How to document my company's expenses correctly? - invoices, contracts, etc.

How to document my company's expenses correctly? - invoices, contracts, etc.

One of the most important things for your accountant is to receive the correct types of documents for your revenues and expenses and this should be important for you too. 

But why? 

The documents you have are the basis to justify your revenues and expenses in front of the authorities, not having the correct once will lead to higher taxes and potentially some hefty penalties. In this article we try to summarize the most common knowledge you should have:

I. Revenues:

1. When your business sells its goods and services to another company you are obligated to issue an invoice which includes your company data, your client company data, a 10-digit consecutive number, the date of sale, a description and quantity of what you are selling, price per pcs,, total price, VAT amount and VAT rate, total amount due and the way of payment.  If you are not charging VAT you are obligated to write the reason for not charging VAT too. 
2. When you sell to individuals, they are allowed to request an invoice  and you are obligated to give them such if they do but otherwise you are not obligated to track every sale with invoice.
3. When you receive cash payments (regardless of the type of client) you are obligated to have a cash register and to issue cash receipt for every sale paid in cash. When you receive a card payment via a POS terminal in your shop you are also obligated to issue a cash receipt. Nowadays you can find hardware that combines a POS terminal and a cash register in one device. 
4. If you have an online shop and you send your goods via courier, you are obligated to issue a cash receipt and send i to your client. Depending on your couriers service you might be able to skip the receipt.
5. If you sell services online which are paid via an online payment method, most of the time you are obligated to issue a cash receipt or a digital cash receipt via specialized software. 

II. Expenses:

1. For almost all your business expenses you are obligated to have an invoice for the cost, otherwise it won't be tax deductible. There are few exceptions of course, for example you a receipt is enough for your meal and entertainment costs. 
2. If your costs are paid cash or with card you need to keep your cash receipt together with the invoice.
3. There is no need to have a written contract with every vendor you work with but for higher value services it is recommended to have such and in general it is much safer for you to have a contract. 
4. If you pay salaries cash it is mandatory to ask your employee to sign a pay slip.

Should I keep a paper copy of all my invoices? 

Nowadays most invoices are transmitted via email and fewer are received on paper. All those invoices you received on paper you should keep in storage, and you shouldn't throw them away. However, there is no need to print out the once you received as PDFs, storing them digitally is enough and you can always print them if you need them. A good accountant will provide you with well-organized digital storage that is accessible to you at any time.