March 1, 2022
QuickBooks Online is one of the best tools for bookkeeping that small businesses have at their disposal. With just one software program, you can keep track of income, manage payroll expenses, prepare for tax season, and more.
In fact, QuickBooks Online has so many features that some small business owners get confused about which ones to use. For example, you can issue both invoices and sales receipts. This article will help you understand the difference between the two, including when to use each.
What Is a QuickBooks Online Invoice?
An invoice is a document that details services provided and any payments due. It usually includes customer details, business information, an itemized list of services done, and a completion deadline.
Usually, you send an invoice to a customer upon completion of the services agreed upon in a contract. The invoice is your document to start the process of collecting payment. If a customer does not pay by the agreed-upon due date, you can charge them a late fee or take them to small claims court. Learn how to create an Invoice in QuickBooks Online.
What Is a QuickBooks Online Sales Receipt?
Sales receipts are documents that you hand to customers when they purchase an item from you. The receipt will have information such as the goods that the customer purchased, the itemized prices, the total price, and any sales tax that the customer paid. Learn how to create a Sales receipt in QuickBooks Online.
How to Decide Whether to Issue an Invoice or a Sales Receipt
The biggest difference between an invoice and a sales receipt is when a customer pays them. You send an invoice before customers pay you, and they agree to pay you by the agreed due date. For example, if you are providing a service such as freelance web design, you send customers an invoice after you finish the website, and they then pay you for the service that you provided.
By contrast, you give customers a sales receipt after they have already paid you. For example, if you are running an online shop selling earrings and a customer orders an item through your store, you send them a receipt along with an order confirmation after they input their payment confirmation.
If you are collecting payment immediately, you should issue a sales receipt through QuickBooks Online. If you are giving customers a longer period within which they have to pay, then you should issue an invoice.
Besides the payment timing, the type of payment document that you issue will depend on the goods and services that your business offers. Typically, if you are running a business that sells concrete goods such as food, apparel, or art, you receive payment immediately upon the sale and should issue a sales receipt. Businesses that offer services such as graphic design, copywriting, or accounting issue invoices. This is not a hard-and-fast rule, but it can still provide guidance if you’re not sure about what to do.
Tracking Payments Through QuickBooks Online
QuickBooks Online is a great bookkeeping service that allows you to keep track of how much customers have paid you and who owes you money. You can do this by issuing a sales receipt or an invoice.
Both forms allow you to track income, but sales receipts are issued when a customer has already paid, and invoices are for when a customer still has to pay you by an agreed-upon due date. As long as you are mindful of the different payment terms and are consistent with logging payment information in QuickBooks Online, you’ll find that using this software is easy indeed. If you get stuck, you can always call a professional accountant for help.
If you need help with your bookkeeping and accounting, don’t hesitate to schedule a consultation with us!
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