Contractor invoice

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Introduction

As a UK contractor, when you bill a client for your work, what details should your self-employed independent contractor invoice include? Indeed, when you run your own company or business, what should we consider regarding how to invoice as a contractor? When invoicing, there’s certain UK invoice requirements (UK) to fulfil when you’re sending contractor invoices to clients or customers. Therefore, getting the correct IT contractor invoice details are essential from the outset after you form your own UK company. In this guide, we’ll research which contracting details to include and the contractor billing process. What’s more, we’ll discover the contractor invoicing requirements (UK), how to invoice a client correctly and invoicing software for contractors. Furthermore, when you create an invoice for contract work, we’ll go over the correct legal details to include and what to show as payment terms for contractors.

Whether you’re a sole trader or you trade through and run your own company, you’ll create UK contractor bills for the work you do for your client or customer. In this guide, we’ll research both how to invoice as a contractor and what needs to be on an invoice (UK) to your client. What’s more, we’ll consider an independent contractor invoice template (UK).

Many UK contractors investigate where and how to obtain free contractor invoice templates. As a result, it’s ideal to have a UK contractor invoice template which they can use to bill to their client. Therefore, in this guide we’ll show an example of how this might look. Indeed, you can view our example invoice (UK) as it shows how to make an invoice (UK). In summary, once you’ve completed some work, you can create and send your sole trader or company invoice on to the client before receiving payment.

Initial thoughts on your contractor invoice 

First thoughts

As a UK business owner, it’s important that you know how invoicing for contractors works. Certainly, this is a key part of contracting day to day when you run your business. As you perform your work for your company you’ll need to bill for your work on a periodic basis. This’ll usually be every week or every month, whatever is agreed with your client. When you know your contractor invoicing cycle for your current client, you should know how to bill them.

When we look at how to invoice a company for contract work, you bill for your contractor hours worked and perhaps even expenses incurred. However, when you do this there’s a certain process to follow. Therefore, let’s now take the time to investigate how to invoice as an independent contractor. In addition, let’s consider what should be on an invoice and how to do this correctly.

Common questions

Some common questions and thoughts will arise from UK contractors in terms of how to create an invoice for contract work. Such questions will likely arise at the outset, when you go UK contracting for the first time. Therefore, these‘ll include:

  • What is an invoice (UK)?
  • How do I invoice as an independent consultant?
  • What should a contractor’s invoice include?
  • How to bill as an independent contractor.
  • How to invoice for hourly work or daily work?
  • Does an invoice need bank details?
  • is it a legal requirement to provide an invoice (UK)?
  • How to make a legal invoice.

Therefore, in this guide we’ll look at what do invoices need to include. What’s more, we’ll consider how to invoice for contract work and also research how to write an invoice as an independent contractor.

Other initial considerations for UK contractor billing

Contractor self-billing agencies

Please take note that it’s common for some agencies and end clients to self-bill for your time as a limited company contractor. Furthermore, your company isn’t required to create a contractor invoice for your UK contracting work in this scenario. However, as part of this contractor self-billing process, you’ll complete timesheets showing your contractor details along with the time you’ve worked. Once complete, you’ll send these on to the accounts department of your agency or client. In addition, you’ll complete this process on a weekly or monthly basis, depending on what agreement you have in place.

If your client isn’t operating the self-bill system, it’s key to note that you’ll need to raise a professional contractor bill when you invoice your client. Therefore, when you do this, you’ll be creating an invoice for contract work, and you’ll set out the relevant details on the contract invoice to your client. Please read on to find out how to do this in more detail.

The current invoice date rules (UK) and limited company invoices for contractors

When we investigate what should you put on an invoice and how to bill as a contractor, it’s important to comply with current laws. You can find these details online but please read on to discover more. Therefore, please ensure you include the relevant details when you do your UK contractor billing to your clients.

What’s more, when you raise a bill for your contract work, there’s extra details to include if you’re registered for VAT (as most contractors are). When you register for VAT, your future invoices will need raising including VAT. Furthermore, when we consider how to do an invoice (UK) and what to put on an invoice, our VAT guide is a good read. It gives an overview of what to expect you’re your business is registered for VAT and explains how the UK VAT rules work.

Please have a read of our guide which covers tax tips for limited company contractors. Certainly, this covers all sorts of areas to consider when you’re UK contracting. In addition, it includes lots of top tips when you run your own business on how to save tax. To summarise, this guide covers many different but relevant aspects when you are contracting in the UK. What’s more, it explains how to operate tax efficiently and how to maximise your pay as a UK contractor. 

