How to Write an Invoice: Legal Requirements and Best Practices 

As an eCommerce business owner, you will receive customer payments for your goods or services.  You will also have to pay others to help run your business activities. For example, you may need to pay a supplier for goods you resell online through your website. Therefore, you will have heard of invoices and likely receive them and give them to customers and other businesses. While familiar with invoices, you may need to learn the rules surrounding them. When you write an invoice, you need to ensure it is legally compliant, such as by giving it a unique invoice number and including payment details and contact details, which include a business address. This article will, therefore, explain how small businesses should write professional invoices in terms of legal requirements and best practices.

What is an Invoice?

An invoice asks someone to pay you, so your business requests money from them. An invoice will detail what you want your customer to pay for and the payment terms. When creating an invoice, it is helpful to use an invoice template to present invoices professionally and include your logo. 

What Do I Need to Include in My Invoice? 

Including the correct information in your eCommerce brand’s invoices is essential. This starts with clearly labelling the invoice so it is clear that it is an invoice. Knowing who should receive the invoice will also help, as this can ensure payment is made on time. 

However, there are legal requirements you, as an eCommerce business owner, must adhere to when writing about your invoices. These include:

• a unique number to identify the invoice from other ones;
• an invoice date;
• your eCommerce company name, address and contact details where the requirements differ slightly depending on the type of business you re, e.g. sole trader or limited company;
• the name and address of the person you are invoicing, and if they are a business, you should state what type;
• clearly describing what you are charging for, such as the details of the goods or services;
• a date of supply, which is when you provided what you are charging for;
• the total money due and the date it is due; and 
• any other payment terms and information.

VAT and Invoices

If you are a VAT-registered business and your customer is a VAT-registered one, your invoices must include VAT.

If your eCommerce brand had a total VAT-taxable turnover of over £85,000 in the past 12 months, you may register for VAT. If in doubt, take legal or accounting advice. 

Tax Invoice Template

When creating a tax invoice for your customers, it needs to be HM Revenue & Customs-appropriate. LegalVision’s free Tax Invoice Template will help. Simply customise it and use the built-in formulas to finalise your total.

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Are There Legal Differences Between Sole Trader and Limited Company Invoices?

Depending on whether your eCommerce brand is a limited company or a sole trader, the details you legally have to include in your invoices will be slightly different. For sole traders, in addition to the details in the above paragraph, you will need to also include:

• your personal name;
• the business name you may use, if any; and
• if you use a business name, an address to which legal documents can be sent.

If you are a limited company, your invoice must include your full name. You must present this precisely as it is on your company incorporation certificate. This must still be present even if you use a different trading name. You may choose to list your company directors on the invoice. However, if you do, they all need to be detailed. 

Key Takeaways

Your eCommerce brand will send and receive invoices, which are payment requests. You need to record these and ensure they are legally compliant when creating them. For example, you must give each invoice a unique number, detail what you are charging for, and the total amount due and the date it is due. You must also include any payment terms and VAT if you are a VAT-registered business. However, there are differences between the details needed on your invoices depending on whether your internet brand is a sole trader or a limited company. For example, as a sole trader, you must include your name. 

If you need help understanding how to write an invoice in terms of the legal requirements and best practices, our experienced eCommerce lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.

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