Confused about Paypal "receipt" vs "invoice"

16 replies
Hello, fellow Warriors!

I sell software and information products online.

All this happens automatically. At any given time, I have no idea if a customer buys as an "individual" or as a "company."

My understanding is that:

- Individuals get receipts for their purchases.

- Companies get invoices for their purchases.

... right?

I know each purchaser receives a Paypal email after they buy.

So, is that "email" a "receipt" or an "invoice"? Or neither?

And what if a customer buys with a credit card via Paypal, without even having a Paypal account?

Sorry if this is a dumb question. Creating value and sharing it with people is 2nd nature to me - but I seriously struggle with the "business" part of the equation.

Thanks in advance!
#business #confused #customer #invoice #kyc #mmo #paypal #receipt
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  • Profile picture of the author Oziboomer
    An Invoice is a detailed list of what item or items the purchaser has purchased.

    A receipt is a record of the payment.

    It doesn't matter whether the purchaser is an individual or company you should be issuing invoices and in most cases it is ok to show on that invoice how the item was paid making it both an invoice and a receipt.

    How do you do keep a record of your accounts or run a business without issuing invoices?

    Best regards,

    Ozi
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  • Profile picture of the author perneali45
    Thanks for the answer, Ozi!

    Up to this point, I have been doing small volume. That's why I haven't looked into all the business "details". I now want to grow and of course make sure everything is legit.

    My initial question still remains: Is the Paypal email the customer receives considered to be a "receipt", an "invoice", "both", or "neither"?

    You mentioned I should be issuing invoices. If using Paypal (which I am) do I need to do anything else than what Paypal automatically provides to the customer? Keep in mind all products I sell are instantly downloadable (nothing to ship).

    Thanks again, and sorry if my questions are super basic.
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  • Profile picture of the author Kay King
    Keep in mind all products I sell are instantly downloadable (nothing to ship).
    Someone clicks a 'buy now' button - go to paypal and pay - and then are redirected back to download the product???

    There is no INVOICE involved if someone pays and then receives the product.

    The email the customer receives is a RECEIPT from paypal for the payment the customer made.

    Another point you should know - the customers 'order number' is not the same as the 'number' the seller receives. Those numbers are part of paypal's business process. If you need to locate a paypal payment, you would use the customer's paypal email address...not the receipt number he received from Paypal.
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  • Profile picture of the author Randall Magwood
    The only way i can see you issuing an invoice to a customer for your instant download product(s), is if a particular person emailed you back-and-forth with questions - and then decided that they wanted you to send them an invoice to pay because it would make them feel safer from ordering from you.
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  • Profile picture of the author perneali45
    Thanks for the replies.

    But what if someone puts several instantly-downloadable products in their online shopping cart and then they buy (once) via Paypal?

    Should they then receive a breakdown of what they bought?

    - - - - - - - - - -

    You bought:

    - Product 1 ($19)

    - Product 2 ($27)

    - Product 3 ($59)
    - - - - - - - - - -

    And would the above be an "invoice"?

    What is the PURPOSE of having an invoice for tangible goods in the first place... and why would that not be needed in intangible goods as well? LOL - all this is so confusing to me.

    The main reason I'm asking is this:

    I want to start a company and also open a corporate bank account. This will require I give some information about my financial activities.

    One of the questions I was asked by a lawyer who wants to help is "What is Paypal? And do you create invoices?"

    This lawyer mainly deals with big firms who have merchant accounts, etc. I admit their question did stump me.

    Thanks!
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    • Profile picture of the author SARubin
      Well, in any of my businesses here's how I've always looked at it...

      A receipt is a record of the payment .
      So I'd consider your example here to be a receipt


      Originally Posted by perneali45 View Post


      But what if someone puts several instantly-downloadable products in their online shopping cart and then they buy (once) via Paypal?

      Should they then receive a breakdown of what they bought?
      - - - - - - - - - -
      You bought:

      - Product 1 ($19)

      - Product 2 ($27)

      - Product 3 ($59)
      - - - - - - - - - -

      And would the above be an "invoice"?

      An invoice is a detailed record of products sold, or services performed that I send to the client after the work is done. And then they pay me in 15 or 30 days. (or whatever time frame we agreed on)

      So a receipt is an itemized list of what you've just paid for.
      And an invoice is like a bill that shows what was done and the amount owed.

      Don't know if everyone else looks at it the same way, but that's how it's always worked for me.



      Originally Posted by perneali45 View Post


      The main reason I'm asking is this:

      I want to start a company and also open a corporate bank account. This will require I give some information about my financial activities.

      One of the questions I was asked by a lawyer who wants to help is "What is Paypal? And do you create invoices?"

      This lawyer mainly deals with big firms who have merchant accounts, etc. I admit their question did stump me.
      Now here's a weird idea for you (just putting it out there)...


      If your lawyer is asking the question, why don't you ask your lawyer to clarify the question for you? after all... you're paying for his time and expertise, right?
      And he'll probably send you an invoice for services rendered (or if you've already paid, then you'll get a receipt as a record of payment )


      So you might as well get what you're paying for.
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  • Profile picture of the author perneali45
    The lawyer is a friend. They ain't asking me for money.


    Thanks!
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  • Profile picture of the author Kay King
    But what if someone puts several instantly-downloadable products in their online shopping cart and then they buy (once) via Paypal?

    You can ask 'what if' for years (some here do exactly that) and never DO anything.



    I want to start a company and also open a corporate bank account. This will require I give some information about my financial activities.

    One of the questions I was asked by a lawyer who wants to help is "What is Paypal? And do you create invoices?"

    When you start a company you'll find many of the 'what if' questions sort of answer themselves as you go through the process.


    If you have a lawyer who does not know what Paypal is - and you plan to take online payments....PAY a lawyer experienced in ecommerce issues.
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    • Profile picture of the author Oziboomer
      You are now getting into the area where you really need the advice of an accountant especially if you are thinking of setting up a company and a corporate bank account.

      The tax system where my business operates can get very complex quickly when it comes to obligations to meet government requirements.

      The basic requirements were to generate a quote that could then become a Job which could then become an Invoice.

      At any stage any step could be skipped but the important document was the invoice because that was where the tax was going to be applied and become liable.

      For example you could issue a quote and then the quote could go straight to an invoice.

      You could issue a jobsheet which then was eventually invoiced.

      You could issue an invoice.

      From a cash auditing tax perspective they maybe interested in receipts because that often shows the method of payment and in the past any tax authority would look at "cash payments" as opposed to electronic or other payment methods that generated a paper trail.

      With most payments now being electronic the opportunity to abuse the system to avoid paying tax has been reduced.

      When it comes to what documentary evidence you need to produce to meet your local government taxation requirements you need to get professional advice.

      If you don't already have an accountant I would suggest that would be the first professional along with a lawyer to engage BEFORE setting up a business.

      You would be surprised how much easier it is once you are getting qualified advice.

      In regards to your business bank account set up that really comes AFTER you set up the legal and accounting structure for your business.

      Take the time to form those relationships first and then when it comes to applying to open a business account you'll rock up with all the right information and exude confidence in the fact you know you have professional advice backing you from the beginning.

      Best regards,

      Ozi
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  • Anothah winna from the Boomster.


    tbh I had 'receipt' down as random guy touches on your ass in WalMart an' 'invoice' as thanks so much for optin' in to life in the post-DarkAges era; plz msg yr legal guy's details ovah.
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