Whether you’re self-employed or about to take the plunge, invoices are a source of confusion for many. You might be wondering whether you need an invoice to get paid and, if you do, how you should go about their creation. Luckily, once you’ve got your head around the first one, the rest will feel like second nature.
Do I Need to Send Invoices?
The short answer is: yes. By selling a product or service to a client, you are legally required to send them an invoice that details the total cost and the items they’re paying for. Invoices make customers obligated to pay for the service you’ve provided and encourage faster payments. Not only do they tell clients the amount they need to pay, but they also help you to organise your finances. You’ll likely need to go through your invoices when completing a tax return and should hold onto them in case you ever need to provide evidence of your income.
How Can I Create an Invoice?
You have the option of designing your own invoice from scratch, but could also turn to a self employed invoicing template. Templates look professional and are easy to customise to suit your business. Simply swap out the fields for your personal information and relevant costs before sending it off. If you decide to use invoicing software, this can all be done automatically for you, making the process even quicker.
What Should an Invoice Include?
First and foremost, your invoice needs to detail the total cost of the transaction clearly. But you’ll also have to include your company’s name, the customer’s name and the date the invoice was issued. Make sure you state what the customer is being charged for and a short description of what these products or services are.
You’ll need to factor in VAT if it applies to your transaction and set a deadline for your client to pay by. This is particularly important because if there’s no deadline, your client will almost certainly take their time in sending over a payment. Finally, advise your client on how they can pay, whether that’s by cheque or bank transfer.
Do I Need Invoicing Software?
It’s not essential, but invoicing software can make billing clients a lot easier. Not only will invoices be generated for you automatically, but you’ll be able to set up payment reminders too. The software also gives you the option of asking for a deposit at the beginning of a job and even calculates taxes for you. If you’re looking to upgrade the way you do your accounting, you could look for software that does it all, from invoicing and expenses to reports.
Some self-employed people feel more comfortable than others calculating their tax return. But if you’re feeling unsure and aren’t mathematically minded, software can help to reduce mistakes. It’s only natural to miscalculate sometimes, but when it comes to taxes this could have serious consequences. Accounting and invoicing software might save you the headache further down the line.
