As a small business owner trading taxable goods and services, you need to understand how to correctly issue a tax invoice to your customers. Not only does this ensure you are compliant with the law, but issuing professional-looking invoices can also help improve your business cash flow by getting paid faster.
A tax invoice template gives your clients a breakdown of the exact taxes charged to them, helping to ensure there are no misunderstandings about the cost of goods and services being invoiced.
Here, we will show you how to create a professional tax invoice template step-by-step, so that you can get started issuing compliant and accurate invoices for your business.
The anatomy of a tax invoice template
Here’s what you need to include in a professional tax invoice template:
The first step is to include your company details in the header of the tax invoice template. This should include your company name, address, contact number, and email address.
If you have a business logo, you can also add this to the header of the tax accounting invoice template. You may also want to include your website or social media information so that they can connect with you online.
Invoice Number and Date
A legal invoice needs to include an invoice number and date. The invoice number should be unique and easy to reference, such as a sequential number or your business initials followed by the year (e.g. XYZ Pty Ltd 2020/12). The date should be the date that the goods or services were provided.
The third step is to add your client’s details to the commercial invoice. This should include their name, address, and contact number.
Note that you don't always have to enter your client's business address. For instance, if you are a plumber and you have completed work for a homeowner, you would include their residential address. If you are a web designer and you have completed work for a business, you would include the business address.
Description of Goods or Services
The next section of your invoice should include a description of the work that was performed. This should be as detailed as possible, including information like the type of work, quantity, and rate.
If you provided materials for the job, be sure to include those in this section as well. You will also want to specify whether the charges are for labor, materials, or both.
For instance, if you are a plumber, you might write something like:
Invoice for plumbing services and installation of new water line - $100
If you provided the materials, you would include that in the description as well:
Materials for installation of new water line - $50
Labor for installation of new water line - $100
Sales Tax and fees
The next step is to add any sales tax or fees that are applicable. Depending on your state, there may be different tax rates that apply. Be sure to add the appropriate tax rate for your state.
You may also need to add other fees, such as council or environmental fees. If this is the case, be sure to include these in the invoice template as well.
Discounts and Credits
If you are offering any discounts or credits, the next step is to add these to the invoice template. This could be a percentage discount for early payment or a credit for work that was not completed.
The next section of your proforma invoice should include the invoicing terms and payment method. This ensures that your clients know when and how they need to pay you. You can include a specific due date or simply list "Due upon receipt." You should also list the methods of payment that you accept, such as cash, check, online payments, or credit or debit card.
Thank you message
The final step is to include a thank you message. This is a nice touch that shows your appreciation for your client's business.
Creating Your Tax Invoice Template
The first step is to open a new document in either Microsoft Word or Google Docs. Once you have the blank document open, you will need to insert some basic information into the header. This should include your business name, contact details, and business address.
Next, you will need to add a table to the document. This table will be used to list the items being invoiced, as well as the relevant unit prices and quantities. Be sure to leave some room on the table for any additional notes or instructions you may need to include.
Once the table is set up, you can start entering the items being invoiced. Begin by adding a description of the item, followed by the quantity and unit price. If there are any special instructions or notes relevant to that item, be sure to add them in the appropriate column.
When all of the items have been added, you can calculate the total amount due by adding up the quantities and multiplying them by the unit prices. Once you have the total, simply insert it into the document where indicated.
Once you have created your tax invoice template, be sure to save it so that you can reuse it for future invoices. This will save you time and ensure that all of your invoices are consistent.
That said, using word processing programs and Google Sheets to create invoices can be time-consuming and tedious.
Try Bonsai's Invoice Templates
A better approach is to use a free invoice generator tool or to download free invoice templates that you can customize for your business. This is a good option if you don't have time to create your own template, or if you want to add a professional touch to your invoices.
Our free invoice template, for example, is a great option for businesses that need a quick and easy way to create invoices. By downloading our free tax invoice template, you can create consistent, professional invoices with just a few clicks.
If you're looking for a more comprehensive solution, we also offer invoicing software that allows you to send invoices, manage clients, and manage payments all in one place. Our software is easy to use and comes with a variety of features -- such as automated invoicing, automatic reminders, and partial payments -- that are designed to save you time and streamline your invoicing process.
Sign up today to generate invoices instantly.