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Self employed invoice template excel for Planning

welcome back to the small business toolbox I'm Andy Mack and I've been self-employed for longer than I can remember on this channel we just have a little informal chat about well frankly stuff that you probably should have been taught at school but hopefully just a few bits and pieces that I've picked up over the years you can benefit from if you're just starting out in business so you've thought of an awesome business name you've registered for self-employment in the UK you've got yourself sorted with a business bank account well it's time to start doing some work and actually get paid some money and in order to get paid you're probably gonna have to generate your first invoice and that's what this video is all about I'm gonna try and explain what an invoice is how to make one a couple of different examples of stuff that you need to include in an invoice and later on in the video I'm gonna give you a little tip from my absolute favorite invoice numbering system which just will make your life so much easier for managing your invoices I'll tell you all about that later on but let's start with some of the basics first so an invoice this is kind of what an invoice looks like you can print one out and send it to your customers through the post or you can send them as a PDF electronically or however you want to do it there's lots of different ways of sending invoices to people and an invoice essentially fulfills two different roles it's a tax document and it's a legal document from a tax perspective it's required just to maintain your own accounts and if you ever get audited by HMRC then they might ask for a copy of all of the invoices that you've ever raised and from a legal perspective you're issuing a formal demand for payment from your customer so above all an invoice is essentially how you get paid when you're talking about billing your customer you're generally talking about giving them an invoice you do some work you issue an invoice you get paid for the work simple as that most invoices these days will be electronically generated but you can do paper invoices if you want the main thing is you need to keep a copy of every invoice that you've raised whether it's an electronic copy or a physical paper copy that's entirely up to you I'll just keep PDF copies of every invoice that I've raised and that seems to do the job now as a small business owner you're probably only going to be generating what three or four invoices a month maybe depends what you sell but if you're in those sort of volumes you really don't need to go overboard on fancy accounting software and stuff like that a simple spreadsheet like Excel should do the job perfectly well if you do generate a lot of invoices so a more automated approach might be more sensible using either your e-commerce software or dedicate accounting software or as I found out with tide bank account I can now do invoices directly from my bank account when you're just starting out though you're gonna have enough things to worry about without having to try and learn accountancy software so just I would say keep things as simple as possible to start off with a simple Excel spreadsheet will be fine so I'll take you through everything you need to include on an invoice from a UK self-employed perspective obviously if you're watching this in other parts of the world the requirements might be a little bit different but to be honest I've dealt with many international invoices over the years and they're all more or less the same I am making the assumption that you're not that registered because if you are earning over the VAT threshold of 85 grand a year then you're probably going to be using accountancy software anyway if you are that registered and you're planning on doing things the way I'm talking about doing things in this video just bear in mind there are some additional requirements for VAT registered businesses which I'm not gonna cover off in detail so let me talk you through it I'm just going to take you through a sample invoice template which you can get off my patreon if you want to use the one I actually use for my businesses or you can generate your own it's relatively straightforward so here's a really typical business invoice remember it's not a fat invoice but for any other kind of sole trader type work should do the job so what I'm going to do I'm gonna highlight in yellow all of the absolutely essential things that you need to have an invoice and then I'm going to come back and I'm gonna in pink show you some of the optional things that you might want to think about including on an invoice first of all it sounds obvious but an invoice should have the word invoice on it you can call it something else if you want but you do run the risk of not being paid especially by businesses if your invoice doesn't have the word invoice written on it secondly obviously you want the customers name and address so you should have the company name maybe even a contact name or like their accounts payable department or something like that but just make sure you've got the customers full name and address on their invoice you need to have an invoice date and that's generally going to be the date that you prepared the invoice on you also need to have a unique invoice number and I'm going to be talking about that and a little bit more detail later on of course you need to include your own business details so in this example I've got a company logo up the top here but then I've also got my full business contact details down at the bottom here so what I'm trading as my business name business address business postcode telephone number email address web address just your full contact details so there's no ambiguity about how the customer can get in touch with you then of course we'll need a description of the work we've actually done for the customer so make that as detailed as you like but you need enough information that the person in the Accounts Department paying you can work out what they're paying you for so in