What to Include on a Business Receipt (Legal Requirements)

Receipts are more than just pieces of paper—they’re legal documents. When running a small business or documenting expenses, missing a required field could result in tax audits, customer disputes, or even IRS penalties.

The Quick Answer

Every business receipt must include 8 essential elements:

1. Business name and contact information
2. Date of transaction
3. Itemized list of goods/services
4. Total amount paid
5. Payment method
6. Receipt number (unique identifier)
7. Tax identification number (for businesses)
8. Tax breakdown (sales tax, VAT, etc.)

Miss any of these, and your receipt may not hold up as a valid business record.

Legal Requirements: What’s Mandatory vs Recommended

The IRS and most state tax authorities require specific information on receipts for transactions to be deductible or refundable. Here’s what’s legally mandated versus what’s just best practice.

Legally Required (IRS)

For tax purposes, the IRS requires:

• Business name and address: Must clearly identify who provided the service/product
• Date of transaction: Exact date, not ranges
• Amount paid: Total including tax
• Description of items: Generic “services rendered” doesn’t cut it; be specific
• Tax breakdown: Separate line for sales tax or VAT

For purchases over $75, you also need:

• Detailed itemization: Exact quantities and unit prices
• Payment method: Cash, credit, check number, etc.

Recommended (Customer Service)

These aren’t legally required but prevent 90% of customer disputes:

• Return policy: Clearly stated terms
• Warranty information: If applicable
• Contact information: Phone, email, or website
• Business hours: For in-person returns
• Authorized signature: For high-value transactions

Receipt Requirements by Business Type

Different industries have specific requirements:

Business Type	Must Include	Why
Restaurant	Tip line, gratuity breakdown, server name	IRS tip reporting, credit card chargeback protection
Retail	SKU/product codes, return policy	Inventory tracking, returns management
Service-based	Hourly breakdown, labor vs materials	Tax deductions, scope-of-work verification
E-commerce	Shipping costs (separate), order number, tracking	Delivery disputes, fraud prevention
B2B/Contractor	Tax ID number, payment terms (Net 30, etc.)	1099 filing, accounts payable matching

Digital vs Paper Receipts

Digital Receipts (Email/PDF)

Pros:

• IRS-approved - Electronic records are legally valid
• Searchable - Find expenses instantly
• Cloud backup - Never lose a receipt again
• Eco-friendly - No thermal paper fading
• Lower cost - No printer/paper/ink expenses

Cons:

• Customer spam concerns - Email receipts can feel invasive
• Email deliverability - May land in spam folders
• Technology barriers - Older customers may struggle
• Data privacy - Storing customer emails requires GDPR/CCPA compliance

Paper Receipts

Pros:

• Immediate handoff - No tech required
• Universal - Works for all customers
• Psychological - Feels “official” for high-value purchases

Cons:

• Fading ink - Thermal paper becomes illegible within 1-2 years
• Loss risk - 30% of paper receipts are lost or damaged
• Storage headache - Shoeboxes of receipts for tax time
• Environmental impact - Billions of pounds of waste annually

Hybrid Approach (Best Practice): Offer both. Text or email the receipt, and ask, “Would you also like a printed copy?”

Pro Tips for Better Receipts

1. Use Sequential Numbering

Receipts should have unique, sequential numbers (e.g., #001234). This:

• Prevents fraud (missing numbers = red flag)
• Simplifies bookkeeping (chronological order)
• Helps tax audits (proves you didn’t backdate receipts)

2. Match Your Brand

Your receipt is a marketing touchpoint. Include:

• Logo: Brand recognition
• Website/social media: Drive repeat business
• Loyalty program info: “Join our rewards program at…“

3. Be Specific with Descriptions

Don’t write “consulting services” when you can write “3 hours SEO audit + keyword research report.” Specificity helps:

• Customers: Remember what they paid for
• Accountants: Categorize expenses correctly
• IRS: Verify deductions during audits

4. Store Receipts Electronically

Even if you issue paper receipts, photograph or scan them immediately. Thermal paper fades to blank within 2-3 years, but the IRS can audit you for 3 years (or 7 if you underreport income by 25%+).

5. Automate for Tax Time

Use accounting software (QuickBooks, FreshBooks) or receipt apps (Expensify, Shoeboxed) to:

• Auto-categorize expenses
• Generate year-end reports in minutes
• Sync with your tax software

Or use our receipt generator to create professional receipts with all standard tax-required fields in seconds.

Common Receipt Mistakes (That Trigger Audits)

1. No Tax ID Number

If you’re a registered business, your Employer Identification Number (EIN) or Tax ID must appear on receipts. Missing it raises red flags during audits because the IRS assumes you’re dodging taxes.

