Invoice

Small business start up information

What is an invoice? 

In business you will need to send an invoice if you have sold goods or services of which you did not receive immediate payment. For example Jill, from Jill’s Café places an order for coffee beans from Becky’s Beans (note no payment has been exchanged).  Accompanying the delivery to Jill’s cafe is an invoice; it contains the date of issue, date of delivery, name of the supplier, name of the recipient, the amount payable and when payment is due.

When you sell products of services on credit, you should use an invoice to notify your customers of their obligation to pay. Some businesses regularly prepare and issue invoices at the end of the month, other businesses prefer to invoice upon delivery of an order. It is up to you as to how and when you issue your customers with an invoice.  I would suggest you invoice your customers as you dispatch their order, if you keep on top of your invoices you will reduce the accounting workload and paper work at the end of the month.

Contents of an invoice

In commercial practice, an invoice should include the following items:

  • Date of issue
  • Date of supply
  • Names and addresses of the suppliers and recipients
  • Description of the goods or services supplied including quality, quantity and unit prices
  • Terms of sale, due date for payment and whether any discount is available and
  • Amount payable

Note: Businesses who are not registered for GST, can only issue a standard invoice as discussed above, they cannot issue tax invoices or claim GST credits.

What is a tax invoice?

If you are registered for GST, you will need to issue a Tax Invoice, instead of a normal invoice. A tax invoice is like a normal invoice as discussed above, but must include some additional information. The information required on a tax invoice will differ depending on the price of the sale. Tax invoices for sales of $1,000 or more require more information than tax invoices for sales of less than $1,000. (For those businesses that sell to other businesses, please note many of your customers and or clients will probably be registered for GST they will expect to receive a tax invoice so they can claim the GST tax credit for their purchase.) If a customer or client asks you for a tax invoice, you must provide one within 28 days after the day they ask you for the tax invoice.

The requirements for a Tax Invoice for taxable sales of $1,000 or less

(Please note the following conditions also apply to the tax invoices your business receives, in order to claim the GST input tax credit.) 

  • The words ‘Tax Invoice’ stated prominently
  • The name of the seller
  • The Australian business number (ABN) of the seller
  • The date of issue of the tax invoice
  • A brief description of the goods or services sold
  • The GST-inclusive price of the taxable sale, and
  • The GST amount. This can be shown separately or, where the GST to be paid is exactly one-eleventh of the total price, as a statement such as ‘Total price includes GST’. 

Tax invoices for taxable sales that total $1,000 or more must include:

  • The words ‘tax invoice’ stated prominently
  • The name of the seller
  • The ABN of the seller
  • The date of issue of the tax invoice
  • The name of the buyer
  • The address or ABN of the buyer
  • A brief description of the things sold
  • For each description, the quantity of the goods or the extent of services sold
  • The GST-inclusive price of the taxable sale, and
  • When GST to be paid is exactly one-eleventh of the total price, a statement such as the total price includes GST, or the GST amount.

For more information visit the website for the Australian Taxation office and down load the ATO Guide GST for Small Business or download their PDF on "How to set out tax invoices and invoices".

Template Invoices

Feel free to down load some of our sample invoices to better understand how your invoices should be formated. (Please note the samples are for businesses who are required to be registered for GST.)

 

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