How to write an invoice

Blogs 26 Mar 2021

Get your invoices right from day one with our guide to how to write an invoice for sole traders and limited companies.

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This content was reviewed on 6 Feb 2024. 

Get started on your business journey. This article is part of our start-up hub, which is home to even more tips and expert advice on starting your own small business.  

From one-off freelance gigs to regular contracted work, invoicing is part and parcel of business life and ensuring you get paid on time. When you’ve just launched a new business, finance can seem like the least fun side of your business but knowing how to write a professional invoice correctly means you’ll get paid for all your hard work. 

What is an invoice?  

An invoice is a request for payment, whereas a receipt is an acknowledgment of payment. It includes what you’re charging for and lays out all the details of payment terms. Clear invoices not only keep you legally compliant but are an important part of your record-keeping. You’ll need them to do your bookkeeping, tax returns, and accounting.   

What should I include in an invoice?   

Bill your customers in no time by following this simple step-by-step process to create an invoice. 

1. Start with a template  

Your sales invoices should look professional and using a template or invoicing software is an easy way to do this. Brand it up with your logo and remember to clearly state that it’s an invoice to avoid any confusion when it lands in your client's inbox.  

2. Add the right information  

What legally has to be on your invoice? The devil is in the detail when it comes to invoices, as one mistake could lead to an unpaid bill or you being short-changed. Make your invoice easy to understand by including the following information:

✔️ A unique identification invoice number, for example, #0001, #0002, and so on  
✔️ Your company name, address, and contact details (you may wish to include your email address or phone number too). ). There are different rules regarding what information about your business you must provide on your invoices, depending on  whether you are a limited company, a sole trader, a partnership, or an LLP. Members can see our factsheet 'Choice of Business Medium' the FSB Legal and Business Hub for further details.
✔️ Your client’s name and address. If your client is a business you need to be clear about whether they are a limited company, a sole trader, a partnership, or an LLP
✔️ A clear description of what goods or services you’re charging for and the amount charged – this is usually itemised for reference  
✔️ Supply date (when the services or goods were provided)  
✔️ Invoice date (this might be different from the supply date)  
✔️ Total amount due  
✔️ Payment terms and information, including due date

3. Sole trader vs. limited company invoices  

sole trader invoice must also feature your name, any business name being used, and an address where legal documents can be delivered if you’re using a business name.  

As a limited company, your invoice must also include the full company name as it appears on your certificate of incorporation. If you are using a separate trading name, you must still include the name of the limited company itself.  If you’re naming directors, don’t leave anyone out. You’ll need to include all directors.    

4. Make sure you know who you’re sending it to   

You should hopefully be clear by this point about who you are dealing with in terms of if they are a limited company, a sole trader, a partnership, or an LLP. When you’re issuing an invoice, you might need to send it to a different person, for example, if the business has a separate finance department. Sending the invoice to the right person the first time means you’re likely to get paid faster.  

5. Send your invoice  

Ideally, you’ll want to issue the invoice as soon as you’ve finished the work to stay on top of your cash flow. You may have agreed on a payment schedule with your client or have taken a deposit beforehand, so make sure you send the following invoices promptly.   

Usually, you’ll send your client an email with a PDF of the invoice attached, to minimise invoice fraud, but do check with your client what their process is.   

6. Keep your records  

This is essential for when tax return and self-assessment season rolls around. Stay organised and file your invoices each month to make managing your finances easier.  

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Should I put VAT on my invoice?  

You need to use a VAT invoice if you and your customer are VAT registered, which includes more details than a regular invoice.  

As your business grows, you’ll need to register for VAT if your total VAT-taxable turnover in the last 12 months was over £85,000. Speak to your accountant for help with VAT or our friendly team of tax experts can answer your questions.  

All VAT-registered businesses must sign up to and comply with Making Tax Digital. This means you need to keep records digitally and use compatible software to upload returns to HMRC.

I’ve sent my invoice, but my client hasn’t paid – what do I do?  

We wish it was as easy to get paid as it is to send an invoice, but sadly late payments are all too common for smaller businesses and the self-employed.  

Once you’ve written and issued your invoice, the next step is to make sure you are paid on time. Keep your records organised so you know exactly which invoices are outstanding and when they’re due. This is helpful if you’re sending lots of invoices to many different clients. Don’t forget you have the right to charge interest on your late invoices if you choose to. Your contract may already include this.   

Generally, the next step, if your invoice has not been paid promptly, would be to write a letter to your client. You may want the first letter to be quite friendly, after all, there may be a good reason as to why they have not paid, and one always wants to try to maintain good customer relations.  

If the invoice has still not been paid, you will ultimately need to send a “letter before action” threatening court action. Be aware that if your client is a private individual or sole trader, then your letter needs to be in a particular format and comply with a set legal protocol. The FSB Legal Hub has precedents of the appropriate letters for each situation.

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