2. Missing or Incorrect Date

“January 2024” isn’t a date, but 01/15/2024 is. The exact date matters because:

• Tax deductions are year-specific
• Payment terms start from the transaction date
• Chargebacks require proof of transaction timing

3. Illegible or Faded Receipts

Thermal paper receipts fade to blank over time. If you can’t read it, neither can the IRS. Solution: Scan or photograph receipts the day you get them.

4. Vague Descriptions

“Office supplies” doesn’t tell you (or the IRS) what you bought. Was it printer paper or a $2,000 office chair? Itemize:

• Printer paper, 10 reams, $45.00
• Stapler, heavy-duty, $15.99

5. Mixing Business and Personal

One receipt shouldn’t combine business and personal expenses. If you bought a laptop for work and groceries in one transaction, split the receipt or note which items are business vs personal.

6. No Payment Method

“Paid in full” doesn’t specify how. Cash? Credit? Check #4521? The IRS requires payment method for large purchases ($75+) to verify legitimacy.

7. Handwritten Alterations

Never cross out and rewrite amounts on receipts. If a mistake happens:

• Void the receipt (write “VOID” across it)
• Issue a new receipt with the correct amount
• Keep both for your records

Receipt Retention: How Long to Keep Them

IRS Guidelines:

Scenario	Retention Period
General business expenses	3 years from tax return filing date
Underreported income (25%+)	6 years
Asset purchases (equipment, property)	7 years after asset disposal
Fraud or no return filed	Indefinitely

State Requirements: Some states (CA, NY) require longer retention. Check your state’s Department of Revenue.

Best Practice: Keep receipts for 7 years. Storage is cheap (cloud drives cost pennies), and it’s better to over-retain than under-retain.

What Happens If You Don’t Have a Receipt?

For Tax Deductions

Without a receipt, the IRS can disallow your deduction. If audited:

• Bank/credit card statements alone aren’t enough (they don’t prove what you bought)
• You can reconstruct expenses with other evidence (invoices, contracts, photos), but it’s a hassle

For Returns/Refunds

Most stores won’t accept returns without a receipt. Some offer:

• Store credit - At the current (often lower) sale price
• Exchange only - No refunds
• Nothing - No receipt, no return

For Warranty Claims

No receipt = no proof of purchase date. Warranties start from the purchase date, not the manufacturing date. Without a receipt, manufacturers may deny claims.

Special Cases: International Receipts

If you do business internationally or issue receipts to foreign customers:

• VAT/GST requirements - EU and other countries require VAT breakdowns
• Currency notation - Specify currency (USD, EUR, GBP)
• Translation - Major languages if you serve international customers
• Tax exemption forms - For B2B cross-border transactions

Frequently Asked Questions

Is a digital receipt as valid as a paper receipt?

Yes. The IRS explicitly approves electronic receipts for tax purposes. Digital receipts are legally equivalent to paper receipts as long as they contain all required information (business name, date, amount, itemization, etc.). In fact, digital receipts are often better because they don’t fade like thermal paper and can be easily backed up and searched.

What is the difference between a receipt and an invoice?

An invoice is a request for payment sent before or when payment is due. It says “you owe us money.” A receipt is proof of payment issued after payment is received. It says “you paid us money.” Invoices have payment terms and due dates; receipts show payment methods and transaction dates. You send an invoice to collect money; you issue a receipt to confirm money was received.

Do handwritten receipts count for taxes?

Yes, as long as they include all required information: business name, date, items purchased, amounts, and total. However, handwritten receipts are easier to question during audits because they can be altered or forged. For better credibility, use printed or digital receipts with sequential numbering. If you must handwrite receipts, use duplicate carbonless forms that create automatic copies.

Can I write my own receipts for expenses?

For small cash expenses where you didn’t receive a receipt (parking meters, tips, small purchases from vendors without receipts), you can create your own documentation. However, the IRS prefers third-party receipts. Self-created receipts should include: date, amount, business purpose, who you paid, and why no receipt was available. These are more likely to be questioned during audits, so use them sparingly.

How long do thermal paper receipts last?

Thermal paper receipts typically fade to blank within 2-3 years, sometimes faster if exposed to heat, light, or friction. This is a major problem since the IRS can audit you for 3 years or 7 years in some cases. Solution: Photograph or scan all thermal receipts immediately and store them digitally. The IRS accepts digital copies of faded receipts if you can demonstrate they were created contemporaneously.

Generate Professional Receipts in Seconds

Creating receipts manually is tedious and error-prone. Our receipt generator handles all the legal requirements automatically:

✓ Auto-calculated tax breakdowns ✓ Sequential numbering ✓ Professional formatting ✓ Instant PDF download ✓ Mobile-friendly

Freelancers, small business owners, and contractors can create professional receipts with all required fields.

Disclaimer: This article provides general guidance on receipt requirements. Tax laws vary by jurisdiction. Consult a tax professional or CPA for advice specific to your business situation.