SALES INVOICE VS OFFICIAL RECEIPT

Since i started writing about invoicing, i remember, I have been ask a few times, what's  the difference between sales invoice and official receipt. Also when to issued sales invoice or official receipt. Here it is.

What is Sales Invoice?

From Wikipedia:

An invoice or bill is a commercial document issued by a seller to a buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the sale transaction only. Payment terms are independent of the invoice and are negotiated by the buyer and the seller. Payment terms are usually included on the invoice. The buyer could have already paid for the products or services listed on the invoice. Buyer can also have a maximum number of days in which to pay for these goods and is sometimes offered a discount if paid before the due date.

In the rental industry, an invoice must include a specific reference to the duration of the time being billed, so in addition to quantity, price and discount the invoicing amount is also based on duration. Generally each line of a rental invoice will refer to the actual hours, days, weeks, months, etc., being billed.

From the point of view of a seller, an invoice is a sales invoice. From the point of view of a buyer, an invoice is a purchase invoice. The document indicates the buyer and seller, but the term invoice indicates money is owed or owing. In English, the context of the term invoice is usually used to clarify its meaning, such as "We sent them an invoice" (they owe us money) or "We received an invoice from them" (we owe them money).

 Simply means:

 SALES INVOICE is a document that records the sale of goods or services from a vendor to a customer.

What is an official receipt?

Yahoo Answer:

An official receipt is a written acknowledgment. It is a specified note that shows money which has been received as an exchange for products or services. The receipt aims to provide an assurance that the party has paid the expenses of the products which it has purchased. Official receipts can be printable or online and their format and pattern can vary depending upon the requirements of the company.
Basically, an official receipt proves how much you've paid for something

 Therefore:

 SALES INVOICE is a document that records the sale of goods or services from a vendor to a customer. While an OFFICIAL RECEIPT is a document which records the payment of sale of goods or services .

 As per BIR:

Sales Invoice is used if you are selling goods or properties  while Official Receipts is issued for services rendered.  

National Internal Revenue Code

SEC. 106. Value-Added Tax on Sale of Goods or Properties.

(1)  The term 'goods' or 'properties' shall mean all tangible and intangible objects which are capable of pecuniary estimation and shall include:
 
(a)  Real properties held primarily for sale to customers or held for lease in the ordinary course of trade or business; (b)  The right or the privilege to use patent, copyright, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right;
(c)  The right or the privilege to use in the Philippines of any industrial, commercial or scientific equipment;
(d)  The right or the privilege to use motion picture films, tapes and discs; and
(e)  Radio, television, satellite transmission and cable television time.

SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties.

The phrase 'sale or exchange of services' means the performance of all kinds or services in the Philippines for others for a fee, remuneration or consideration, including those performed or rendered by construction and service contractors; stock, real estate, commercial, customs and immigration brokers; lessors of property, whether personal or real; warehousing services; lessors or distributors of cinematographic films; persons engaged in milling processing, manufacturing or repacking goods for others; proprietors, operators or keepers of hotels, motels, resthouses, pension houses, inns, resorts; proprietors or operators of restaurants, refreshment parlors, cafes and other eating places, including clubs and caterers; dealers in securities; lending investors; transportation contractors on their transport of goods or cargoes, including persons who transport goods or cargoes for hire another domestic common carriers by land, air and water relative to their transport of goods or cargoes; services of franchise grantees of telephone and telegraph, radio and television broadcasting and all other franchise grantees except those under Section 119 of this Code; services of banks, non-bank financial intermediaries and finance companies; and non-life insurance companies (except their crop insurances), including surety, fidelity, indemnity and bonding companies; and similar services regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties. The phrase 'sale or exchange of services' shall likewise include:

(1) The lease or the use of or the right or privilege to use any copyright, patent, design or model, plan secret formula or process, goodwill, trademark, trade brand or other like property or right; (2) The lease of the use of, or the right to use of any industrial, commercial or scientific equipment;
(3) The supply of scientific, technical, industrial or commercial knowledge or information;
(4)  The supply of any assistance that is ancillary and subsidiary to and is furnished as a means of enabling the application or enjoyment of any such property, or right as is mentioned in subparagraph (2) or any such knowledge or information as is mentioned in subparagraph (3);
(5)  The supply of services by a nonresident person or his employee in connection with the use of property or rights belonging to, or the installation or operation of any brand, machinery or other apparatus purchased from such nonresident person.
(6)  The supply of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme;
(7)  The lease of motion picture films, films, tapes and discs; and
(8)  The lease or the use of or the right to use radio, television, satellite transmission and cable television time.
Lease of properties shall be subject to the tax herein imposed irrespective of the place where the contract of lease or licensing agreement was executed if the property is leased or used in the Philippines.

( Above entry is to give you definition of what the term " goods or properties" & " services" means to BIR )

Question: Where do you record Sale Invoice & Official Receipts?

Answer: SALES INVOICE  is recorded in the Sales Book while OFFICIAL RECEIPT is recorded in Cash Receipt Book.

Lastly: Sales Invoice think of Account Receivable

             Official Receipt think of Cash

Check the REVENUE MEMORANDUM ORDER 12-2013 for the sample of the new official receipts and sales invoice. Go to www.bir.gov.ph or check the link below.

ftp://ftp.bir.gov.ph/webadmin1/pdf/70534RMO%2012-2013.pdf

For comments, questions, suggestions, email me at  yourtaxmama@gmail.com or at ione.mejia@gmail.com