Sales Invoice Meaning and Templates For Businesses in the Philippines
Simple definition: A sales invoice, prepared by the seller, is a commercial record of the sale of products. It specifies the total amount of payment to be settled by the buyer within a given time frame, in order to complete the business transaction.
Download Our Free Sales Invoice Templates
Through this article, you will soon understand the general meaning of sales invoices and their importance to small businesses in the Philippines as you comply with the policies of the Bureau of Internal Revenue (BIR). You will also be guided on how to use our sales invoice templates for a smoother business transaction.
If you are looking for a thorough step-by-step guide on how to create and manage invoices (How to Create Invoices | Complete Guide for Businesses in the Philippines), you may access the information here.
Going In-Depth: Is a sales invoice important for small businesses in the Philippines?
Small business owners might think that invoicing may not really be necessary for them because they are still “small.”
However, if your small business caters to products valued at Php 100.00 and above, then you might need to continue reading because, in reality, you are already required to issue sales invoices, according to the BIR Tax Code.
But what kind of sales invoice is necessary to comply with BIR?
BIR regulations: Manual or Online Invoicing?
In general, BIR requires all registered companies to issue invoices or official receipts for all sales transactions, and both manual and online invoicing are accepted.
For manual invoicing or for paper receipts, entrepreneurs are asked to coordinate only with printers who are accredited by the tax bureau.
According to the latest Tax Code, as amended by the TRAIN (Tax Reform for Acceleration and Inclusion) Law, by 2023, businesses shall be required to comply with the digital transformation strategy of the Department of Information and Communication Technology. BIR joins this campaign by implementing an automated system for online invoicing, also known as e-invoicing.
For more information about the TRAIN Law and how it affects your small business, we have a simple explanation here (TRAIN Law | Everything Small Businesses Should Know).
If you are a small business owner trying to comply with the digitalization of BIR and e-invoicing, you may come across different kinds of invoices on the Internet.
How does it Work: Purchase Order vs Proforma Invoice vs Purchase invoice vs Sales invoice vs Official Receipt
These five invoices might be some of the most common ones you will see online. However, is it necessary for business owners in the Philippines to prepare all of them? Let's take a look at the sale process first.
- Step 1: A buyer shows interest in a product and places an order to the seller, by sending a purchase order (NEW ARTICLE about purchase order and templates?).
- Step 2: After receiving the purchase order, the seller now sends a proforma invoice to the buyer, which is a preliminary bill containing information about the desired product and quantity, together with the price. Here is an in-depth discussion of proforma invoices (Proforma Invoice Meaning | Download Templates | For Businesses in the Philippines) for your convenience.
- Step 3: The buyer now confirms the purchase order by sending the purchase invoice back to the seller. To know more about purchase invoices, read here (What is an Invoice? | Meaning, Purpose, Types, and Elements OR NEW ARTICLE about purchase invoices and templates?).
- Step 4: The seller now creates the sales invoice to request the buyer to finally pay for the amount specified in the document, within the given time period. For international transactions, a commercial invoice should be used, instead of the sales invoice. For the complete guide on commercial invoicing, access here (NEW ARTICLE about commercial invoicing and template?).
- Step 5: After the buyer has now completed the payment, the seller shall issue the official receipt (for services rendered only) to complete the business transaction.
In the Philippines, it is only mandatory to submit one document to BIR, either the sales invoice or the official receipt. We generally use the sales invoice for goods and the official receipt for services. For a more comprehensive comparison between sales invoices and official receipts, you may access this page (Sales Invoices vs Official Receipts | Differences, Use Cases and Benefits).
To make things even easier, you can download our free sales invoice template below.
Download Our Free Sales Invoice Templates
Sales Invoice Template: How to Use
Now that you have downloaded the template, what essential information should you provide to the sales invoice according to the regulations of BIR?
- Registered Company Name. This is the official name of the business you have registered to BIR.
- VAT or Non VAT. Identifying whether your company would be paying Value Added Tax (VAT) or not is a must. But, what is Value Added Tax? If you want to know more about VAT and Non-VAT sales invoices, we’ve got you covered here (NEW ARTICLE about VAT and Non-VAT sales invoice and template?).
- Tax Identification Number (TIN) and Branch Code. The TIN is the number given by BIR after registration and the branch code is the number of the branch in your business area.
- Company Address. This is the complete address of the business.
- Date of purchase. The exact date of the transaction is also important.
- Serial Number. This is necessary for organized bookkeeping.
- Space for buyer’s Name, Address, and TIN. Make sure the space is enough for all the information needed.
- Product description and Quantity. A brief identification of the goods and the exact quantity is also necessary.
- Unit cost and total cost. In order to get the total cost, we multiply the unit cost and quantity.
- VAT amount (for VAT transactions only). If computing VAT is still a little bit confusing for you, here’s a comprehensive guide (NEW ARTICLE like What is VAT?).
These details might get too overwhelming for some, but don’t worry. Here in Kernel Tools, we specialize in making things simpler for you.
Let’s make invoicing simpler: Use Kernel Tools
In this article, we’ve run through the processes you need to undergo in order to issue a BIR-compliant sales invoice. For some, creating this, together with the whole accounting process, might get a little tricky.
Don’t worry. We are here to help. All of these invoices would soon be as easy as 1, 2, 3 and all you need to do is create an account and we’ll do the rest for you. Take a look at our walkthrough of the registration process and the website here (How to Create and Manage Invoices with Kernel Tools).