Invoices form part of the integral documents that account for day-to-day business transactions. However, there are several specific details that are vital to include on an invoice. This Business Kitz blog will take you through all the basic requirements of an invoice, and will provide you with steps on how to draft an invoice.
What is an invoice?
For businesses, an invoice is a document issued by the seller to the buyer containing information about the products, quantities and the price of the product or service. An invoice also typically includes a number of alternative payment methods, so the buyer can choose their preferred payment procedure. To make life easy for you, Business Kitz offers a Book-Keeping and Accounting Bundle that includes a collection of the highest-quality templates to get you started, including both GST and not GST registered invoice templates.
What information should I have before drafting an invoice?
Before you start drafting an invoice, it is important to gather all the relevant information you will need to include in the invoice. Below, we have outlined a few key steps to get you started:
- It is helpful to set up customer accounts so that it is easier for to track the progress of invoices that have been sent to buyers. This will also let you see what payments remain outstanding.
- You may also want to consider using an accounting software to help manage invoicing and customer sales.
- If you haven’t already, set up a bank account under your business name. This will make it easier for buyers and sellers to identify your payments.
- Figure out the most effective method for your to get customer details including their name, address, phone number, email and ABN. For more information on ABN click here to read our blog about what ABN is.
- Lastly, you should set up your payment method and the following terms and conditions of your payment. If you are in need of cost-effective and efficient document templates, head to Business Kitz to check our or 200+ wide range of templates.
What type of invoices does your business need?
The type of invoices required by your business will depend on whether you’re registered for goods or services tax (GST). For more information of GST quoting, click here.
- Tax invoice: In the event that you are registered for GST, you will most likely require tax invoices. The purpose of a tax invoice is to showcase that you charged your customers with GST inclusive of the cost of goods and service sold to them.
- Regular invoice: Alternatively, if your business is not registered for GST, your invoice will not have a tax component and therefore, you will not charge your customers for any of the goods or services you sell.
What should you include in your invoice?
Generally, an invoice needs to include 7 key pieces of information for it to be considered legally valid. Remember, this may be subject to change based on the goods and services your business provides.
If the cost incurred by your customer is less than $1,000 (including GST), here is what your tax invoice should include:
- The words ‘Tax Invoice’ clearly outlined at the top of your invoice.
- Your information as a seller/merchant. This should include your business/trading name, ABN, address and any other relevant contact information.
- Your Australian Business number (ABN). For more information, read this Business Kitz blog.
- The date that the invoice is issued.
- A list of the goods sold, the quantity and the price. This does not need to be detailed but should have adequate information for you to refer back to.
- If there is any GST amount payable, you will need to display the GST amount separately for each item. It is a good idea to use a column labelled ‘Total price includes GST’ at the end of the invoice so this is clearly identifiable to customers.
- Lastly, your invoice should breakdown for each item the price of the item before GST is added, as well as the price of each item GST inclusive.
How can you generate invoices?
If you own a business, invoices will be commonly used in your day to day transaction. Writing a new invoice for every transaction can be a tedious and time consuming process, so we recommend that you utilise Business Kitz’s template system to streamline this process. We recommend using our Book-Keeping and Accounting Bundle that includes documents for Accounting Software Guidance, Manual System Guidance, Invoice Template GST Registered, Invoice Template Not GST Registered and a Quotation Template.
How should I send an invoice?
Now that you have successfully created your invoice, it is now time to send them to the relevant recipient. There are a few ways to do this, including:
- Printable web page
- In person
Following the legal guidelines when invoicing can be difficult. Check out Business Kitz subscription service today to access our full range of legal, commercial and employment documents to begin your business with a solid foundation that ensures compliance. If you are unsure about how to best protect yourself and your future business, our sister company, Legal Kitz can assist you. To arrange a FREE consultation with one of their highly experienced solicitors, click here today, or contact us at email@example.com or 1300 988 954.