How to Invoice as a Sole Proprietor in 2025

To invoice as a sole proprietor, start by creating a detailed invoice that includes:

• Your business name
• Client contact information
• A unique invoice number
• A clear description of goods or services provided
• Payment terms
• Due dates
• Accepted payment methods

Use professional invoicing software like Bonsai for ease and efficiency. Including a professional header and itemized list can enhance credibility and client trust. Regularly updating your invoicing process and templates can improve cash flow and client satisfaction. This approach ensures you meet legal requirements and maintain a professional image, crucial for business growth.

If you're providing goods or services in exchange for payment as a one-man team, you are running a sole proprietorship business. As a sole trader, you'll issue invoices to companies to receive payments for your services.

As a sole trader, it is important to look as professional as possible as it can impress your clients and make them comfortable giving you work. This includes everything from business cards, letterhead, and invoices.

What exactly is an invoice? It's where sole traders define the goods delivered/services performed, the amount charged, and the payment terms for the clients or customers. Creating a new invoice may seem like a pain... but we'll walk you through everything you need to know in order to easily craft a sole trader invoice.

You'll discover the quickest way you can create invoices and the details for what should be included in the commercial document.

Note: If you are a sole proprietor and you want to try a simple way to edit/send invoice information, try Bonsai. Our invoicing software makes it incredibly easy for you to send professional invoices and get paid. Our invoice templates have all the necessary details like contact information, address, due date, description, and more. Save time with Bonsai. Claim your 7-day free trial today to use our invoice template.

How to invoice as a sole proprietor easily

As a sole business owner, you do not need to contact the tax authorities in advance in order to be able to issue a private invoice. Unlike corporations, sole proprietors have the freedom of issuing invoices without restrictions or formal requirements.

Although there are practically no requirements for how an invoice should look or what information it should have, the presentation of your invoice as well as best practices is important to appear credible and professional. The easiest way you can accomplish this is by using invoice templates.

Invoice Templates

There are a ton of sole trader invoicing software on the market, but we'll review the one we know best--our own. Bonsai is an all-in-one freelancer software with "ready-to-edit" professional-looking templates.

Our templates make it a breeze to send professional invoices.

Whether you need an invoice template for graphic designer or social media marketer, we got you covered. We'll include all the vital details in the invoice you can quickly edit and make it look more appealing. On top of that, you'll get access to all our other templates for contracts or sole proprietor proposals.

Try a 7-day test run of our free invoice templates today. You'll see how our software can make life easier to create and send unlimited invoices.

However, if you opt to make your own and not use an invoice template, here are some details for what to include in the invoice.

What should your sole proprietorship invoice include?

Essential contact information for your invoice

Your invoice must clearly display your contact details to ensure clients know who to reach out to for questions or payments. Include your full name or business name, mailing address, phone number, and a professional email address. For example, if you operate as "Jane Doe Consulting," list that as your business name along with your contact info.

Additionally, add the client's contact information such as their name, company, and address. This helps avoid confusion and ensures the invoice is properly directed. Use invoicing software like QuickBooks or FreshBooks in 2024 to automate this process and reduce errors.

Make it a habit to double-check contact details before sending. Accurate information speeds up payment and builds client trust. Always update your details promptly if they change to avoid delays.

How to list services and pricing clearly

Detailing your services and pricing precisely is crucial for transparency and prompt payment. Start by listing each service or product provided with a brief description. For example, instead of just "graphic design," specify "logo design for brand identity."

Next, include the quantity, rate, and total price for each item. If you charge hourly, state your hourly rate and the number of hours worked. For example, "10 hours at $50/hour equals $500." This clarity helps clients understand the charges and reduces disputes.

Using invoicing templates from HelloBonsai or Wave can simplify this step by providing structured fields. Always review your pricing for accuracy and include any applicable discounts or taxes to avoid confusion.

Including payment terms and legal requirements

Clearly stating your payment terms on the invoice sets expectations and encourages timely payments. Specify the due date, such as "Payment due within 30 days of invoice date," and acceptable payment methods like bank transfer, PayPal, or credit card.

Including late payment fees or early payment discounts can motivate clients to pay on time. For example, "A 2% late fee applies after 30 days." Also, note any relevant tax information, such as your sole proprietorship’s tax ID or VAT number if applicable in your state or country.

Make sure your invoice complies with local regulations. For example, sole proprietors in California might need to include a resale certificate number if applicable. Using invoicing software that updates with 2024 tax laws can help maintain compliance effortlessly.

What information should you include in professional invoices?

Review all the details of the invoice before you perform your service. Before you send your first invoice to a customer, we'll review what should be included.

You can generate an invoice on Microsoft Word or Google Sheets with this info:

Note: If you want to save time and have a sole trader invoicing software take care of all of this for you, try Bonsai. Our all-in-one freelancer software can help you send out nice invoices to get paid without you having to constantly create invoices from scratch. Claim your 7-day free trial and try an invoice template today.

Business Details

First, you'll want to write down the details of your business on the invoice. This would include your name or the business name, address, invoice number, contact, and payment information.