this example I've put design of company logo including a design meeting so what I've included here is a date of meetings that have been carried out and also the supply date of the final product it is a good idea to include the supply date on your invoices if possible but just go into as much detail as you feel necessary for the job that you've done you don't have to go as far as having quantity and unit price and total you could just have a total figure but again it's good practice to go down the route of having this quantity field and then a unit field and then the total automatically works itself out and then if you've got lots of different products or services all on a single invoice then just split them out here's another one here design of company business cards letter heads brochures delivered on and then we've got a supply date again and then of course down at the bottom of the invoice we've got the important one the grand total amount do you and if you don't charge v80 some companies can get a little bit confused about that because they're so used to dealing with VAT registered businesses but if you're not VAT registered yet and you do business-to-business sales then it might be a good idea to put on your invoice no v80 to pay but that's not an essential thing so I'm going to mark that in pink however your payment terms it's one of those things that it's not required by law but if you don't include payment terms you could get paid in any random amount of time so I would certainly deem your payment terms as being mandatory in this example I'm saying that the payment is due within 14 days of the invoice date it's up to you what payment terms you use that's a really important point don't let the company that you're dealing with dictate the invoice terms it's up to you to negotiate invoice terms with your customer they will go especially bigger businesses they will call for as longer payment terms as physically possible sometimes they'll push you to 60 days don't let them bully you into having longer payment terms and necessary just say no sorry my payment terms are 14 days is that okay if not then I'm not going ahead with the work that's something that you need to sort out and negotiate early on in Proceedings you should be sorting out what your payment terms are well before issuing an invoice a and oe just means errors and omissions accepted I don't know how much weight it has in a court of law but it basically means that if you've made a mistake on your invoice then you can come back and maybe issue a new invoice and it just gives you a little bit of extra protection to say think everything on here is correct but if there is a mistake then I'm entitled to correct that mistake good practice to have it on I would say have it on by default a link to your own terms and conditions now a lot of companies will put the terms and conditions on the reverse of the invoice or the Mike supply on a separate sheet when you're first starting out you probably don't even have terms and conditions as your business grows you will start to appreciate the importance of having some terms and conditions in place for example telling your customer what happens if they don't pay you on time so a link to your terms and conditions I would say is optional but sorted out as quickly as you can it's a good idea to save what payment methods you accept again it's optional but it's a good idea to include it payment by cash credit card or bank transfer or whatever that you happen to accept for your business and it's also a good idea to have your bank details on the actual invoice again don't give the company you're dealing with any excuses to delay payment because they will use any excuse to delay payment oh you didn't include your bank details on the invoice so if you're going to accept bank transfers at least show your account number sort code and what payment reference you want them to use and then the final thing that you might want to consider adding on to your invoice this is the only thing I don't include by default on the invoice template that's on patreon is a purchase order reference number we'll talk about this in more detail on a separate video but to cut a long story short if the company you're dealing with gives you a purchase order number to use and you don't then show that purchase order number on the invoice that you issue then you probably won't get paid so if you've been given a purchase order number to use by your customer then make sure you show it on the invoice that you raise if you only deal with consumers then obviously consumers aren't gonna give you a purchase order number it's a really easy thing to add on to your invoice template if you need it add it if you don't don't that covers pretty much everything you're likely to ever encounter when you're raising an invoice for one of your customers with the exception of anything to do with v80 and obviously the other thing as well is if you're a limited company you should be including your registered limited company details on the invoice as well but assuming you're a non VAT registered civil trader something like this should do the job to get you up and running so generally speaking you're only gonna be issuing invoices for goods and services that have already been fulfilled so in other words you've already done the work or you've already sent out the product now one thing I get asked a lot is what happens if you want to be paid in advance for a product or service and generally speaking that's where a pro forma invoice comes into play I'm gonna do a separate video all about pro forma invoices so don't forget to hit subscribe if you haven't done so already I'll also make a separate video about credit notes which are effectively the opposite of an invoice and also bear in mind that an invoice can kind of be used as a receipt in most cases if you've issued an invoice and then the customer has paid you for that invoice normally the customer won't then also ask you for a receipt for payment but what you might want to do is just give them a copy of the invoice but have stamped paid or you can just add