Starting your own sole trader business is both an exciting and terrifying experience. While you are pursuing your dreams, there are many unknowns and challenges you will come up against.

Compared to a company, setting up a sole trader business is a relatively simple process. But there will still be a lot to learn about how to operate your business financially.

For the inexperienced, invoicing presents a particular challenge. They are one of the most essential pieces of financial paperwork you will encounter, as you won’t get paid without them.

Fortunately, this guide will give you the rundown on creating an invoice for your sole trader business.

What is an invoice?

An invoice is a record from your business that details the goods or services provided to customers or clients. It also provides a way for them to pay you for those goods and services. The buyer will need to pay the total cost of the invoice.

Why do you need an invoice?

The rules for invoicing are pretty clear in Australia. Any customer subject to Goods and Services Tax (GST) who purchases something worth $82.50 (including GST) or more from your store needs to be issued a tax invoice by your business. 

This rule means that most sole traders will generate an invoice for each transaction, making it easier to manage your bookkeeping. You also will need to issue an invoice within 28 days to your customer if they ask for one, so it’s best to keep track.

If your business is not registered for GST, your invoices won’t include the tax component section, which this blog will talk about next. These are called regular invoices and should not have the words ‘tax invoice’, according to the Australian Government.

How to generate an invoice?

Now that you know the what and why, it’s time to understand how to build your sole trader invoice.

One method is to do it manually.

  1. First, open a new document on Word, and create a header that includes your essential information (business name, ABN, and basic contact information). Align this information to the left side of the page.
  2. Next, enter your customer’s essential and contact information under the header and align it to the left.
  3. Put in an invoice number on the right side of the page, along with the date. This will help you with your accounting afterwards.
  4. Create a table with product information, quantity, price, tax, and sub-total. Create a new row for each item sold.
  5. Calculate the total to be paid at the bottom of the table.
  6. Outline payment method details at the bottom of the document.

While this manual process may seem complex and dense, it will likely become easier once you develop a template. There are many templates online if you’d prefer to go through a tried and tested method.

Consider online invoicing options

Many online platforms allow you to manage your invoicing. Some even offer Australian small businesses customisable invoicing options and further insights into a sole trader business’ bookkeeping.

 Here are some benefits to doing your invoicing online.

  • Less paperwork – Using email to replace paper means you can spend less time stuck in mountains of documents and more time building your sole trader business.
  • Secure and safe – Everything is usually stored in the cloud so you don’t have to worry about losing that USB stick used as a backup.
  • More information – With intuitive navigation and data visualisation, online invoicing solutions make managing money easy.
  • Invoice from anywhere – With your smartphone, you can instantly invoice through some platforms.

Companies like Square, Xero, and myob take it even further in this space, offering a whole host of accounting and bookkeeping options for small businesses, from reconciliation and payroll to cashflow snapshots.

Consider your risk

While you are sorting out the back end of your sole trader business, it might also be an excellent time to consider getting covered from the risks you face.

Public Liability Australia offers a variety of sole trader insurance designed to protect against the specific risks Australian sole traders might face daily.

Jump online or give them a call from their friendly customer service team in Sydney, and you can get cover for your sole trader business in minutes.

Get invoicing today!

Flying solo in the world of business can be overwhelming. Getting your ducks in a row early on in your business journey by creating a functioning invoice system will save you a lot of time and hassle in the future.

This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.© 2022 BizCover Pty Limited, Public Liability Australia is a business name of BizCover Pty Ltd (ABN 68 127 707 975; AFSL 501769)