Business Name

Your company name or full name should stand out at the top of your invoice in an easy-to-read font. Make your name slightly larger and bold compared to the other text to make it stand out. To add professionalism to your invoice, consider creating and including a business logo.

Address

An accurate billing address helps invoices and bills reach the company's correct location. In other words, it is an important piece of identifying information that a credit card issuer or other financial institution – has on your file. This information would help protect you from credit card fraud or identity theft.

You'll also want to include an address where any legal documents can be delivered to you. If your shipping address is different than your billing one, be sure to clearly state that.

Contact Details

If a consumer or client has a problem with an invoice, they need to quickly contact you to resolve it. Place your main phone number, which is answered promptly, in bold, along with your best email address.

This will make it much easier for the billing or accounting department to connect with you if any problems arise.

Invoice Number

A unique invoice number is vital to stay organized. This unique identifier lets you track and manage your invoices, so you know which ones are paid or unpaid. The invoice number also connects the client with the transaction to help bookkeeping.

Invoice Date

The invoice date is the timestamp when goods are billed and the transaction is recorded. Along with the invoice date, include important payment information and the bill's due date.

You can include a "due upon receipt" where your customer would have to pay the invoice as soon as they receive it.

Payment Options

There are various ways to pay an invoice. For example, you can accept:

• Cash
• Credit card
• Bank transfers
• Checks

If you require payment before releasing goods or performing services, you might consider adding "payment due upon receipt". If you want to get paid faster, bank transfers are always a great way to go.

Bank Payments

Bank transfers are a common payment method. If you use bank transfers, include the following details in your invoice:

• Bank Account Name
• Account Holder Name
• Account Number
• Routing Number
• Invoice Reference Number

Read our guide on how to write invoices to send via email.

How to add payment terms and referral incentives

At the bottom of the invoice, include payment term instructions. For example, "Terms: Net 30" means payment is expected in full within 30 days. If the client is late, follow up with an email.

Sole proprietors often charge 1.5% interest per month on overdue invoices as a late fee. Make sure to set clear guidelines with clients. Charging a late fee encourages timely payments.

Try this government calculator to sum up your late fee interest.

Include a small note to attract new clients. For example, mention discounts or referral bonuses if clients introduce you to new customers. This helps grow your self-employed business.

FAQs about invoicing as a sole proprietor

What essential information should I include on my invoice?

Your invoice must clearly state these key details to be professional and valid:

• Full name or business name
• Contact information
• Unique invoice number
• Invoice issue date
• Payment due date

Detail products or services with descriptions, quantities, and unit prices. Show the subtotal, any applicable taxes like sales tax or VAT, and the total amount due. For example, if you provide graphic design services, list each task separately with its rate.

Including payment terms and accepted methods avoids confusion. Clearly state if you accept bank transfers, credit cards, or platforms like PayPal. Use invoicing software like HelloBonsai or QuickBooks to automate this process and ensure all fields are included.

Do sole proprietors need to charge VAT or sales tax on invoices?

Whether you need to charge VAT or sales tax depends on your location and revenue. In the U.S., sales tax rules vary by state. For example, California requires sales tax on tangible goods but not most services. In the UK or EU, VAT registration is mandatory if your annual turnover exceeds certain thresholds, such as £85,000 in the UK as of 2024.

If you must charge VAT, your invoice should display your VAT number, the VAT rate applied, and the total VAT amount. For example, if you are VAT-registered in the UK, your invoice should clearly separate the net amount and VAT charged. If your revenue is below the threshold, you typically do not charge VAT but must state this on your invoice.

Check local tax authority guidelines or consult a tax professional to ensure compliance. Using invoicing platforms like FreshBooks or Xero can help automatically calculate and apply correct tax rates based on your location and service type.

Is it necessary to have a contract before invoicing clients?

Having a contract before invoicing is highly recommended but not legally required. A contract sets clear expectations about the scope of work, payment terms, deadlines, and deliverables, reducing the risk of disputes. For example, a freelance writer might use a simple written agreement outlining the article topics, word count, and payment schedule.

Without a contract, you rely on informal agreements, which can complicate payment collection if disagreements arise. Contracts also support your invoice by referencing agreed terms, making it easier to enforce payment if necessary. Many freelancers use contract templates from HelloBonsai or Docracy to streamline this process.

To protect yourself, draft a clear contract before starting work and send invoices that reference the contract or agreed terms. This practice improves professionalism and helps clients understand their obligations.

How can I maintain professionalism when invoicing as a sole proprietor?

Maintaining professionalism starts with clear, well-designed invoices that reflect your brand. Use consistent fonts, colors, and logos if applicable. Including your business contact details and payment terms upfront builds trust. For example, HelloBonsai allows you to customize invoice templates to match your business identity.

Timely invoicing is also critical. Send invoices promptly after delivering services or products, ideally within 24-48 hours. This practice improves cash flow and shows clients you are organized. Additionally, follow up politely on overdue payments using automated reminders from invoicing software like QuickBooks or FreshBooks.

