Expenses and receipts

Every cost your company pays needs a document behind it. The document is usually a purchase invoice from a supplier, or a receipt for a small purchase. The document shows what was bought, when, from whom, and how much VAT was charged. Keep it, and record it in the books on time.

Invoice or receipt

• A purchase invoice comes from a VAT-registered supplier. It shows the supplier's registry code and VAT number, the VAT rate and the VAT amount.
• A receipt is a shorter document, often from a shop or a café. It may not show the buyer's details. Check the rules for the type of purchase before you rely on one for VAT.

Recording a cost

When a supplier invoice arrives, you record it as a purchase. You choose the expense account, the VAT class, and the due date. The purchase creates a payable: the amount you still owe the supplier, until you pay it.

Paying the cost

When you pay, you record the payment against the purchase. The bank statement line that matches the payment is linked to the purchase, so both sides agree. Reconciliation is the step that shows which bank lines are still unmatched.

Input VAT

The VAT on a purchase is input VAT. Whether you can reclaim it depends on the purchase and on how it is used in the business. The VAT rules set this out, and some purchases are not reclaimable at all. Sapita shows the VAT on each purchase, but the decision about how it is used is part of your records.

Paying with your own money

If you pay a company cost from your own pocket, the cost is still the company's, and the company owes you the money. Record it as an owner loan rather than as a payment from the company bank account. The owner loan lesson explains how this works.