When you get started invoicing clients, it can be tricky to find your way. Practically, an invoice is a legally binding document that outlines a contract between two parties. As such, it should include critical information for tracking and accountability. At the same time, an invoice is a bill that represents your company, so you want it to look both professional and respectable when you send it to your clients. Here are the essential elements your bills should include:
First: Consider Automating
Before discussing what your invoice should include, it’s important to talk about how you’ll create your invoices. There was a time when you could simply fill out a duplicate form, rip off a copy for yourself and a copy for your client, and call it a day. The modern version of that would be creating your own invoice in Excel and sending your client a copy. However, you might find using invoicing software more convenient.
Invoicing software has multiple benefits, not the least of which is making it easier for your clients to pay you. Many times, your clients can pay you directly through the invoice using their PayPal, Venmo, credit card, or other payment information. Furthermore, most software services will allow you to upload your branding information, so your clients receive a professional-looking business invoice from you. You can also often store and save your client data and past invoices for tracking purposes.
Your Business Logo
When you include your business logo on the invoice, you generate an air of professionalism. If you’re creative and familiar with applications like Canva and Excel, you can build your own invoice from scratch. You’ll want to place your logo front and center and also possibly include a signature line. However, if you use a software service all you’ll have to do is upload your logo, and the software will save it for you for all future invoices.
To and From Information
After your logo, you’ll want to make it clear both who the invoice is from and who it is to. The “from” information should include your business name, address, and any other important contact details like your business phone number and email address. The “to” information should at least have the client’s name and address. These parts of the invoice differentiate it for you and the client, keeping you both on the same page.
Invoice Number and Date
Another point of differentiation for you and the client is the invoice number, which is great to have for both of you for tracking purposes. It’s a good idea to start with a specific number with each client and then move forward consecutively with each additional invoice. For example, for your first client’s first invoice, you can use 1001. For your second client’s first invoice, you can use 2001. You always want to include the date for tracking purposes as well.
A Description of Goods or Services and the Cost
Next, every invoice should have the space for line items. On the lines, you’ll list the goods or services you provided. You can also often include a description of those goods or services. For example, if you sold a set of stationary, you’ll describe how many sheets and what type of stationary it is. To the far left of the line, you can put down how many of each item you sold. To the far right of the line, you’ll list how much each item costs.
Applicable Taxes
At the bottom of your invoice, you’ll want to add up the taxes for the goods or services sold, if applicable in your state, for your items. You’ll need to figure out what the sales tax is in your state, if you have any, and include that tax in your total. For example, sales tax in California is 7.25%. If you sold $100 worth of stationary, you’d need to add $7.25 in sales tax, so you can remit it when you pay your business taxes each quarter or annually.
Payment Information
Once you’ve listed all of your products or services, their individual prices, and included the taxes, you’ll want to address the payment information. At the bottom of the invoice, you’ll have a total line, where you can total up the items plus the taxes. Then, beneath that, you can outline how you expect your clients to pay you. With invoicing software, you can offer the option to pay you online. Or, your clients can pay you via check, which they can send to your address.
Terms and Conditions
Finally, every invoice should include a section for terms and conditions. These can be anything from the due date for payment to notes about returns, refunds, and warranties. You can decide which terms and conditions make the most sense to you. Just be sure to be clear with your client when it comes to legal issues like returns or refunds. That way, you won’t find yourself in a legal dispute for lack of information.
Ultimately, it’s better to provide what you might think is too much information than to not provide enough. Explain every aspect of the business transaction on your invoice in as much detail as you can. You may even consider consulting a lawyer or a business manager to determine what type of legal language to include in your terms and conditions. In the end, the more professional and detailed your invoice is, the more smoothly your bookkeeping will be.
