax audit to keep your business diligently compliant to tax compliance.
What are Official Receipts
Now that we’ve talked about sales invoice, official receipts are issued after the customer paid or fulfilled your sales invoice for your product or service. Official receipts is a piece of documentation that breaks down everything that contains a transaction. Just like our example before, if you’re a digital marketing agency that provides marketing services to your business customers, issuing an official receipt that contains transparency of your service for every service is required.
Nowadays with the help of technology, e-receipts or virtual receipts are now being issued that are typically sent to the customers e-mail. Virtual receipts are most commonly issued by eCommerce businesses (but not limited to eCommerce) when you purchase from an eCommerce marketplace. Physical stores still issue physical receipts when you buy from retail stores.
Nevertheless, both virtual and physical official receipts are valid as long as they are duly registered to the Bureau of Internal Revenue (BIR).
What are Official Receipts for?
Official receipts is a document that proves and verifies a transaction between two or more parties. It is also a basis for the company or seller’s output tax liability and the customer or buyer’s input tax claim which is presented at any form of official receipts. Official receipts also is a form of acknowledgement that a transaction is made of payment whether it’s in a form of cash, cheque, or credit.
The Difference Between Sales Invoice and Official Receipts
- Transactions
Sales invoice is a payment request document provided by businesses, sellers, or service providers for its products, goods, or services rendered by the business to its customer. Depending on the service agreement between the business and the customer, it is typically issued when the service is rendered or when the service is halfway through its completion point. Since sales invoices are payment requests, it presents your customer with the breakdown of costs that makes them aware of what they are paying for. Sales invoice contains the overall transaction with products, equipment, service rendered, with transparency to costs.
While an official receipt serves as the proof of payment of a transaction between a buyer and the seller. It is issued once the customer has paid for its service that serves as an acknowledgement document for the transaction has been accomplished.
- Documentation
Sales invoices are usually documented by businesses, sellers, or service providers for tax compliance purposes. Mandated by the tax government sector of the Philippines, businesses are required to comply with annual income and finance audits as part of the rules and regulations of running a business or a corporation.
On the other hand, official receipts are received by the customer provided by businesses, sellers, or service providers. When issuing an official receipt, businesses tend to keep a copy of the receipt for every transaction made between their customers for documentation purposes.
As a customer, keeping official receipts helps you with returns and refunds rather than throwing them away. Official receipts officiate your transaction with a vendor. If you’ve recently purchased an item and wish for a return or refund for a particular reason, official receipts authenticates where you purchased the item from, helping you make the returns and refunds process easier. - Use of Importance
For Businesses
Sales invoice and official receipts go hand-in-hand that serves as an evidence for the sales of goods, products, services, or property. As mentioned above, the Bureau of Internal Revenue (BIR) mandates the issuance of sales invoices and official receipts as part of running a business or corporation for its annual financial audit and tax compliance.
For Customers
Again, a sales invoice is a document that represents what the customer is paying for and how much they owe the business or service provider. In terms of sales and purchasing of goods or properties in huge quantities, a sales invoice serves as the document in authenticating the transaction before it was paid and the official receipt is issued once the transaction is paid.
Unlike businesses, the Bureau of Internal Revenue (BIR) doesn’t require customers that are not involved in business transactions to keep sales invoice or official receipts as tax compliance. If you’re a day-to-day consumer or just shop for items that you need everyday, you don’t have to compile them and present them as part of your tax compliance annually.
Why Tax Compliance is Important for Businesses
As a registered business in the Philippines, it is mandated by the Bureau of Internal Revenue (BIR) that businesses should comply with taxes. Whether you’re a one-person corporation, freelancer, licensed professional, sole proprietor, or in a general partnership, your business is required and responsible for your annual income tax compliance as stated by the Tax on Income Law. Failing to duly comply with BIR Form 2307 tax compliance can result in serious penalties for individuals, businesses and corporations.
What is BIR Form 2307
According to the Bureau of Internal Revenue, the BIR Form 2307 or Certificate of Creditable Tax Withheld At Source is a Certificate to be accomplished and issued to recipients of income subject to expanded withholding tax paid by a Payor/Withholding Agent including government money payments made by a government office showing therein the monthly breakdown of the total income payments made and the total taxes withheld and remitted during the quarter/period.
Why Businesses Should file BIR Form 2307
BIR Form 2307 is an integral part of your business tax compliance framework. The BIR Form 2307 serves as the document for filing quarterly or annual income tax returns. Submission of BIR Form 2307 serves as evidence of withholding that is in lieu of income tax return.
Who Should File for a BIR Form 2307
The BIR Form 2307 is certainly one of the most common forms submitted by businesses of all sizes whether you’re a startup, SMEs, large and multinational corporation in filing for tax compliance such as quarterly and annual income tax returns.