a line on the invoice to save when it was paid and how it was paid you know you do run into situations like that from time to time it kind of depends on whether you mostly deal b2b in other words business-to-business or b2c which is business to consumer in the world of b2b most businesses won't ask for a receipt to prove that they've paid an invoice because the invoice itself is a tax document that they need on their side the receipt doesn't really serve much of a purpose for the business that you've dealt with from a consumer perspective you might get customers asking for a receipt just for peace of mind to prove that they've paid a particular invoice again it happens but it's fairly rare these days normally there's a paper trail or an electronic paper trail of communication about getting paid you know whether it's on text message or on email seeing and kind of prove that things have been settled through other means so normally it's a little bit pointless also giving them a separate physical receipt but you might get us to do that so it's very easy for you to do keep the customer happy just do a copy of the invoice and stamp paid on it so when don't you need to issue an invoice well that's largely up to you and how your business model works generally speaking though if the exchange of goods or services for money happens almost immediately and it's for a relatively low amount of money then you're not going to give them an invoice so for example if you went into a shop and bought a Mars bar the shop owner isn't going to give you an invoice for 50 pence which you then give them but they might give you a receipt which is kind of an automated thing from their till but that's different from an invoice it's a receipt isn't a demand for payment the receipt as a thing to say that you've already paid it another example might be if you're a music teacher or just a private teacher of any description and you might do hourly music lessons let's see well you're not going to invoice the parent or the pupil every time you want to get paid for the lesson because they're probably gonna pay at the time that they have the lesson what might happen is that they pay for a block of lessons upfront so you might want to invoice them for a block of lessons again normally that's a bit formal for things like music lessons and normally would just send them an email to say can you transfer 300 pounds to my bank and then that'll cover you for ten lessons that's kind of an invoice it's just taking a different format you know invoices don't have to follow this very structured format if you're dealing with businesses so they will expect that the invoice follows a more structured format and if you don't give them a structured properly written invoice they might not pay you so the main thing is as the value of the goods or services decrease and if it's pretty much an immediate transaction then the level of detail required on invoices kind of diminishes to the point where the invoice disappears and it's more or less just replaced with a receipt you still need to be keeping good accounting records of all your sales but again you're probably not going to be logging things like the customer name and the customer address and all sorts of details like that just think about what happens if you go into a shop even if you're buying a potentially fairly high value item say for example you go into a hi-5 shop you might spend two or three grand on hi-fi equipment the transaction happens straightaway but they're not asking for your name and address other than perhaps for marketing purposes but that's not a tax requirement but you do obviously need to record those sales what you sold and how much and when and all that sort of thing as per usual if you're in any doubt about this sort of stuff speak to your accountant and they will help you and they will point you in the right direction with invoices you might want to show them one of your invoices and how you're doing it and just they'll say yeah that's fine or they might say well you should have really included this bit of information on it they will have a much better understanding of the kind of detail of how your business is run so they're the best person to ask finally let's have a look at my favourite invoice numbering system now this might not work if your VAT registered because there's some weird rules surrounding v80 and having sequential invoice numbers and all sorts of ridiculous bureaucracy surrounding that but if you're not v80 registered I can't find any reason for not doing it this way and my favorite way of picking an invoice number is to take the invoice date and reverse it so if the invoice date was the 1st of June 2019 then your invoice number would become one 906 oh one now you might generate more than one invoice per day so you do need a way of keeping your invoice numbers unique so for that reason I add a letter on the end normally it's a letter A but if you've generated more than one invoice on that particular day then your next one would be a letter B the next one let us see etc etc it still is sequential but it's not sequential in the way that v80 might demand it to be sequential I really like this invoice numbering system because if you name your invoice files as 1906 or one a then it means that when you sort them then all automatically in date order the other big advantage is just by glancing at the file name you know the date that that invoice was generated [Music] the only disadvantage really other than the bat thing is that it's a bit of a manual process for putting the invoice numbering together I haven't seen automated systems for doing an invoice number like this I'm sure they might exist somewhere but if you're just a self-employed sole trainee there and you're not that registered and you're not generating millions of invoices I find this invoice numbering system works much better than a sequential number I hope that's all been useful for you remember next time we're going to have a little look at pro forma invoices until then I wish you every success with your own business and I shall see you next time bye