What must an invoice include, and what details should you show on your limited company contractor invoice? This is a consideration when you are working for yourself therefore, we will investigate how to bill as a contractor. Knowing how to invoice a client correctly and how to get the invoice details right from the outset is key.
Whether you are a sole trader or you are trading through and running your own company, you will need to create invoices for the work that you do for your client or customer. We will look at both how to invoice as a contractor and what needs to be on an invoice to your client. Therefore, you will be able to create your independent contractor invoice each time before your client or clients can make payment.
As a UK business owner, it is important that you know how invoicing for contractors actually works. When you bill for your time worked and perhaps even expenses incurred there is a certain process to follow. Let us now take the time to investigate how to invoice as an independent contractor and do this correctly.
Please note that it is common for some agencies and end clients to self-bill you as a limited company contractor for their time. Furthermore, your company is not required to create an invoice for your contracting work in this scenario. Instead, as part of this process, you will need to complete timesheets and send these to the agency or client.
If your client is not operating the self-bill system, it will be important when you bill your client to raise a professional contractor invoice. With regard to what should a contractor invoice include, this will contain all your business information and contact details such as company name, address, phone number, and email address. It should also include how your client can make payments to your company. What’s more, you should send your invoice with bank details included. If you do not show this, it could delay payments to your company.
Current rules -invoices for contractors
Above all, to comply with current laws, you must ensure that you include the relevant details when you do your contractor invoicing. There are extra considerations in terms of your invoice details if you register for VAT (as most contractors do). Our VAT guide also gives an overview of what to expect when registered for VAT.
Please read our article covering tax tips for contractors. This includes lots of top tips when running your own business.
What must an invoice include?
Invoice for contractor -what should be on a contractor invoice?
Let us now consider what should an invoice include when you create this. It is important to get the details right before you send your independent contractor invoice to your customer or client.
Therefore, what should be on an invoice? There are specific details that your contractor invoices require. In no given order regarding what is on an invoice, when you create this an invoice for contractors should contain:
- The word `invoice.’ You could show the words `professional invoice’ if you charge for your professional time.
- A unique invoice number on your contractor’s invoice –these should be sequential –the first professional contractor invoice could be number 001, the second one could be number 002, etc. If you use a unique identification number approach, it is both logical and a straightforward referencing system.
- The date of the invoice. You will raise an invoice after you make a sale or complete some work, therefore the invoice date should be after this.
- Your business name, address, and contact information.
- Your VAT registration number if your business is registered for VAT. You can show the VAT number either at the top or bottom of your VAT invoices.
- The name and address of your client.
- A clear description of your products or services, e.g., 35 hours at `x’ rate per hour. The charges should also include any expenses that you are to recharge.
- The date you provide the goods or service, i.e., the supply date.
- The due date for payment.
- The amount(s) that you are charging.
- The VAT amount, if relevant (at 20%).
- The total cost of the invoice. This is the final sum of your charges plus VAT and the total amount due from your customer or client.
If you are recharging expenses
You may be able to recharge expenses that you agree to in advance with your customer or client. If this is the case, you will need to add these in at the seventh step as mentioned above, as part of your invoices to your client or customer.
The expenses will also need `netting down’ before you recharge them. Please see our other article that covers recharging expenses. This explains how the `netting down’ process works.
Once the expenses are netted down correctly and VAT is recharged you will arrive at the total amount owed.
It is advisable to show your payment terms and payment due date on all invoices which you issue. This will help ensure they are paid on time. It is 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 getting your invoice or the goods or service. 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 if there are no other payment terms that are stated.
Do you put bank details on an invoice?
Should I put my bank details on an invoice? This is your choice; however, showing how your client can send the payment to your business bank account is advisable. This will include your business sort code and account number. Please also make sure that you request electronic payment.
How to issue an invoice and send it on to your client
There are many computer applications that you can create your invoice on nowadays and you can look to use some independent contractor invoicing software. Such programs 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 also specific contractor invoice software packages out there when you are invoicing as a contractor. Many modern digital platforms, such as FreeAgent, also contain an invoicing function. As a result, they allow you to create your invoice on their platform, which can save time.
When sending your invoice to your client or customer, you could send it through the regular post. However, nowadays, it is much quicker and less costly to send this via e-mail.
An online system for your company’s record-keeping may also let you produce your invoices on the site. What’s more, if it does, the system will show all the correct invoice details for your small business. It will do all of the calculations for you. Indeed, this will include your chargeable time and the expenses you are recharging, and it will work out the VAT, too, for you.
The online system may also allow you to email the invoice directly to the client. Doing this will be a time saver as it lets you track your invoices online and see which ones are currently outstanding.
If you are dealing with a customer or client for the first time, it would be wise to take down details of their accounts department. Should the need arise, it would also be wise to follow through and ensure that you receive the payment in due course.
Finally, regarding how should an invoice look, if you need a free contractor invoice template (UK), please send a message on the contact form. This form is at the bottom of the home page, and we will be happy to provide this.
Link to Contractor Advice UK group on