Sales invoice vs. official receipt: what should your food business issue? In the Philippines, these two documents are distinct despite their similar functions. They’re essential to keeping your house in order and complying with local tax laws. Of course, provided that your business is registered with the Bureau of Internal Revenue (BIR) and makes over PHP250,000 in profits annually. Otherwise, you’re tax-exempt and don’t have to worry about this paperwork.
When your venture starts to take off and grow, it’s helpful to have professionals on the payroll to handle legal documents for you. But that doesn’t mean you can’t figure things out for yourself, especially if you’re just starting. Numerous crash courses can tell you what to do – including this simplified guide to sales invoices and official receipts.
Sales Invoice vs. Official Receipt: What’s the Difference?
Each document differs based on the type of sale they cover. Sales invoices are for the sale of goods or property, while official receipts are for the sale of services or leases of property. Both are considered principal evidence for these transactions. In other words, they’re definitive proof that they happened. Meanwhile, commercial receipts, like billing invoices, order slips, or purchase orders, are only supplementary and non-essential for tax filing.
The BIR revisited these distinctions in their Memorandum Circular No. 002-14 and reiterated the need for strict compliance. The two documents are not interchangeable as they serve different purposes.
You can also refer to Section 237 of the Tax Code (a.k.a. the National Internal Revenue Code of 1997) for a more in-depth look into official receipts and sales invoices as requirements for Philippine taxpayers. The section states, “All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or services rendered valued at Twenty-five pesos (PHP25.00) or more, issue duly registered receipts or sales or commercial invoices.”
This covers most types of services, given the low threshold value of PHP25. On the other hand, sales less than PHP25 are more than likely for minor goods or merchandise. In these cases, the law does not oblige you to issue an invoice. However, you certainly can if you’d like to standardize bookkeeping across your business.
When Do You Issue a Sales Invoice vs. OR?
To know what your business needs to issue, assess your revenue model and the category (goods or services) your sales fall under. Food-related examples include grocery stores, specialty retailers like delicatessens, online shops, and restaurants.
The first three are focused on the sale of final goods. Once a customer checks out, they should receive an itemized list of everything they bought. This list is a sales invoice. Even if a customer only buys a jar of Lady’s Choice Real Mayonnaise, you’ll still need to issue a formal invoice as part of best business practices. Failure to do so will result in the incurrence of hefty penalties by the BIR. The same goes for official receipts!
Restaurants and other similar ventures (like on-site catering) issue official receipts. These provide a full, service-based dining experience that goes beyond the goods listed on the menu. Like the example above, even small purchases require an OR as long as it’s more than PHP25.
Required Information for OR vs. Sales Invoice
Official receipt
Accounting service provider CloudCfo notes that the mandatory information required for official receipts “has been subject to various issuances, updates, and clarifications by BIR over recent years.” Many of these are due to the differences in information between manually issued ORs and those generated by machines and software. Here’s a short selection of the orders and regulations surrounding this subject, which you can use as a starting point:
- Revenue Memorandum Order (RMO) 12-2013 – Key source of required information for ORs; only applies to issuances of manual ORs and receipts issued through cash-register machines, POS machines, and the computerized accounting system (CAS)
- Revenue Regulation 10-2015 – Outlines required information for ORs generated through the machines and software mentioned above, as well as others
- Revenue Regulation 16-2018 – Amends the list in Revenue Regulation 10-2015
At a minimum, you should find the following information in ORs:
- Taxpayer’s (TP) registered name
- TP’s business name and style (if any)
- A statement that the TP is VAT or Non-VAT registered followed by the Taxpayer Identification Number (TlN) and 4-digit branch code
- The complete business address where such official receipts shall be used or located
- Date of transaction
- The serial number of the OR printed prominently
- A space for the name, address, and TIN of the buyer
- Description of the nature of service
- Quantity
- Unit cost
- Total cost
- VAT amount (if the transaction is subject to 12% VAT)
Additional requirements, including those for VAT or Non-VAT taxpayers and non-VAT official receipts or sales invoices, can be found in the references above. In addition, machine- or software-generated documents require the Machine Identification Number (MIN) and the serial number of the cash register or POS machine.
Sales invoice
Compared to ORs, sales invoices are more straightforward in terms of the required information. You can refer to Revenue Memorandum Order No. 12-2013 for specific details required from Philippine companies. This includes, but is not limited to, the following:
- Taxpayer’s (TP) registered name
- TP’s business name and style (if any)
- A statement that the TP is VAT or Non-VAT registered followed by the Taxpayer Identification Number (TlN) and 4-digit branch code
- The complete business address where the sales invoice will be used
- Date of transaction
- The serial number of the sales invoice printed clearly
- A space for the name, address, and TIN of the buyer
- Description of the items or goods
- Quantity of the items or goods
- Unit cost
- Total cost
- VAT amount (if the transaction is subject to VAT)
Now that you have a clearer understanding of the difference between sales invoices vs. official receipts, you should be able to identify what will work for your business needs. And make sure to always follow updates and pronouncements from the BIR or your local government unit.
Do you need a refresher on other legal aspects of new food businesses? This helpful guide covers the different business structures under Philippine law and the permits needed for registration, among other information. It’s a great place to start the learning process!
Keep track of the profitability of your dishes by using our FREE food cost calculator which automatically gives you the cost and price of your dishes.
