In this sponsored post, chartered accountant Gail Freeman shares the art of drawing the right invoice.
SAMANTHA and Jake are setting up a new company and want to start the year on the right foot.
“We are changing our software and stationery, and so we thought we should find out what invoices should look like,” Samantha said.
I told them that there were certain requirements for invoices, the most important being that, if you are registered for GST and if the sale is for more than $82.50 and less than $1000, you must show the words “tax invoice”.
“Your business identity should be next and you should include your logo. This should be closely followed by your ABN. Then your address, email and phone number,” I said.
“The next item should be the date of the sale and the name of the purchaser.
“Then there should be a description of the goods and the quantity if you are selling more than one. The total cost should follow.
“At this point you can choose to show the cost before GST, show the GST separately and then the total. Alternatively, you can show the cost including GST but the purchaser must be able to identify the amount of GST included in the invoice.
“Your software has the capacity for you to set up invoices. So you need to make sure that they contain all the above elements.
“I am a great believer in making things easy for customers, so I recommend you include your payment details and terms.
“From a customer’s perspective there is nothing worse than trying to work out how to pay. These details should not only be on the tax invoice but also on any statement you issue.”
“If your invoices are over $1000 you need one more field and that is the ABN or identity of the purchaser. It is also the case that if you choose, you can have all your invoices with your customers’ ABNs and names even if they are under $1000.”
Samantha said she had no idea that was the situation and raised the issue of different rules if the new company was not registered for GST.
I confirmed that the rules were different and that if the company was not registered for GST, it was really important not to give a “tax invoice”.
“You need to provide an ‘invoice’. And it is best practice to also state at the bottom that ‘no GST is included’,” I said.
“And one other thing that often catches new businesses out; if you buy an invoice book from the stationer it says ‘tax invoice’. If that is the case I recommend that you get a thick black marker and delete the word ‘tax’. You must also state there is ‘no GST is included in the invoice’.”
If you need advice on tax or GST contact the friendly team at Gail Freeman & Co Pty Ltd on 02 6295 2844. If you want a template for a tax invoice email firstname.lastname@example.org