Official receipts and invoices of businesses in most countries require the presentation of imposed tax. Value-added tax (VAT), also known as Goods and Service Tax (GST) in some countries, is a type of general consumption tax imposed on goods and services that is collected incrementally. As of 2018, 166 countries of the world out of 193 approximately employ a VAT. This includes all OECD members except the US, which uses a sales tax system instead. So if you provide services or supply goods subjected to tax, you should have a VAT invoice template to bill your customers.
A VAT invoice is one of the most crucial records every individual contractor of business should have. The bill is an obligatory document, which shows that a consumer has paid for the service or taxable goods received. Besides, the record shows liability that makes you and your customer trustworthy. You must have a VAT invoice template for quick invoicing say within 15 days of completing a business transaction. The document decares accurate details of a business transaction to avoid cases of cheating and smuggling.
Requirements of a VAT invoice template
Only VAT-registered businesses can use VAT invoices, and the document is only used if both seller and buyer are registered for VAT with HMRC. In other countries, businesses whose goods and services are subjected to tax may create and use VAT invoice template to bill their customers. Usually, VAT invoices are raised within 30 days of the date of supplying goods or providing a service. Businesses and individuals may also create the document when payment is made in cases where the payment was made in advance.
Creating a VAT invoice template
VAT invoices, in addition to the information in a regular invoice, should carry accurate VAT information. It must be detailed and well structured since it has to explain lots of legalities related to business. The document should have the word VAT invoice placed in a prominent place on the document, and it should be reviewed to avoid inaccuracy. See the session of a typical VAT invoice template.
1. Header section of the VAT invoice template
At the top of the document should be a caption that identifies the bill as a VAT invoice, and your business name should follow that. Then comes your contact information, including email address, mailing address, phone number, contact address, and website.
2. Recipient contact information in the VAT invoice template
Include the business name, email address, contact and address, and phone number. Also, add the business number for customers that have one.
3. The VAT invoice sample number & date
Create a date field at a prominent place, perhaps on top of the bill, and you may stamp it to authenticate it is from you. Your VAT invoice template should carry a unique invoice number to track the document and keep a tab on a specific customer account. Make sure you have a set of unique chronological numbers, so it is easy to generate one for another customer or transaction.
4. Product or service description in the VAT invoice template
Itemize each product or service and briefly describe them, so your customer understands what they are paying for in the bill. Enter each good or service as a line item if you have several of them.
5. Rate and amounts in the VAT invoice template
Include the rate for each hour worked, service, or quantity of product. You need the utmost clarity in this section to avoid confusion and email inquiries.
6. Net & gross of VAT in the VAT invoice template
Enter the appropriate rate in cases where each product or service has a discounted value. Include other fees that would affect the total amount. Now sum the fees after-tax and include the total at the bottom of the page.
7. Payment terms in the VAT invoice template
Include payment terms and conditions like preferred payment and due date policy.