This is something many of my clients find tricky. In this quick video, I talk through what you need and help you understand the rationale behind it.
When you understand the why, it’s easier to remember the what.
If you’d rather read this tip, just scroll down.
- Who you paid
- How much you paid
- When you owed it (the date)
- What you paid for
If your coach bought a train ticket to come see you and are billing that expense to you, do you need the train ticket?
If your photographer bought a flash drive to send you the thousand photos they took and are passing that cost onto you, do you need the receipt from the shop for that flash drive?
If your website designer paid for your annual hosting on SiteGround, do you need the receipt from SiteGround?
No, you don’t.
Your coach, photographer, and website designer need those receipts for their own records.
They may choose to send you a copy of that receipt, but then, they may not. Either way, you don’t need them to.
They may just as easily choose to markup the expense. Markup means charging more than cost. Let’s say your photographer bought 100 flash drives for £464 from Acme USB Drives Ltd. That means she paid £4.64 per flash drive. She could decide to bill you £10 for yours, not £4.64.
Ultimately, what you need is the invoice from the contractor. This shows who you paid, how much, when, and what you bought. You paid your photographer £10 for that flash drive, so that’s what you need paperwork to show.
That receipt that shows her purchase of 100 flash drives for £464 from Acme USB Drives Ltd is not actually helpful for your records (or possibly for your relationship with your photographer, either)!
Life is not always straightforward. Another version I’ve been asked about is when you are running a limited company and billing it as a sole trader contractor.
Even though it’s you in both businesses, the above still applies.
For example, if you as a sole trader bill your limited company for travel that you paid for, your limited company only needs the invoice from your sole trader business. Your limited company doesn’t actually need the bus or train ticket; you’ll keep those in your sole trader paperwork.
This applies regardless of the type of expense.
When your clients or customers reimburse you for supplies, you do not need to provide those receipts to them.
This might be for materials that have gone into creating a product, or items you’be bought to provide your service, for example.
They’re paying for your expertise in putting it all together so that it looks good and makes them feel good, be more confident, and make great things happen in their life.
They’re paying for your expertise in making their business look good online, which makes them feel good, be more confident, and do more and better business.
Remember that when you’re pricing!
Still have questions? Ask in the comments.
Hi, I'm Sara-Jayne Slocombe, and my mission is to help UK-based businesses run better. Everything I do is aimed at giving you the confidence to run your business using the power of your numbers.
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