Finally, keep accurate records of all invoices and payments for tax purposes and financial management. Using cloud-based tools ensures your data is secure and accessible. Professional invoicing helps you get paid faster and fosters positive client relationships.

Best practices for sole proprietor invoices

Use professional invoicing software to streamline billing

Using professional invoicing software is essential for sole proprietors to create clear, accurate invoices quickly. Tools like HelloBonsai, QuickBooks, and FreshBooks offer templates tailored for freelancers and small business owners, ensuring your invoices look polished and include all necessary details such as your business name, contact info, and payment terms.

These platforms also automate calculations for taxes and discounts, reducing errors and saving time. For example, HelloBonsai allows you to customize invoices with your logo and set recurring invoices, which is helpful if you bill clients regularly. Using software also makes it easier to track which invoices have been paid and which are overdue.

To get started, choose software that fits your budget and needs, then input your client details and services. This approach not only improves professionalism but also speeds up your payment cycle, helping you maintain steady cash flow.

Keep detailed records for tax and legal purposes

Maintaining detailed records of your invoices is crucial for managing your finances and preparing for tax season. As a sole proprietor, you must keep copies of all invoices issued and payments received for at least three years, according to IRS guidelines for 2024.

Organize your records by client, date, and payment status using digital folders or accounting software. For example, QuickBooks allows you to attach receipts and track expenses alongside invoices, making it easier to calculate your net income. This level of organization helps you claim all eligible deductions and provides proof in case of an audit.

Regularly backing up your records, either on cloud storage like Google Drive or an external hard drive, ensures you won't lose important documents. Staying organized reduces stress and saves time when filing your 2024 taxes.

Set clear payment terms and communicate them upfront

Defining clear payment terms on your invoices helps avoid confusion and delays. Specify the due date, accepted payment methods, and any late fees. Common terms for sole proprietors include:

• Net 15 (payment due within 15 days of the invoice date)
• Net 30 (payment due within 30 days of the invoice date)

Including these terms upfront, either in your contract or on the invoice itself, sets expectations for your clients. For example, you might write:

Payment due within 30 days via:

• Bank transfer
• PayPal
• Credit card

A 2% late fee applies after the due date. This clarity encourages timely payments and reduces disputes.

Review your payment terms annually to ensure they align with your cash flow needs and industry standards. Clear communication about payment expectations is key to maintaining professional client relationships.

Follow up promptly on overdue invoices

Promptly following up on overdue invoices increases your chances of getting paid on time. If a payment is late, send a polite reminder within a few days after the due date. Tools like HelloBonsai and FreshBooks can automate these reminders, saving you effort and ensuring consistency.

When following up, keep your tone professional and friendly. For example, a message might say, "This is a friendly reminder that invoice #12345 was due on March 10, 2024. Please let us know if you need any assistance with the payment process." If the payment remains overdue, escalate your communication gradually, offering payment plans if necessary.

Consistent follow-up protects your cash flow and reinforces your professionalism. Setting up automated reminders now can prevent future delays and reduce the stress of chasing payments.

How and when should you send your invoice as a sole proprietor?

When to send your invoice for timely payments

Send your invoice immediately after completing the work or delivering the product to encourage prompt payment. Waiting too long can delay your cash flow and create confusion about payment terms. For example, if you finish a project on March 15, send the invoice the same day or within 24 hours.

Some sole proprietors choose to invoice upfront or request a deposit before starting work, especially for larger projects. This approach reduces the risk of nonpayment and helps cover initial expenses. For instance, asking for 30% upfront on a $2,000 project secures $600 before you begin.

To stay organized, set a consistent invoicing schedule if you work on ongoing projects. Monthly or biweekly invoicing helps clients anticipate bills and keeps your accounts current. Using invoicing software like HelloBonsai or QuickBooks can automate reminders and track due dates for you.

How to send your invoice professionally and securely

Email is the most common and efficient way to send invoices as a sole proprietor. Attach a PDF version of your invoice to ensure formatting stays intact and is easy for clients to open. Avoid sending invoices as Word documents or editable files to prevent accidental changes.

Include clear subject lines such as “Invoice #123 from [Your Business Name]” to make your email easy to identify. In the email body, briefly summarize the invoice details and payment instructions to reduce back-and-forth questions. For example, mention the due date, accepted payment methods, and contact info for billing questions.

For added security and professionalism, consider using invoicing platforms like FreshBooks or Wave. These tools allow you to send invoices directly through their system, track when clients open them, and even accept online payments. This reduces delays and improves your chances of getting paid on time.

Best practices for following up on unpaid invoices

Send a polite follow-up email if a payment is not received by the due date. Waiting 3-5 days after the due date before following up is standard practice. This gives clients a grace period while showing you are attentive to your business finances.

In your follow-up, restate the invoice number, amount due, and original due date. Offer to answer any questions or provide additional payment options if needed. For example, you might say, “Please let me know if you need an alternative payment method or a payment plan.”

Use automated reminders through invoicing software to save time and keep communication consistent. HelloBonsai and QuickBooks offer customizable reminder templates that can be scheduled to send automatically at intervals you set. This helps maintain professionalism without extra effort.