In the full scope of your business’ activity, preparing an invoice may seem like a small burden. But when it comes to payment collection, nothing can be left to chance. HMRC want clear, quantifiable lists of the money you’re expecting at any given point in the year.
Not to mention, clients can’t pay your invoices if they’re not in the correct format. To guarantee your cash flow is steady, all the right details need to be plain for them to see.
Limited companies may forget about some of the following things that need to be included on an invoice. Have you?
1. The very basics
Believe it or not, without the word ‘invoice’ clearly displayed on the document, it won’t be valid. So don’t forget to include the simple things. You’ll also need to date and number the invoice. This will make it easier for HMRC to refer back to, as well as your clients – leaving them with no excuse for late payments.
2. Your full company details
The name of the business must be correct. Likewise, your address and registration number – the same ones you received on your incorporation certificate from Companies House – need to be accurate. Physical addresses are mandatory: it may be an office postcode or, if you work from home, the main personal address you use. Put the name and address of the client on the invoice too, in case HMRC needs to cross-reference them.
3. Other ways to contact you
Whilst the company address and registration number is mandatory, contact details like phone number and email are not. However, placing them on your invoices will make it simpler if HMRC need to get in touch. This can prove additionally beneficial if clients want to contact you regarding the invoice. You can also add your business’ social media URLs, helping to nurture your relationships with clients.
4. Details of the work
The work you’ve carried out should have a reference number – this can be in the form of a client reference or Purchase Order number. As well as this, you should give a succinct description of what the work entailed.
5. Dates of the charges
You may be working on a retainer, or a contract that includes various service elements. Either way, it’s likely that your net request will be broken into different charges. Separate them with the dates of delivery. Whether you’re invoicing over a month, quarter or half-year period, the timelines have to be right.
6. The numbers to pay
Each piece of work on the invoice should not just display the accurate price per unit, but the number of units too. These will need to be totalled, providing a sum for the client to pay. Although optional, you can display your limited company’s bank details on the invoice also, so that electronic payments can be sped up.
7. The VAT payable, if required
Many limited businesses gain confidence from their customers when they collect tax on behalf of the government. If you have an annual turnover of £85,000 or more, you must apply for a VAT scheme, however, you can also voluntarily choose to register your business. A VAT number will have to be stated on the invoice. Furthermore, your previous case-by-case price breakdown now won’t be valid without the added VAT calculations. Top the value up by 20% and show the value percentage. Add your VAT Registration Number to the head of the document.
8. Discounts for a ‘simplified’ invoice
You only have to create a simple invoice for transactions below £250. These don’t take any service or product discounts into account; the price cut is worked out between you and the client, ‘off the record’ as it were. But for invoices beyond the £250 limit, discount notations are mandatory. The invoice has to show the original price and what has been taken off of it
9. Any late-payment fees
You’re within your rights to state that any missed deadline (usually around 30 days after the payment has been requested) will result in a penalty, which rises the longer the invoice is left unsettled. This has to be worded correctly, however, with a percentile of interest on the outstanding fee. When the conditions are clear, you’re able to act with a good conscience.
You can use a basic template for your invoices, or you can ensure clients will always recognise one from you by branding it. By including your colour palette, logo and tagline, this may also help to make your limited company appear more professional to clients.
Simplify your invoices with Gorilla Accounting
It’s easy to feel overwhelmed – after all, the demands may change from client to client. Yet for everything we’ve discussed, success can be achieved in the form of cloud accounting. Our services include the most up-to-date software, which can use to generate and chase invoices on your behalf, so nothing slips away from you.
When paired with a specialist cloud accountant, you can have a much easier hold on your business’ finances. Your accounts will all be kept in one sole suite, from your invoices to your Self Assessment tax return.
At Gorilla Accounting we can also take your tax return, and other accounting and tax duties, off your hands. We offer the full package – we’ll crunch the numbers in the financial statements, and help you maximise your tax efficiency by advising on tax planning.
On top of this, we can carry out HMRC record checks and remind you of all deadlines and payments. You can get on with actually doing the work you’re invoicing for, rather than being stuck trying to figure out the sums.
What’s more, we won’t only provide you with accountancy help and support, but a dedicated and personal service you can count on too – just check out our Client Service Guarantee.
Speak to our advisors for more information on stress-free accounting as a limited company contractor.