Why every business needs to obtain an invoice or receipt for their purchases

No matter what your business structure (yes, this includes sole traders), it’s essential to have a record of all your business purchases. You only have to ask my clients to know I chase them all the time to make sure we have a receipt for every one of their purchases.

I know it’s easy to forget to ask for a receipt when you are in a rush, but no receipt will have an impact on your business accounts, whether you are VAT registered or not. Here’s why:

Financial Management and Budgeting

Invoices and receipts provide a clear record of your expenditure and what specifically has been purchased, including the VAT element of the items. By having these documents, you can:

• Track spending
• Monitor cash flow
• Analyse your expenditure to help you budget better

VAT Compliance and Deductions

Having an accurate record of all your expenditure is vital for tax compliance. If you are VAT registered, the invoice/receipt will identify the correct VAT amount where applicable, ensuring your VAT return is accurate (we don’t want to be over or under-claiming). Having detailed receipts and invoices will also ensure you and your business don’t miss any deductible expenses, helping to reduce your tax liability.

Efficiency

Keeping track of your purchases can help make your business more efficient:

• Track your purchases, making it easier to manage your stock levels
• Monitor suppliers based on their delivery times, quality, and pricing
• Accurate records help with financial forecasting

In summary, those pieces of paper are vital to your business in so many ways, and it’s your responsibility to ensure you receive an invoice/receipt for each of your purchases.

If you are overrun with paperwork and need help to make sense of it all, book a discovery call to see how I can help.