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Purchase and Sale Bill – Description, Format, and Example

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The bill of sale is a legal agreement between a seller and a buyer regarding the transfer of title of the seller’s belongings in exchange for money or trade. It acknowledges the transaction between two parties, and it avoids any disputes between the seller and the buyer.

We often use the bill of sale as a legal document to prove transfers of the ownership of a product, item, vehicle or personal property from one individual to another. Overall, a bill of sale is a legal and enforceable transaction document.

Did you know?

A bill of sale protects the transfer of property or selling items by creating a legal document that prevents miscommunications between buyers and sellers. It’s an advantage for any transaction that requires assistance from the law.

Also Read: What are Debit, Credit Note and their Formats?

What Is a Purchase Bill?

The Purchase Bill is the customer’s receipt for the thing he has purchased. A bill is a document that specifies the amount of money that must be paid to fulfil an order. The vendor refers to this bill as a Sales Bill because he is selling the product, whereas the consumer refers to it as a Purchase Bill since he is buying something from the vendor. Money to be credited is shown on the sales bill, while money to be credited is shown on the purchase bill.

A purchase bill comprises information such as a unique reference number, the date of the bill, product details, the name and full contact information of the individual involved, the amount of taxes due if any, and much more. The purchase bill indicates the sum that both the buyer and the seller have agreed to.

What Is a Bill of Sale?

A bill of sale refers to a legal document. This agreement documents the exchange between the buyer and seller that transfers ownership of a property or other personal possession to the purchaser. This legal document is issued following the completion of the transactions.

The primary purpose of drafting the bill of sale is to avoid frivolous conflicts between buyers and sellers, and it serves as a document to settle disputes. The bill of sale is necessary when you need to sell personal possessions, vehicles, your home or anything belonging to you personally.

The Importance of the Bill of Sale

We can describe the bill of sale as a legal document that outlines the details of transactions, and it is a contract between the buyer and seller.

It reduces the chance of disputes between two parties to trade and helps any company be transparent about the trading.

The most important aspects of the bill of sale include:

  • Legally, a bill of sale is an agreement between two parties regarding transferring ownership in exchange for property or money.
  • It’s a legal form of document to prevent further confusion between the two parties.
  • A bill of sale is also referred to as a sales receipt or a proof of sales.

The Different Types of Bills of Sale

There are two sale bills: an absolute sale and a conditional sale. 

A final sale is not a security. It’s the only straightforward proof of the transaction. A conditional bill of sale, in contrast, is a security measure for the amount of money. Let’s take a closer study of both options –

The Complete Bill of Sale

Absolutely bills of sales aren’t associated with any security, and they are mere documents that serve as proof of the transfer, assignments and other guarantees regarding personal belongings. 

We can interpret them as contracts for the selling of goods under the law of sale of goods and common law.

The Conditional Bill of Sale

This kind of bill of sale is a part of any transaction that transfers personal property to someone as security to pay cash. In this case, the ownership transfer completes after fulfilling certain conditions.

How Do I Make a Bill of Sale?

You can design a bill of sale with just a few templates. Take these steps to create a bill of sale now:

1) Include Details About the Property.

Information about the property is essential for establishing an official document. Give the location, cost and essential details if you’re selling your home.

It is essential to include the product’s type and model, the identification numbers (if available) or other item specifics for selling items. It’s helpful to be clear regarding the kind of item or the property.

2) Get Details from Both Parties

Before seeking assistance through the legal system, you must provide buyers’ and sellers’ full information. Therefore, include your permanent address for both parties and their current addresses (if they have one).

A bill of sale could include information for multiple buyers or sellers. When dealing with a corporation, you must collect the company’s name instead of your business’ name.

3) Set the Price

To draft a document, particulars are vital to achieving the purpose. It would help if you gave the exact cost of the item or property. 

It is essential to incorporate taxes with the total cost and then write down all the relevant information for a form of payment. The buyer typically makes the payment using the demand draft, cash or a promissory note.

Demand drafts are among the most secure methods of transferring funds. The promissory notes are legal documents that the buyer guarantees to the seller that the payment is made based on a loan.

4) Mention the Existence of Loans

The presence of loans on your home is among the most important issues to consider before consolidating any deal. 

Make sure you record all the lender’s name, the interest rate, the current amount or other financial details. In most cases, the buyer doesn’t purchase these kinds of properties due to the enormous responsibility of settling all loans.

Also Read: How to Create Purchase, Sales, Freight, and Discount Ledgers in Tally ERP 9

5) Be Crystal-Clear

If you are dealing with any additional issues that aren’t listed, it’s necessary to mention them to avoid legal problems and protect the buyer. It is important to be clear and use easily understandable language to ensure that everyone understands the details.

6) Make Sure You Sign the Documents

The last and most important step is to sign the documents. Make a timetable for both parties to show and take the document to sign. There’s an option to select “unsure.” When you choose it on your questionnaire, you can choose a suitable date for printing your documents. Witnesses are not usually necessary to sign the bill of sale. However, having one is a must to prove any dispute.

Bill of Sale vs Purchase Bill

A bill of sale is an official document that reveals the exchange of funds to purchase private property or items for sale. The invoice, however, is a document the seller signs to buyers to inform them about the amount of money that is not yet due.

In some instances, the invoice and bills of sale can work together.

An Example of the Bill of Sale

In buying/selling the vehicle, the bill of sale can be extremely prominent when transferring ownership rights of the car from the owner and the new buyer.

  • In the beginning, the process begins with negotiations of the time frame for the contract. The agreement takes place to purchase or sell the vehicle.
  • The buyer will then need to be able to obtain the VIN or the Vehicle Identification Number of the car. He’ll need to get copies of the few documents for the vehicle.
  • The seller should collect the registration and title of your vehicle, along with the vehicle bill of sale, odometer reading disclosure statement and photo ID.
  • The buyers and sellers are now ready to close the deal. The buyer needs to bring money, and the seller must get the car.
  • Then, both of them will sign a bill to transfer the vehicle’s ownership to the buyer.

How Can I Create a Purchase Bill?

If you’re drafting an invoice of sale yourself, you must make sure you comply with your state’s requirements. The requirements for a bill of sale vary. Therefore it is crucial to consult with your state to confirm who needs to sign the document. Make sure you include the most basic information.

Also, include any relevant information to explain what’s being offered for sale. This could also have specific conditions, faults, sizes, marks, colours and designs. The description could extend to the VIN or the licence plate for cars.

There are a few sales that are completed by a cash-in-hand payment. For instance, in the case of a car, the purchaser might be making payments in instalments. In such an instance, list the payment schedule in the section for payment information to record the payment method, late fee, interest and obviously, payment pending. Make copies of this original bill. 


A bill of sale is an official document that serves as an acknowledgement of the transaction. Certain kinds that sell require a statement of sale, while others don’t. If you’re making a deal but aren’t sure if you need a bill of sale, think of taking help from an attorney. If you want to keep all your calculations of transactions easily accessible, platforms like Legaltree are ideal. It’s free and 100% secured.
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