How to invoice

There are 2 main types of invoices. Which one your business uses depends on whether your business is registered for goods and services tax (GST).

• Tax invoices – GST-registered businesses must use these. It shows the GST on the goods or services you’ve sold.
• Regular invoices – businesses that aren’t registered for GST use invoices that don’t show any tax.

A less common type is the recipient-created tax invoice, which the buyer sends to you. The Australian Taxation Office (ATO) only allows this in certain industries or business setups.

If your business is registered for GST, you must give a tax invoice when:

• a taxable sale is more than $82.50 (including GST)
• a customer asks for one (regardless of the amount) – you have 28 days to give it to them.

Businesses that aren’t registered for GST don’t need to give regular (non-tax) invoices – but it’s good practice to give one. By law, you must still give customers a receipt if the goods or services were over $75 or they ask for one.

Include the right details on your invoices. This helps you stay organised, look professional, and avoid disputes.

Tax invoices

By law, you must include these details on all tax invoices:

• the words ‘tax invoice’
• your business name
• your Australian Business Number (ABN)
• the date you issue the invoice
• a short description of what you sold (including quantity and price)
• the amount of GST payable (if any).

You must also include the buyer’s identity or ABN on invoices for sales over $1000.

It’s also a good idea to add:

• a unique invoice number
• your contact details (postal address, email and phone number)
• when and how you want customers to pay.

This helps streamline your record-keeping and makes it easier for both you and your customers to track payments and resolve any queries quickly.

Regular invoices

There’s no law that sets out what to put in a regular invoice. But common practice is to include:

• the word ‘invoice’ – you must not use ‘tax invoice’
• your business name
• your ABN
• a unique invoice number
• the date you issued the invoice
• your contact details (postal address, email, phone)
• a description of the goods or services sold (including quantity and price)
• when and how you want customers to pay
• the buyer’s name or business name.

Tips to help you get ready for invoicing:

• Set up a business bank account. This keeps your business and personal finances separate and makes it easier to receive payments.
• Collect a customer’s details when they order, so you have all the information to invoice them. For example, their name, address, phone, email and ABN.
• Use accounting software to manage invoices, sales and customer accounts. This helps you keep track who you've invoiced and who has paid.
• Set clear rules for when and how customers should pay you and let them know their options.

Invoice design

Keep your invoice simple and clear so everyone can understand it.

Use a layout that makes it easy for your customers to find important information.

Consider adding a custom design to reflect your business’s brand. But make sure you include the mandatory tax invoice information where needed.

You can send your invoices:

• by post
• by email
• online through your accounting software. Many software packages now offer secure eInvoicing between businesses using the Peppol network
• in person.

Other things to consider

• Send the invoice at the time your customer buys to encourage them to pay on time.
• If you send invoices regularly, set up a consistent schedule so customers know when to expect them.
• If a customer asks for a tax invoice, you have 28 days to send it. Keep this in mind when you choose how to send your invoices.
• Choose a delivery method that lets you easily record your invoices and retrieve them for compliance and audits.

By law, you need to keep most business records for at least 5 years. You can keep printed or electronic records.

Keep your invoices as a record of all income you’ve received and payments you’ve made to others. This will help you prepare your business activity statements (BAS), income tax returns and other tax obligations.

To address unpaid debts or customer disputes, consider sending reminders or letters of demand. Get more tips on what to do when your customer doesn’t pay you.

To reduce unpaid invoices:

• Clearly list your payment methods and terms on invoices.
• Offer multiple payment options.
• Give detailed item descriptions to avoid disputes.

To claim GST credits, the buyer must have a valid tax invoice. If the invoice you sent is wrong or missing details, it's not valid. You'll need to replace it with a complete and correct tax invoice when the buyer asks.