Details you must include on limited company invoices

Issuing invoices for your goods or services is a key task for limited company owners. If your invoices lack specific details, this could delay receiving payment, possibly resulting in cash-flow problems.

There is certain information you should include on your invoices.

If you’re VAT registered – as many limited companies are – there are additional requirements (see below).

So what exactly do you need to include on invoices you send out?

Essential information

There are some details every invoice should contain:

• A unique invoice number.
• Your limited company’s full name as it appears on its certificate of incorporation, together with its address and contact information.
• The name and address of the client, agency or customer you are invoicing.
• A clear description of the goods or services you are charging for, for example: ‘consultancy services – 20 hours at £50 per hour’.
• The date the goods or services were supplied.
• The date the invoice was issued.
• The amount being charged.
• The VAT amount, if applicable.
• The total amount owed.

If you include the name of any director on an invoice, you must include the names of all the company’s directors.

There are also several things which aren’t necessarily legal requirements for an ordinary invoice but are well worth including:

• Clearly include the word ‘invoice’ on the document.
• Your company’s registered number and registered office address.
• Any reference number or purchase order number you were given in advance by your client, agency or customer.
• Any agreed expenses or recharged costs, clearly itemised.
• Your payment terms and the due date.
• Your preferred method of receiving payment, typically electronic payment, together with your company’s bank account details and sort code.
• Useful contact details, such as an email address and telephone number.

These two GOV.UK guides are useful – a) what invoices must include, and b) additional details required if you’re VAT registered.

More details

We strongly recommend that you discuss payment terms with your clients/customers before undertaking any work or sending out invoices.

If you don’t agree on a payment date, the law generally treats a commercial payment as late 30 days after the customer receives the invoice or you provide the goods or services, whichever is later.

Be sure to specify your payment terms in advance and include these on your invoice. Many agencies and business clients will pay quite promptly. You can incentivise early payment by offering a discount if the invoice is settled within 7 days.

Conversely, you may be entitled to charge interest for late payment; while many smaller businesses are reluctant to do so, it is worth knowing your rights.

For qualifying business-to-business debts, statutory interest is currently 8% above the Bank of England base rate, unless your contract provides a different substantial remedy for late payment.

You may also be able to claim a fixed sum towards the cost of recovering a late commercial payment – £40 for debts under £1,000, £70 for debts from £1,000 to £9,999.99, and £100 for debts of £10,000 or more.

See the government’s guide to late commercial payments, interest and debt recovery for more information.

Are you VAT registered?

You must register for VAT if your company’s taxable turnover exceeds £90,000 over a rolling 12-month period. You must also register if you expect your taxable turnover to exceed £90,000 in the next 30 days.

Once registered, VAT invoices are subject to additional requirements. These include your VAT registration number, a sequential invoice number, the tax point, the applicable VAT rate or rates, the amount excluding VAT, and the total VAT charged.

Your VAT invoice number must be a unique sequential number based on one or more series. For example, you might use INV-001, INV-002, INV-003 and so on. You don’t need to start a separate numbering sequence for each customer.

If you have registered for VAT but are still waiting for your VAT registration number, there is an important wrinkle.

You can’t show VAT separately on an invoice until you receive your VAT number. However, you are still liable for VAT on supplies made from your effective date of registration.

HMRC says you can increase the amount you charge to allow for the VAT you will subsequently have to pay. Once your VAT number arrives, you can reissue the invoice to show the VAT correctly so that a VAT-registered customer can reclaim it where appropriate.

For more information on what a VAT invoice should include, read the GOV.UK VAT invoicing guidance.

Project a professional image

It’s definitely worth taking some time to design an invoice that is well laid out, easy to read, and projects a professional image.

You can do this yourself or commission a designer to create one for you, including your company logo and any specific branding.

Software such as the excellent Xero (80% off for 6 months) and FreeAgent (30-day free trial + 10% off) has made life easier for small business owners and their accountants. You can invoice clients directly via the software, with a wide range of professional templates.

This is a great way to keep on top of your invoicing while updating your accounts simultaneously.

The human touch

Get the name and contact number of someone in the company or agency you’re invoicing. That way, if something goes wrong, there’s an issue with payment, or you have a query, you know who to speak to to resolve the matter.

That way, if something goes wrong, there’s an issue with payment, or you have a query, you know who to speak to to resolve the matter.