Small business invoice

As a small business owner, you will be aware that you have to invoice your clients in order to receive your money and maintain an organized cash flow to keep every­thing running smoothly. Creating a pro­fes­sion­al-looking small business invoice isn’t difficult, but we’ve compiled a list of what to include to help you out.

The US gov­ern­ment has a say in what counts as a small business. The size standards have been es­tab­lished by the SBA (Small Business Ad­min­is­tra­tion) and define the maximum size that a company (including af­fil­i­ates) can be to qualify as a small business. Whether you run a sole pro­pri­etor­ship, LLC, part­ner­ship, or cor­po­ra­tion, the SBA either looks at the number of employees over the last 12 months or at the average annual receipt for the past three years to determine if the business falls into the small category. The two most used standards for qual­i­fy­ing a business as small are 500 employees for the majority of man­u­fac­tur­ing and mining in­dus­tries, and $7.5 million in average annual receipts for many non-man­u­fac­tur­ing in­dus­tries.

These small business criteria also need to be fulfilled in order to determine a company’s size – the business:

• Is organized for profit
• Has a place of business in the United States
• Is in­de­pen­dent­ly owned and operated
• Is not dominant in its field on a national basis
• Operated mainly within the U.S. or at least makes a sig­nif­i­cant con­tri­bu­tion to the economy

There’s no right or wrong way to create a small business invoice, but it is essential that it includes all the important in­for­ma­tion between you and your clients.

The client needs to know who they’re paying and that’s why your business name, address, e-mail, phone number, and website are an important part of the small business invoice, just as on any other kind of business cor­re­spon­dence.

The client or customer’s name (or at least the contact person if it’s a large company) should be listed along with as much in­for­ma­tion on them as possible.

Each invoice has a unique number so it can easily be referred to if needed. It’s up to you how you number the invoices. It could be that you don’t want the first client to see that they’re #0001 so you might want to assign them a different number or even a code which is unique to each company e.g. #CLIENTA0020.

Some bigger companies will want you to include a PO (Purchase Order) number on their invoice. A PO number uniquely iden­ti­fies a purchase order/invoice and is usually defined by the client. This makes it easier when the client purchases a sub­scrip­tion and provides a PO number, since all invoices as­so­ci­at­ed with that sub­scrip­tion can be grouped together for a better overview.

Include the date that the invoice was sent as well as the date that the payment is due so there are no mis­un­der­stand­ings.

You should list a de­scrip­tion for each product or service that you’ve sent or provided the client. For products, this means listing each item purchased, the quantity, the price per item, and the total price. When it comes to a service, you should write down the flat fee or the hourly fee (depending on what was discussed in advance), and the total hours it took.

Once you’ve itemized every­thing and totaled up the amount due, don’t forget to add the ap­pro­pri­ate tax, then write the final amount un­der­neath.

Specify when you expect payment to be received by. If the service you’ve provided comes with a deposit then this also needs to be addressed. If the client misses the deadline, will they incur a fee?

If you wish, you can leave a message for the client, maybe a quick “thank you for doing business with us.” Finish it off with your company logo, since this makes your business more rec­og­niz­able, as well as using your business’ color scheme for the invoice.

You can send your invoice by mail, but nowadays e-mail is the more common way since the small business invoice will arrive much faster and there’s less chance of it getting lost along the way. There are also some extra steps you can take to make sure the whole process goes as smoothly as possible. You could call the client after you’ve sent the invoice to make sure they un­der­stand it and don’t have any questions about its content. Since you can never be too sure about security online, it makes sense to send the invoice in an un-editable format, e.g. PDF, so criminals can’t intercept it and change the bank details to their own in order to receive the money.

The Internal Revenue Service (IRS) rec­om­mends busi­ness­es keep any invoices they create in case they are audited and need to prove the validity of profit. If a dispute arises between the company and a client, it’s also good to have all the invoices saved so they can be quickly accessed and the matter solved. By keeping your invoices as organized as possible, you can better balance your budgets as well as manage your business’ accounts payable and accounts re­ceiv­able functions.

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