Why You Should Always Ask for Official Receipt?

The importance of asking for an official receipts on every purchases or payments made is not a common knowledge to individuals or business owners. This is why the BIR have created different ways to remind customers to do so such as requiring business establishments to display the ASK FOR RECEIPT signage, Premyo sa Resibo raffle promos and more.

Furthermore, it has issued Revenue Memorandum Circular No 16-2013, stating that for expenses to be claimed as deduction to income tax, it should be substantiated by Official Receipts/Invoices issued by third-party establishments.

Some Benefits of always Having an Official Receipt of Your Purchases

1. Completeness of Records

One of the basic benefits of asking official receipt is completeness of accounting records to support existence of recorded transactions. Without an official receipt, your accounting records is incomplete which can be risky in the long run.

2. Claim as Deduction or Refund

If you ask for an official receipt on your purchases or payments, you can validly claim it as expense and use it as deduction to sales. If in case you are VAT registered and your input tax (vat on expenses) exceeds output tax (Vat on sales), you may claim for refund on the excess or difference.

3. Decreases Tax Payments

Another importance of asking for an official receipt is that it can be used to legally minimize or decrease tax payables. Since the official receipt can be use as expenses which is deducted to sales, it will in effect minimize your company’s tax payments due to lower net income.

4. Minimizes Audit

In my experience as Accountant and Auditor, one of the major reason for audit is lack of documents, such as Official receipts, to support the existence of the transaction. Asking for official receipts and properly filing it will minimize the risk involving audit.

5. Hard Evidence

Last but I think the most important benefit of asking for an official receipt is having a hard evidence to support the existence of the transaction recorded. This is very important in the long run of the business especially during BIR or Government audit.

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Disclaimer: The content of this article may become outdated because of changes in the rules and regulations over time. It does not substitute the need for inquiring professional advice.