Although they’re used less frequently than invoices, receipts are still fairly common in business payment transactions. For small-scale entrepreneurs in particular, receipts can be a useful way to properly document transactions and ensure accurate taxation. In this article, we’ll go over what a receipt is, how it differs from an invoice, and whether it can replace an invoice. We’ll also break down the information you must include in a receipt for small-scale entrepreneurs and what to consider when issuing one. Additionally, we’ll share a free receipt template that small-scale entrepreneurs can issue themselves.

What’s in this article?

• What is a receipt?
  
• What’s the difference between a receipt and an invoice?
  
• Can a receipt replace an invoice?
  
• Do I have to issue receipts as a small-scale entrepreneur?
  
• What information does a receipt need to contain?
  
• What else do businesses need to consider when issuing receipts?
  
• Receipt template: An example for small-scale entrepreneurs
  

What is a receipt?

A receipt is a written document confirming that a service has been provided or payment has been received. For example, when a customer buys and pays for goods, the seller issues a receipt. The customer can use this to prove that they have paid for the goods. The business also uses it to prove the sale to the tax authorities.

Because a receipt contains key information about the transaction, it serves as official proof and can be used as evidence in complaints, returns, or legal disputes. The issuance of a receipt is regulated by law in Section 368 of the German Civil Code. The German Civil Code states that a receipt must be issued as an acknowledgement of receipt if requested by the obligor (buyer). Receipts are especially required for cash payments that cannot be documented by a bank statement.

What’s the difference between a receipt and an invoice?

Businesses must provide written proof of their income and expenditure. Three types of documents are used for this purpose: the invoice, the receipt, and the checkout receipt. The primary difference between an invoice and a receipt is their purpose and when they are issued. An invoice is issued to document a claim for payment. That is, it notifies the recipient that a payment is due before the payment is actually made. A receipt, on the other hand, is issued after the payment has been made and serves as proof of the payment transaction.

Invoices and receipts also differ in the information they require: invoices must contain more information than a receipt. For example, Section 14 of the German VAT Act (UStG) requires that an invoice number and the issuer’s tax number are included. More details on the information required for an invoice can be found in our article on how to create invoices.

What is a receipted invoice?

An invoice can become a receipt, and a receipt can become an invoice; these are known as receipted invoices. An invoice becomes a receipt when it clearly indicates that the customer has already paid. This must be documented with the payment date and the payee’s signature. A receipt becomes an invoice if it contains the mandatory information of a regular invoice.

Can a receipt replace an invoice?

A receipt can replace an invoice depending on the value of the transaction. In general, a regular invoice doesn’t need to be issued for gross amounts of up to €250—a small-value invoice is sufficient in this case. Receipts, such as cash register receipts or cash and purchase receipts, are considered low-value invoices. They contain less information than regular invoices because they are subject to fewer legal requirements. Low-value invoices streamline payment processes and reduce unnecessary paperwork, especially for retail businesses that record numerous purchases each day.

More detailed information must be provided if the invoice amount exceeds €250 gross. A receipt cannot replace an invoice in this case.

Do I have to issue receipts as a small-scale entrepreneur?

According to the German Civil Code (Bürgerliches Gesetzbuch, or BGB), companies in Germany must issue receipts if requested by their customers. This also applies to small-scale entrepreneurs.

Small-scale entrepreneur status can be applied for by businesses or self-employed individuals who reported an annual turnover of less than €22,000 in the prior year and are not expected to exceed €50,000 in turnover in the current year. If these conditions are met, the small-scale entrepreneur rule (Kleinunternehmerregelung) can be applied in accordance with Section 19 of the German VAT Act. This exempts small-scale entrepreneurs from any value-added tax (VAT) liability. As a result, they don’t have to file VAT on their goods and services. The aim of this simplification rule is to reduce the accounting workload for both businesses and the tax authority, especially given the relatively small amounts of tax involved.

The VAT exemption under the small-scale entrepreneur rule applies both to the issuing of invoices and to the issuing of receipts. In both cases, only a net amount is shown.

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You can find more information on this subject in our articles on how businesses can apply for the small-scale entrepreneur rule and creating invoices as a small-scale entrepreneur.

What information does a receipt need to contain?

Receipts must be issued in writing. You can use a receipt pad. You can also write the required information on a blank form or issue digital receipts. In either case, the receipt must contain the information required by law. The receipt must be complete and accurate before it will be accepted by the tax office as a valid document for input tax deduction. Incorrect receipts may result in additional payments.

First, the receipt must be clearly marked as such with the appropriate designation. In addition, the name of the payee and the payer (buyer) must appear on the receipt. The receipt must also state the type and quantity of the product or service, and the amount of the receipt in figures and words. In principle, the net amount, the tax rate, and the tax amount as well as the gross amount must be indicated. For small-scale entrepreneurs, it’s enough to show the net amount. However, they must add a note about the VAT exemption in accordance with Section 19 of the VAT Act. In addition, the date and place of issue must be indicated on the receipt. Finally, the receipt must be signed by the payee to confirm receipt of the service or goods.

In addition to these mandatory details, a receipt or voucher number can be added to the receipt. This is particularly useful for businesses that issue receipts on a regular basis. A receipt number allows you to quickly organize receipts and associate them with the appropriate business transaction. Optionally, you can also enter the address of the payee and the buyer.

If you want to ensure compliance when creating invoices, receipts, and integrating them into your accounting software, we're here to support you with Stripe Invoicing.

Mandatory information to be included on receipts and invoices from small-scale entrepreneurs

What else do businesses need to consider when issuing receipts?

When receipts are issued using a receipt pad, there is an original receipt and a copy. The purchaser always keeps the original and the issuing business keeps the copy. If a pad is not used and a handwritten receipt is issued instead, two copies must be written and signed. Digital receipts must be made available to both the payee and the purchaser.

Receipts should be carefully documented and retained, especially if the transaction involves a warranty or return service. In this case, the business would need the receipt to complete the return. However, it’s also important to keep receipts as part of a general recordkeeping requirement to ensure that all business transactions can be properly documented.

If a receipt is lost or can’t be found, there are several options to replace the missing receipt and ensure accurate accounting. First, a replacement receipt can be obtained from the payee. They can send a copy of the original receipt or create a new receipt. You can also create your own receipt. This document should include the required receipt information, along with an explanation of why the original receipt is unavailable and what steps have been taken to replace it.

Receipt template: An example for small-scale entrepreneurs

Below is a legally valid sample receipt for small-scale entrepreneurs.