How to make an invoice:your complete guide
Don’t let billing go uphill… In this article we explain everything you need to know to become a true master of invoices.
It’s that simple: no bills, you don’t charge. Billing is a really crucial part of the business world because, in some way or another, it’s the heart that allows the whole system to move right. But, at the same time, it is also a part of the day-to-day that is done uphill to many professionals… And it’s totally understandable.
After all, billing is a world that works by its own rules. And they are rules that you have to control 100 percent if you want to avoid unpleasant surprises. For that very reason, in this article we want to reveal everything you need to know when making an invoice.
How to make an invoice: step by step
Now you know what you need to do to make your bills legal… But that doesn’t mean you know how to make that same bill. So let’s look step by step at what you should make sure you’re getting your billing right.
- Choose your billing method. Are you going to use a lifelong Excel or prefer some more modern billing program? In this regard, you should know that the best online billing software (many of them included within powerful ERP tools like Holded’s,for example) allow an entire team to work in real time in the cloud, with all the advantages that this entails.
- Use the Invoice Templates. Whether it’s a spreadsheet invoice model or the multiple options offered by a billing program, where customization will always be much easier and more effective.
- Make sure that everything you’re going to reflect on your bill (data, amounts, taxes) is agreed by the two parties involved.
- Fill in your invoice with all the correct details. And don’t forget to go over that data, because you can always miss mistakes that end up leading to various problems.
- Decide whether to work with traditional invoice (on paper) or electronic invoice.
- Submit your invoice and keep a copy.
- Note that the payment periods you have agreed are met.
What are the requirements to generate an invoice?
Above we have already mentioned legality as one of the fundamental coordinates of billing. And, precisely to ensure this legality, there are a number of requirements that you must meet when issuing your invoices. Something like a billing regulation in which you include all the necessary data…
- Invoice number and serial. It is the number that identifies the invoice you are issuing and that, in fact, distinguishes it as a unique and differentiated document from the rest.
- Date of issue. This data is particularly relevant because it will determine the billing period in which the corresponding taxes must be allocated.
- Tax data. Both the data of the issuer and the customer’s data must be correctly reflected: first and last name (in the case of one of the parties being an autonomous), full company name (i.e. company reason), address and, finally, tax identification number, either the self-employed ID or the business NIF. Note, that the CIF has no longer been used in legal terms for some years.
- Concept, amount and taxes of the invoice. This data will vary on each invoice, obviously, and will depend on what is stipulated between both parties.
How many types of invoices are there?
At this point in the article, maybe you think all your bills are going to be the same… But no. Because it turns out that there are different types of invoices and, depending on the nature of the transaction they cover, they can be one way or another.
Let’s look at the five types of basic invoices.
1. Ordinary invoice
It is the standard and most common invoice. As we have said above, it is the physical proof of a trading operation and must include all detailed information about it.
2. Simplified invoice (also called ticket)
It is an invoice type that does not include customer data (unless the customer expressly requests it in order to deduct expenses and VAT). This means that VAT is not broken down, but is only included under the phrase ‘VAT included’. Simplified invoices can only be issued in four specific cases:
• In the event that the amount of the transaction is less than 400 euros (including VAT).
• In the case of amending invoices.
If you have received an authorization from the Department of Tax Management.
• In the case of registering a commercial transaction in which the Billing Regulation allows the issuance of tickets. They are usually commercial transactions that do not exceed 3000 euros (VAT included).
3. Proforma invoice
It is a budget that has no fiscal value, as it is issued only as proof and commitment to a future investment. It must be labeled as a “proforma invoice” and include the same information as an ordinary invoice, but it must always be numbered separately.
4. Amending invoice (credit invoice)
These invoices are issued for the purpose of making changes or extensions to an original invoice. In other words, it’s the way to fix errors on invoices already issued.
5. Summary invoice
This type of invoice allows you to group different business transactions performed for the same customer within a calendar month. It works just like an ordinary invoice, but must contain the amount of all sales for the calendar month in addition to a brief description of all the transactions that are grouped in it.
How to calculate VAT and total amount?
If in point 1 of the inside section you have decided to use a billing program such as the one included in Holded, the calculation of VAT will not be a problem for you because it is something that the software will do for you. That’s how you forget.
But if, on the other hand, you prefer to do these calculations yourself, the truth is that you just have to apply a really simple formula. However, first of all, you should know the type of VAT that you must apply to your invoices: is it the general of the 21st? The reduced 10? The super-reduced 4?
Once you’re clear, it’s time for you to start doing your math. When we are faced with a rule of three, it all comes down to dividing the total amount of the invoice by 1.xx (xx being the percentage that corresponds to you according to the relevant VAT rate). For example, if you apply a VAT 21, you’ll need to divide the amount by 1.21. And, if you apply a 10, you’ll need to divide by 1.10.
Once you get this information, you will need to add it to the total amount of your invoice. And this result will be your final amount… Unless you have to subtract the IRPF, of course.
General tips for making invoices
Everything we’ve explained makes you more relaxed when it comes to making your first bill? You know everything you need to know to keep up with the Tax Agency and you’re willing to check in like there’s no tomorrow?
Well, wait, don’t embalmed yourself… Because here are a few tips to get you done rounding off your expertise in these tasks.
- Soak up all the basic elements of the invoice. Come on, everything we’ve been explaining to you in this article so far. No more, no less.
- Review, review and go over again. It’s best to go over a thousand times a bill before you have to repent when something that went unnoticed in your face blows up in your face. You know what grandmothers say: prevention is better than cure. And, when it comes to billing, prevention is reviewing.
- Keep track of your invoices issued and received. Not only will this record help you facilitate quarterly and annual returns, but also allow you to control which all your customers pay you when they should (and that, obviously, you also pay when you owe and don’t hang up on it). A small tip: A billing program is ideal for optimizing and automating such invoice records.
- Don’t be upset with check-in. Seriously, don’t. Don’t get carried away on the dark side. Here’s the big tip: if you’re tidy and methodical, bill management shouldn’t cause you any anxiety.
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