Do you know what information your business invoices must legally include?
If you are a new business owner, it can often be hard to know what you should include on an invoice. We all know the obvious, like the amount and who it is for, but what should be on every invoice you create to ensure it is a legally enforcing document?
In this article, we explore the 10 things that your business invoice MUST legally include.
1) Marked As Invoice
Every invoice should be clearly marked with the word ‘Invoice’ to ensure that the recipient is aware that this is a request for payment and not a receipt or purchase order.
2) Unique Identification Number
Don’t mistake this for the Customer Account Number. A Unique Identification Number should be different each time an invoice is raised and usually follows on from the previous invoice raised.
3) Your Company Name, Address & Contact Information
If you are a Sole Trader, this should be your name and any business name being used and an address where legal documents regarding your business can be sent to. If you are a Limited company, this should be the full company name as it appears on the Certificate of Incorporation and can be your trading address or registered company address. If your business is registered, your company registration number should also be displayed. Contact information (telephone number, email address) should also be clearly shown in case a customer needs to get in touch with you regarding the invoice.
4) Company Name/Individual & Address Of The Customer
Whether your invoice is to a business or an individual, their name and address should be clearly stated to ensure there is no confusion about who you are expecting to pay the invoice.
5) Description Of Items
A Clear description of the products or service that you are charging for should be displayed in the invoice. This has a couple of benefits. First of all, the customer can see exactly what they are paying for and secondly, it enables the invoice to be categorised correctly for tax purposes.
6) Date Of Goods/Services Provided
The date the services were being provided show be displayed and in the case of physical goods, this would be the date to products were despatched/delivered. This is to ensure the invoice can be filed within the correct tax period.
7) Date Of Invoice
Unless payment terms have been agreed in advance, a customer is obliged to pay you within 30 days of receiving your invoice or goods. Therefore, stating the date gives a clear indication of when payment is due.
8) Amount Being Charged
This may seem obvious, however, many people simply put the total amount owed and it is a legal requirement to show the amount BEFORE VAT is added and any discounts applied.
9) VAT Amount (If Applicable)
If VAT is applicable, this should be shown separately on the invoice for tax purposes. If you have physical goods, there may be different VAT amounts due for each item and these should be displayed separately, indicating the VAT percentage and amount. If no VAT is due, then this should be clearly marked also.
10) Total Amount Owed
As there may be individual items due for various VAT amounts and discounts or payments applied (also to be shown), the total amount due should be displayed at the bottom of your invoice to ensure there is no confusion about the amount you are expecting to receive to clear the invoice in full.
If your business is VAT registered you should also include your VAT number on all invoices.
As you can see, it is not as simple as just including the name and amount, if you want to be able to use your invoices as a legally enforcing document in the situation of non-payment, then you need to ensure all of the above is also included.
Are you struggling to get your invoices produced and sent out in time? We are here to help. If you would like us to take care of your invoicing for you, call Lyn on 01329 481202 or click on the ‘Request Call Back’ button below.
If you have found this article helpful, please share and tweet. You may not be the only business owner that finds it useful.