What must an invoice include for a UK business? 

UK contracting -what should be on a contractor invoice?

Let’s now consider what should an invoice include when you create this. Indeed, it’s important to get the details right before you send your contractor bill to your customer or client. You don’t want to create and send an invoice to your client and then later discover that you missed some important details off this. Indeed, there’s specific details that your UK contractor invoices should clearly display when you issue these. Therefore, let’s look at how to create an invoice as an independent contractor. To sum up, when you create an invoice for your work, the correct and complete details should always be shown.

Legal requirements for a contract work invoice 

When we consider what should a contractor invoice include, let’s take a look at the legal requirements for invoices. Basically, your contract invoices are legal documents, therefore it’s key that they contain the correct information. Furthermore, certain details on your UK invoice for contractor work are legally required. Therefore, as part of your contractor requirements, when you bill a client, this’ll contain all your relevant business information. In other words, it’ll show your contact details such as company name, address, phone number, and email address. In addition, it should include how your client can make payments to your company. What’s more, you should send your contractor work invoice with bank details included. Indeed, if you don’t show this it could delay payments to your company.

A company invoice is a document and the legal requirements in respect of a UK invoice for independent contractor are:

  • The word “Invoice” clearly displayed.
  • Your business’ full name and address.
  • Your customers’ full name and address.
  • The date of the bill.
  • The payment due date.
  • A unique bill number.
  • The description of the services or products sold.
  • The quantity and price of each service/product.

What’s more, you should also show the total value that you are charging on your bill. If you’re registered for VAT, you should also be charging VAT and showing this clearly on your contractor invoices. Please see later in the guide for how to set your contractor bill out in terms of adding VAT.

Contractor billing / format 

Let’s now take a look at a contractor billing format when you create invoice for contract work. Therefore, when you issue an invoice to a company, let’s research what this’ll include from a contractor limited company who is VAT registered. After we have explained the contractor invoice format (UK), we’ll next look at a sample invoice for contract work.

What is on an invoice for contractors?

The first few items in the UK contractor bill format shown below are in no particular order. However, when we consider how to bill as a contractor (UK) as a UK VAT registered company, the details you should include on your VAT invoice are as follows.

Invoice details

1 The word `invoice.’ That’s to say, you could show the words `professional invoice’ if you charge for your professional time.
2 A unique bill number on the invoice. These numbers should be sequential and the first professional contractor invoice could be number 001. The second one could be number 002, etc. Therefore, if you use a unique identification number approach, this is a logical method. Also, it’s a straightforward referencing system.
3 The tax point i.e. the date of the bill and time of supply. You’ll raise a bill after you make a sale or complete some work, therefore the date of it should be after this. Indeed, this’ll be the `supply’ date.
4 Your full company business details i.e., your full company name as it appears on your Certificate of Incorporation. The official business address and contact information should also be shown.
5 Your VAT registration number if your business is VAT registered. You can show the VAT number either at the top or bottom of your bills.
6 The official details of your client. This includes their full name and address.
7 A clear description of your products or services, e.g., 35 hours at `x’ rate per hour. The charges should also include any expenses you’re to recharge.
8 The date or dates when you provided the goods or service.
9 The due date for payment of the bill.
10 The amount(s) you’re charging for your services.
11 The VAT amount, if relevant. To clarify, this is 20% of the services cost.
12 The total cost of the goods or services. To sum up, this is the final sum of charges plus VAT and the total amount due from your customer.

An example contractor invoice 

Let’s now look at an independent contractor invoice sample and see what to show on a contractor invoice for hours worked, along with any expenses which you recharge. As part of this, we’ll set out what a bill from your limited company to your client should look like, by way of an example invoice for contract work. Therefore, shown below is a basic independent contractor invoice example (UK):

Consulting fees -5 x £400.00 2,000.00
Expenses 200.00
2,200.00
VAT @ 20% 440.00
Gross total 2,640.00

This UK invoice example for contract work shows your fees and expenses added together to make £2,200. Next, in this contractor’s invoice example, we charge VAT at 20% on the sum of your invoice work and expenses. As a result, this reaches a grand total of £2,640 due from your client. When you’re a UK contractor, the company invoice template (UK) above sets out the basic details in terms of how to display your charges and expenses (and VAT) to your client.

