Types and requirements of accounting and tax documents

Accounting vs. tax document - what is it and when is it used?

An accounting document is a document that records a financial transaction such as a sale or purchase. It simply serves as evidence of what you are recording in your accounting records. An example of an accounting document is an invoice or cash receipt.

If you are a VAT payer, your accounting documents are called tax documents and you must include this name in the document.

Accounting and tax documents are used for the following purposes:

• they are created as a confirmation of trade,
• they are used to make entries in the books of account,
• they help you keep track of your finances,
• they are the basis for calculating taxes.

Types of accounting documents

Receiving / dispensing agent

Receipt and issue notes are internal documents that serve as information about goods received into and issued from the warehouse.

Although these are not documents issued to customers or suppliers, you need them for proper bookkeeping and they give you an overview of the internal management of the company.

Cash receipts

A cash receipt is an accounting document that is used to record transactions within the cash register. It can be a receipt, a receipt (handwritten, less formal) or perhaps a receipt and expense slip. It is therefore a confirmation that a transaction (purchase or sale) has taken place.

A receipt is usually issued in two copies - one for the customer and one for the seller. The cash receipt must state:

• the receipt number,
• identification of the payer and the payee,
• the date of the document (when the payment/disbursement was made),
• the purpose of the payment,
• the amount of money.

Delivery note

You are not legally obliged to issue a delivery note, but it will certainly make it easier for you to keep records of materials, stock or goods in your accounts. The delivery note serves as a document of the movement of goods in the warehouse - who issued or received them, in what quantity, at what price, etc.

You can tailor the content of the delivery note to your company. In particular, it should contain information about the name of the item (stock/goods) and its quantity. However, it is up to you whether you want to include the price of the item or hide this information from the eyes of your regular employees.

As it is still a document, be sure to include information such as:

• Supplier and customer identification,
• the serial/registration number of the document,
• the date on which the transaction took place.

Optionally, you can add the name of the person who carried out the transaction and is responsible for it, the name of the department or section under which the transaction falls, etc.

Invoice

An invoice is a document issued by a supplier to its customer in the case of deferred sales - i.e. when the buyer does not pay for the goods or services immediately, but only within a predetermined period of time. Invoices are of two types:

• Issued / issued invoice - you issue this to your customer for the services you provide (selling goods or services) and it enters the accounts as income / revenue;
• Invoice received - you receive this from your supplier for the services provided (when you are buying) and it is an expense in your accounting.

Generally the invoice includes:

• description of the product or service,
• the price,
• details of the buyer and seller,
• instructions for payment.

Formally, no invoice should be missing:

• the invoice number,
• the date of issue (or, if different, the date of the accounting event),
• the name of your company as a supplier (name and surname for self-employed persons) and the address of your registered office,
• your VAT number, possibly also your VAT number,
• details of the customer (name, registered office, VAT number, possibly VAT number),
• invoice items,
• the amount of money, the price per unit of measure, if applicable, and the quantity,
• method of payment and specific payment details,
• information on whether you are a non-/VAT payer,
• for VAT payers, the rate applied, the price excluding VAT, the tax base and the VAT calculated.

Conversely, a stamp or signature is not obligatory on the invoice. However, an invoice with a signature, logo or stamp looks more credible, so you can add these details, although the law does not require you to do so.

In addition to normal invoices, there are special types of invoices:

• Proforma - an unofficial accounting document that serves as a preliminary draft invoice or offer to a customer.
• Advance invoice - an accounting document used to request payment before goods or services are delivered. Unlike a regular invoice, an advance invoice is not taxable and therefore does not serve as a basis for VAT.
• Credit note - an accounting document issued when the original invoice is corrected or amended. It is usually a reduction of the amount originally invoiced, for example, due to a claim, return of goods, discount or error in the original invoice.

Types of tax documents

In general, a tax document is any accounting document issued by a company in the VAT regime. You must issue a tax document whenever:

• you trade with another VAT payer,
• as a VAT payer you send goods within the Czech Republic,
• your company supplies goods to another EU country,
• you accept a payment (in this case you issue a so-called tax document for the payment received).

There are five types of tax documents divided according to their purpose and each type must meet certain requirements of tax documents:

Simplified tax document

Such a document is commonly referred to as a receipt and can be issued when the total price including VAT does not exceed CZK 10,000.

Ordinary tax document

You issue a standard tax document when, on the other hand, the price including VAT exceeds CZK 10 000. Compared to the simplified tax document, it also contains the identification of the buyer, the unit price excluding VAT, the VAT base, any discounts and the calculated VAT rounded to whole crowns. Do not forget to include a reference to the VAT Act.

Summary tax document

Use the summary document when you need to issue a document to one person for several separate taxable transactions. You will always create it for the calendar month (up to 15 days after the end of the calendar month) in which either the first taxable supply took place or you received the first payment for those partial supplies.

Corrective tax document

You issue a correcting document (you may have also seen the names credit note or debit note) when you need to adjust or cancel an invoice that has already been issued. A credit note contains the same information as a regular invoice, plus you also state the reason for the correction and the differences between any original and corrected amounts.

Tax receipt for payment received

If you issue an advance invoice and receive payment from a client, you must issue a "real" tax receipt for the payment received (which is not what an advance invoice is) within 15 days. This is even if you don't want or can't issue a final invoice yet.

The most common mistakes when issuing documents

• Missing or incorrect data - e.g. missing identification data, incorrect date, incorrect amount, missing description of goods or services or incorrect variable symbol.
• Incorrect VAT classification - avoid putting the heading 'tax document' on the invoice if you are not a VAT payer (this can unnecessarily confuse your accountant). Incorrectly calculated tax is also a common error.
• Mismatch between the document and the actual transaction - for example, invoicing for a different amount or different goods than those actually supplied or provided.

Archiving accounting and tax documents

Invoices and other accounting documents cannot be thrown away or shredded after payment. As a business, you are legally obliged to keep accounting documents for a certain period of time. This is usually 5 years, but the rules vary depending on the type of document.

What documents do I need to keep?

Can I store documents electronically?

By law, you can store documents both physically and electronically. Electronic archiving of documents is obviously more efficient and saves you time and money.

However, documents filed electronically must be:

• legible (ideally saved in PDF format)
• credible (ideally with an electronic signature)
• with a time stamp to prove that the document has not been modified in the past. You can arrange a time stamp, for example, through the Czech Post.

Get help with your accounting

Correctly issuing, accounting for and storing documents is the foundation of a functional business. If you don't want to be bogged down with paperwork or if it costs you a lot of time and money, take advantage of our bookkeeping services for businesses.

As our clients, you will receive, among other things, the mPohoda document issuing software. Contact us using the form below and together we will find a solution.

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