What Is a Receipt?

Will Kenton is an expert on the economy and investing laws and regulations. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU.

David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning. David has helped thousands of clients improve their accounting and financial systems, create budgets, and minimize their taxes.

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What Is a Receipt?

A receipt is a written acknowledgment that something of value has been transferred from one party to another. Receipts are issued to consumers from vendors and service providers, used in business-to-business transactions, or provided with banking or financial market trades.

Key Takeaways

• Receipts are an official record that represents proof of a financial transaction or purchase.
• Receipts are issued in business-to-business dealings as well as stock market transactions.
• Receipts are necessary for tax filing purposes.
• In accounting, receipts can refer to the total cash inflows over a specific period.

Tracking Transactions

Companies and other entities use receipts to track their cash flows, reimburse eligible payments, or claim certain benefits on their taxes. Each receipt should include the date of the transaction. In most cases, they include other details such as the nature of the transaction, details of the vendor, method of payment, and any additional taxes or costs. In some cases, they may require a signature.

Many retailers insist that a customer show a receipt to exchange or return items while others demand that a receipt—generally issued within a certain timeframe—be produced for product warranty purposes.

IRS Requirements

The IRS requires documentation of certain expenses. Individuals should keep receipts and other records for three years after filing taxes. However, for some types of expenses—such as unreported income or bad debt deductions—the IRS advises taxpayers to keep records for six or seven years.

The Internal Revenue Service (IRS) suggests that the following receipts if generated, be retained by individuals or businesses:

• Gross receipts such as cash register tapes, deposit information, receipt books, invoices, Forms 1099-MISC
• Receipts from purchases and raw materials
• Cash register tape receipts
• Credit card receipts and statements
• Invoices
• Petty cash slips for small cash payments
• Travel and transportation expenses
• Asset purchases for real estate, furniture, or personal property

Since 1997, the IRS has accepted scanned and digital receipts as valid records for tax purposes. Revenue Procedure 97-22 states that digital receipts must be accurate, easily stored, preserved, retrieved, and reproduced. The business owner must be able to supply a copy to the IRS.

Origin of Receipts

The practice of retaining receipts for tax purposes is thought to originate from ancient Egypt. Farmers and merchants sought ways to document transactions to avoid tax exploitation. Papyrus was used instead of paper. In more modern times, London banks used the printing presses of the Industrial Revolution to print receipts with their brands.

What Are Types of Receipts?

Common examples of receipts include packing slips, cash register tape, invoices, credit card statements, petty cash slips, and invoices. Although the format for these forms may vary, they all serve the same purpose of documenting the time and value of a business transaction.

Is an Invoice the Same as a Receipt?

An invoice is a payment request, while a receipt is a document for payment that has already occurred. Businesses frequently use invoices after providing a service to notify the customer of the expected payment.

What Are Gross Receipts?

Gross receipts are the total amount of cash or property that a business receives, without accounting for any other expenses or deductions. Accountants use a company's gross receipts as one factor to calculate the firm's net income and profitability.

The Bottom Line

Receipts are one of the basic units of corporate accounting. Businesses and individuals use receipts as proof of payment, to claim deductions on their taxes, and to document expenditures on their income statements as well as to substantiate the existence of the assets on their balance sheets.

1. Internal Revenue Service. "How Long Should I Keep Records?"
2. Internal Revenue Service. "What Kind of Records Should I Keep?"
3. American Numismatic Society. "A Brief History of the Receipt."

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