Other areas to consider as part of your contractor invoicing 

Recharging expenses as part of your billing 

When we look into limited company invoices for independent contractors, you may be able to recharge expenses. However, this is on the basis that you agree to this in advance with your customer or client. What’s more, if this is the case in your contractor billing invoice, you’ll need to add these in after the tenth step in the table of details to include in your contractor invoicing. Therefore, you’ll do this as part of your contractor billing to your client or customer and we show how to do this in our contract invoice template table above.

The expenses that you charge will also need `netting down’ before you add them on to your contractor bill. Basically, `netting down’ means removing the VAT from any VAT-inclusive costs.  What’s more, most costs include VAT however some do not. There is also the fact there is no VAT on goods or services from a supplier that isn’t registered for VAT. Please see our other guide which covers recharging expenses. In short, this explains how the `netting down’ process works and it contains some more UK contractor limited company invoice templates. Once the expenses are netted down correctly and VAT is subsequently charged, you’ll arrive at the total amount which is owed to your company. 

Contractor invoice payment terms 

When we research what does an invoice need to include, it’s advisable to show a contractor’s payment terms on the bill. Therefore, this’ll include the payment due date on all contract invoices which they issue. Indeed, when invoices show the payment terms for independent contractors, this’ll help ensure that contractor payments are received on time. What’s more, it’s also good to mention that your company will appreciate quick and prompt payment.

Per HMRC guidance, unless you agree on a payment date, the customer must pay you within 30 days of receiving your bill for the goods or services. In addition, you also have the right to charge interest for late payments, but you can choose not to. Therefore, the law assumes that a standard thirty-day payment period exists. That’s if no other payment terms that are stated. 

Do you put bank details on an invoice?

As part of how to invoice as a contractor, should this contain your bank details? Indeed, when we consider what to include in an invoice, this is your choice. It’s worth noting, showing your accepted payment methods and how your client can send the payment to you is advisable. When you do this, it can also help ensure you invoice is paid on time. Therefore, can include the sort code and account number of your business bank account. Furthermore, if you prefer a bank transfer, please also include a request electronic payment. 

How to issue an invoice and send this on to your client

In this guide, we have considered how to create an invoice (UK) and what details need to be on an invoice for a contractor. Indeed, nowadays there’s many independent contractor billing software applications that enable you to create an invoice online (UK). Therefore, many UK contractors will utilise this as it’s a more efficient way to create a UK contractor’s invoices. Therefore, you can look to use some independent contractor invoicing software. Certainly, such invoice software for contractors’ programs will include Word, Excel, PowerPoint, and many others. However, to give it a more professional look, you could convert your document to PDF format.

There are specific contractor invoice software packages out there when you are invoicing as a contractor. Indeed, it’s good to use an invoicing platform for contractors. What’s more, many modern digital platforms, such as FreeAgent, contain a billing function. As a result, a billing platform for contractors allows you to create these within the software. Consequently, this can save you time which is a plus point. In addition, such a billing system for contractors will allow you to track these to see any which are unpaid. Therefore, you can chase up any outstanding invoices and it’ll be easier to track these with your online system.

When you send a contracting invoice to your client or customer, you could send it through the regular post. However, nowadays, it’s much quicker and less costly to send this via e-mail. Once again, many software programs like FreeAgent allow you to e-mail this straight to the client from within the software. 

Final thoughts

Finally, when we consider how to bill as a contractor, an online system for your company’s record-keeping will let you generate your contractor invoicing. What’s more, if it does, the billing software for contractors’ system will show all the correct invoice details for your small business. Furthermore, it’ll do all the calculations for you. Indeed, this’ll include your chargeable contractor hours. What’s more, it’ll include the expenses you’re recharging and your payment terms. In addition, the online system will also work out the VAT too.

When you have an online system, this may also allow you to email the invoice directly to the client. To sum up, when you do this, it’ll be a time saver as it lets you track any outstanding bills online and see which ones are currently late or overdue.

If you’re dealing with a customer or client for the first time, it’s wise to take down details of their accounts department. However, should the need arise, it would also be wise to follow through and ensure that you receive the payment in due course.

As a final note, regarding how should an invoice look we have shown above a contract invoice example. If you have a VAT inspection in the future, a VAT officer would review your methods and processes to ensure that you’re following correct procedures, However, if you require a free billing template, please send a message on the contact form at the bottom of the home page. If you make the request, we’ll be happy to provide a free contractor invoice and limited company invoice template (UK).

Link to Contractor Advice UK group on

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Published On: January 4th, 2024 / Categories: First timer guide, Invoicing /

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