The paperwork for buying and selling between two private parties can be a hassle, but there’s one piece of paperwork that you can draft up quickly and easily – a bill of sale. Creating a bill of sale is absolutely crucial. Not only do most states require a bill of sale when buying or selling items like cars, motorcycles or firearms, the federal government will also require this for tax purposes. Forgetting a bill of sale can leave the previous owner in a pinch when tax time rolls around, and the buyer in an equally difficult situation when it comes to licensing and registration.
What Needs to be on a Bill of Sale?
Bills of sale include a relatively simple and easy-to-find set of information. At a minimum, the document needs to include the names of both the buyer and seller, a description of the item being sold, date of the transaction, and the price at which it was purchased. For items like vehicles, boats, machinery, or firearms it’s also wise to include information like the VIN or serial number, make/model, and mileage or operating hours. PaySAFE actually provides a free bill of sale wizard that will allow you to create a basic bill of sale – at no cost to you – that compiles all the minimum information that most states ask for. However, we highly recommend contacting your local DMV to confirm and additional paperwork or documentation that may be required.
I have my Bill of Sale… Now What?
Once you’ve compiled all the information needed on your bill of sale, we recommend having a few copies for both parties to sign. This ensure that both you and the other party will have a copy with identical information, and signatures from each party as well. Depending on where you live you may also need the stamp of a notary for the bill of sale to be considered valid. Again, we recommend that you consult with your local DMV or government office to ensure you have all the proper signatures lined up.
Either party can draft up copies of a bill of sale, so even if the other party has offered to do so it’s never a bad idea to have a blank bill of sale or two of your own handy – just in case. Remember, whether or not the other party has said that they’ll put the proper paperwork together, in the eyes of the government it’s your responsibility to ensure that you have everything required to document and report your transaction.