An eCommerce Platform where Sales Invoice and Official Receipt Matters
Now that we’ve repeatedly mentioned how important it is for a business to collect and document every sales invoice and official receipt, compiling your sales invoice or official receipts can be quite challenging. Not only the documentation part, but gaining access to the document itself can be quite daunting. Especially in eCommerce marketplaces, not every purchase or transaction is issued with a sales invoice.
We know the pains for businesses to stay accurately compliant with yearly tax compliance especially when it comes to dealing with penalties. An eCommerce platform Shoppable Business makes business compliance easier by making sales invoice and official receipt accessible for both buyers and sellers.
What is Shoppable Business
Shoppable Business is the Next Gen B2B eCommerce Marketplace that aims not only to make every B2B transaction and the procurement easier, but also considers a great value of consideration when it comes to your business’ transaction documentation. Issuance of sales invoice is guaranteed for every sales transaction you make as a seller with Shoppable Business. Another thing, you won’t have to go through the trouble of filling up the BIR Form 2307 on every tax income return compliance as it is provided by Shoppable Business for businesses that require it. You wouldn’t have to worry about misplacing and scattering your sales invoice and official receipt as it is administered digitally, making it easier for you to compile and stay compliant with taxes.
Here’s why you should join Shoppable…
If you’re a wholesaler, retailer, manufacturer, supplier, or any business that participates in selling of goods, products, or services and issuance of sales invoice is a big deal to you, then joining Shoppable Business makes your business easily compliant with sales invoice, official receipts and tax compliance documents.
- It’s FREE – It’s free to start selling on the Shoppable platform. As long as you’re a legally registered business, you’ll be able to list products for free on Shoppable. You only pay a commission if an item sells on the platform, and you get paid.
- Expand your Customer base – Through Shoppable, you’ll reach thousands of new customers for free. Think of Shoppable as your marketing arm that you only pay when you have a sale.
- Get your eCommerce Store – Increase sales by digitizing your product catalog and reaching customers worldwide. Print catalogs are dying, costly, and not environment friendly – digital is the future. Sellers can get their eCommerce store on Shoppable Business that can be given to any client.
- Procurement Technology – Enable your customers to pay you online through Bank Transfers, Credit Cards, Over-the-Counter Payments, Recurring Payments, and more. Easily track and manage orders, payments, and shipping through the Shoppable platform.
- Shipping Technology – Shoppable has integrated directly with multiple shipping couriers, enabling you to provide same-day to next-day delivery to your customers.
- Compliance – Sales invoices and 2307’s required? Don’t worry. Shoppable has got you covered! The platform keeps sellers fully compliant, never worrying about missing documents.
- 3PL & Fulfillment Services – Need additional manpower? Shoppable can provide you with warehousing and fulfillment solutions so you can expand your brand to different locations enabling you to get products delivered faster to your customers.
- Real Sellers, Real Buyers, and Real Products only – We vet and interview sellers that join the platform, so you will be assured that all of the products and transactions are authentic and legitimate.
How Shoppable Business is Different from Other Marketplaces
✓ All buyers and sellers must be a legally registered business in the Philippines
✓ Financing available for both buyer and sellers
✓ Refer your existing customers onto our platform and enjoy 0% marketplace fees on all of their orders!
✓ Sales Invoices are Provided for Every Sale
✓ 2307 forms for businesses that require it
✓ 100% Authentic branded products only, no fakes or non-branded products allowed
✓ Same Day Shipping for select products
✓ Installation Services and scheduling within the platform for select products
✓ Product Cataloging – all products listed on our platform go through a Quality Assurance process to ensure product details are accurate such as technical specs, descriptions, images and categories
✓ BuyBox Technology – Sellers with the best performance win the BuyBox and customers can also buy from other sellers on the same listing, eliminating the problem of duplicate listings in the search results
✓ Sellers can provide tiered discounts to customers
✓ Recurring subscriptions for customers who need deliveries occasionally
✓ Procurement tools such as single purchase orders, buying policies per department, split order fulfillment, reporting, and multiple payment options
✓ All items sold must be located in the Philippines, no cross-border selling allowed
The Bottomline
Running a business requires you to understand the difference between a sales invoice and official receipts. Well, for a day-to-day consumer, sales invoice and official receipts are just a piece of paper that they usually throw away once the transaction is accomplished. But if you’re a business, it’s a completely different story. You wouldn’t want to get confused and mix the two together as it is critical for your business to document it separately for compliance purposes. It all comes down to the fact that sales invoice and official receipts are integral for your business tax compliance framework.
If you’re a business, wholesaler, retailer, manufacturer, or supplier looking to join an eCommerce platform that supports guaranteed sales invoices and official receipt for every sales and transaction made, then joining Shoppable Business is the solution for your business and tax compliance worries.
