When making an invoice, you need to ensure that it includes all necessary legal information. A well-designed invoice will make a favourable impression on your clients. Payment will be delayed if your invoice lacks the necessary details, therefore it’s usually wise to check ahead of time if they have any special requirements.
There are unique regulatory criteria for what you must include in your invoice for different business structures, such as sole traders, limited companies, and those registered for VAT.
Sole trader invoices must include your name, as well as any business names you use. If you’re using a company name, you must provide an address.
If your business is a limited company or an LLP, your invoices must include the complete company name as shown on the certificate of registration. You must also include the registered number and address with Companies House. If you use the name of one director on your invoice, you must add the names of all directors. However, all invoices must include:
A unique identification number
The number must be unique to each invoice for identification, and you must record the numbers and references used. Using a sequential numbering scheme is the best approach to handle this.
Create a numbering system to help you organise your bills. This might be a simple numerical system starting with 001, or it could be a date-based system (e.g. 04172022). This will assist you in organising your invoices for tax purposes. A proper invoice numbering system will also make it easy to follow up with a client about a late invoice.
Any information requested by the customer
This is standard procedure on all invoices, but customers can reclaim any VAT charged if they wish. For that reason, the seller’s VAT registration number may also be requested.
In some instances, some customers will request that you:
- Include your Tax ID number.
- Give a clear description of the services you’re invoicing.
- State the date of the invoice or ‘supply date,’: the day when the products or services were issued.
Payment terms
Each invoice you send out should have a clear date when payment is due. It is up to your company to decide how and when you want to be paid, and whether or not you will charge late fees.
Although adding extra payment conditions to your invoices isn’t required, it does help your customers understand when the payment is due and how they should pay the rest.
A description of goods/services
An invoice is a chance to remind your client of the value you’ve provided. Each invoice line should include a detailed description of the services invoiced. It’s easy to skim over this section of the invoice, but make every effort to be as clear as possible.
Purchase order
If your customer gives you a purchase order number, it should be displayed on the invoice. Some clients may also ask that the contact person’s name appears on the invoice. Requesting a purchase order is advised because it creates a legally binding relationship between you and your client.