How to Write an Invoice: Legal Requirements

If you’re reading this, the chances are that you have some questions about how to write an invoice. This is something that nearly all self-employed freelancers and contractors struggle with initially. But don’t worry: You’ll soon find that writing an invoice is simpler than you might think.

In this post, we’ll outline the things you’re legally required to include in your invoice, before providing some step-by-step instructions on how to write an invoice. We’ll also take a look at the things you can do if one of your clients refuses to pay an invoice.

What information do you need to include in an invoice?

Invoice Legal Requirements

You have a legal requirement to include certain things on your invoice including dates, fees, details of your business, your clients and the work you’ve been doing for them and as well as ways to identify and refer back to the invoice:

  • A unique identification number. You’ll have to develop your own system here, but it doesn’t have to be anything too complicated. It could be something as simple as the name of your client, and the date you issued the invoice. For example, if you were to invoice Tapoly on May 18, 2020, your unique identification number could be TAPOLY180520.
  • Your company details. You need to include your company name, address, and contact information. This is why it’s a good idea to register your business before you send any invoices – it helps to keep things consistent. Head here for our guide to registering your business.
  • Your client’s details. You need to include their company name and address too.
  • A clear description of what you’re charging for. This will obviously depend on who you are and what you do. The important thing is that you’re not vague. If you’re a contractor, don’t just invoice for “contracting”. Instead, invoice for painting, decorating, carpentry, or whatever it is you do. If you’re too vague, you could trigger a HMRC investigation into your finances.
  • Dates. You need to include the supply date. That is, the date you supplied your goods or services. You also need to specify the date of the invoice.
  • Charges. Include how much you’re charging your client for each of your services, and the total amount they need to pay. If you’re registered for VAT payments, you’ll also have to include the VAT amount on your invoice. We’ll look at this in more detail below.

If you’re registered as a sole trader or a limited company, there are certain other rules determining the company name you list on your invoice, and the address you provide. For more information, take a look at the government’s online invoice guide.

How to Write an Invoice

  1. Find a good template. With a little online searching, you should have no trouble finding an invoice template. The template will include all the relevant information you’ll need to provide, so it’ll then just be a case of filling in the blanks with your own details. You shouldn’t have to pay for any invoicing software. It’s fine to use any home office software – Word, Excel, or whatever you use. Indeed, these systems often include in-built invoice templates. Take a look!
  2. Make it look professional. Include a company logo if you have one. Use the same font you use for all your communications. Do you associate any colours with your brand? If so, see if you can find a way to include them in your template. All of this will make your invoice look that little bit extra considered and professional.
  3. Make sure your invoice looks like an invoice. It might sound obvious, but include the word “invoice” at the top of your invoice. This could make clients more likely to pay you on time!
  4. Include everything you need to include. See our list of all the necessary items above: Your company name and information. Details of the goods or services you’re charging for. Dates, and a summary of all the money your client owes you, culminating in a grand total.
  5. Specify your payment terms. Include your bank details – the account number and sort code. You’ll also have to specify just when you expect the client to pay the invoice. To avoid uncertainty, you should agree these terms with your client before you take on any work. If you do this, mentioning the payment terms on the invoice will act as a gentle reminder. If you want your client to pay the invoice immediately, just write “invoice payable on receipt.”

VAT Invoice Requirements

Once you start earning a certain amount as a self-employed freelancer or contractor, you’ll have to register for VAT payments. Read our guide to registering for VAT here.

If you’re registered for VAT, you’ll have to start using VAT invoices. These are broadly similar to standard invoices, but there’s a few more bits of information you’ll have to include:

  • Your VAT registration number.
  • The going VAT rate, and the amount of VAT you’re charging – provided that all the items in your invoice are charged at the same rate.
  • The “tax point” – the time you supplied your goods or services – if this is different to the invoice date.

For a full guide to VAT invoices, head to the government’s online help portal.

What to Do If Someone Refuses to Pay Your Invoice

All freelancers and contractors have to deal with unpaid invoices at some point. It’s annoying, but it’s not the end of the world. The government recognises that when you send an invoice, you have a right to get paid. As such, there are many routes you can take to get the money your client owes you.

We have a full guide to what to do is someone refuses to pay an invoice. It takes a look at what UK law says about the situation, before outlining some of the options that are open to you. Find it here.

Unpaid invoices can compromise your cashflow. That’s why it pays to get yourself insured. We offer specialist insurance policies for freelancers and contractors. If you ever have to take an unpaid invoice to court, we can cover your legal fees. We can also cover you for many of the additional risks that freelancers and contractors face from as little as 35p a day.

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