When it comes to Tax Invoices, as a business you have requirements that must be met. To start with if you are registered for GST your invoice should be referred to as a Tax Invoice if you are not registered it is referred to as an invoice.
No matter what you call it, there is necessary information that needs to be on your invoice to meet the requirements of the ATO.
If you're registered for GST, your tax invoices should contain the following information:
- your business name
- your Australian business number (ABN)
- the words ‘tax invoice’
- an invoice number
- the amount of the sale
- the amount of GST (this can be shown separately for each item or, if the GST to be paid is exactly one-eleventh of the total price, as a statement such as 'total price includes GST')
- not matter what make sure you GST component is clear on your invoice as in my time as a debt collector we have seen ridiculous disputes due to GST not being clear on invoices
- nature of the goods or services sold
- date of sale
- date of the document
- the purchaser’s identity or ABN (for invoices over $1,000). Not a requirement of the ATO but your invoices should include your payment terms and conditions and a variety of payment methods.
If you are not registered for GST then your invoice is not a tax invoice it is just an invoice, it is important that you do not collect GST if you are not registered.
Nor should you claim GST from a supplier who is not registered for GST.
Your invoices are a critical part of the sales process and before you can start billing a customer you need to supply them with an itemised invoice.
If you follow the steps above and ensure all the data is on your invoice you eliminate an opportunity for customers to complain.
Most business these days have access to some sort of accounting package, it is important that you are set up to quickly and easily provide invoices to your customers.
I have always been a big advocate of having a bookkeeper, this makes life easy and you are able to stay focused on your tasks whilst your paperwork is being taken care of.
It is always a good idea to contact your customers soon after they have purchased from you and after you have sent your invoice, this is a great way to circumvent any disputes that may arise after service.
If your invoice is over $75.00 you are obligated to give your customer a receipt of proof of purchase.
Further to this you must keep good records and be able to easily access them in case a customer asks for a new copy.
Often this is another area that causes problems for customers who have to keep asking for invoices.Under tax law, the ATO requires that your records:
- explain all transactions
- be in writing
- be in English be kept for five years (although some records need to be kept longer).
Keeping good records helps your business run smoothly and enables you to keep an eye on your cash flow.