What is an invoice?
Definition of an invoice
An invoice is a document that a business issues to its customers, asking the customers to pay for the goods or services that the business has supplied to them. Invoices can be issued either before or after the goods or services are supplied.
If the business issuing the invoices is registered for VAT, the invoices must comply with certain requirements as laid down by HMRC.
An invoice is a legal document and as such, if an incorrect invoice is issued, it should either be cancelled with a credit note and a new, correct, invoice issued, or a credit note should be issued to correct the invoice. The incorrect invoice should not simply be deleted from the business's records.
What to include on your invoice
An invoice for a non-VAT registered business should include these basic items:
- Your trading address and contact details
- A unique, sequential invoice reference number
- The date that you expect your customer to pay
- Your quantity, description, and price for each good or service provided
- The total price of the invoice
- Details about how the customer should pay you, including any bank account information
- For limited companies or LLPs, you need to show your Companies House registered number and address. And if you include the name of one director or member on your invoice, you must include the names of all directors or members.
For VAT-registered businesses, read our guide for what you should include in your VAT invoice.
Got questions? Ask Emily!
FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.