Most freelancers and small business owners learn the ropes of business management on the fly. Considering 35% or more of the US workforce is freelancing these days, and 99.9% of all US businesses are small businesses, thousands of business owners find themselves working through ins-and-outs of running a business every single day. One of the most important early lessons every freelancer or small business owner needs is how to create an invoice.
Client invoicing may seem daunting and stressful at first, but it’s actually quite easy. It only takes a few minutes to learn how, and you can easily practice by sending an invoice to yourself to make sure you’ve got the process down. All you need is to do is create or use simple invoice templates, ensure you include the necessary elements on the invoice document, and then automate future client invoicing as much as possible to save yourself time and energy.
What Is an Invoice?
An invoice is a document a business creates and sends to a client to request payment for services rendered. In simpler terms, an invoice is a bill, just like any other type of bill you might receive, such as for utilities or even at a restaurant. The key difference between a bill and an invoice is which industries use the term. Service-industry businesses and independent contractors tend to prefer to use the term invoice.
That said, the process you’ll follow for how to create an invoice is certainly different than what you’d find at a restaurant. If you’re doing most of your business online, as many business owners now are, the most efficient approach is to streamline the process by creating an online invoice.
Why Do I Need to Create an Invoice?
Creating invoices is incredibly important for any small business owner or freelancer. When you create an invoice you:
- Establish yourself as a professional service
- Create a document that ensures easier financial record keeping
- Make it easier for clients to keep track of your work and payments made to you
- Provide clients with documentation of what services they’re paying for
Invoicing clients also helps you build trust with your current and future clients. Trust is incredibly important for maintaining long-term clients and is essential for positive customer relationships.
Can an Unregistered Business Create Invoice Documents?
Under US law, you’re considered a sole proprietorship if you own and run an unincorporated business by yourself. That category would include freelancers of all kinds, such as photographers, writers, graphic artists, and web developers, among many others. Any person who offers legal products or services as a sole proprietorship can create and send invoices.
The next step for you is to explore how to create an invoice that looks professional to your clients.
What to Include on an Invoice
There’s no one process you should follow for how to create an invoice, but you should make sure any invoice you create or invoice template you use has the following parts.
- Business name
- Seller or Service Provider (that’s you!) contact information
- Invoice number
- Invoice date
- Total cost
- Payment(s) due date
- Bill to (buyer/payer information)
- Product details or description of services provided
- (Optional): Accepted payment methods
- (Optional): Discounts and taxes
- (Optional): Seller notes
- (Optional): Terms and conditions
- (Optional): Company logo
1. Business name
Your business name may be a sticking point when you’re first learning how to create an invoice. Depending on your situation, you may need to use your real name, but the best option is to use a business name in the header section of your invoice, regardless of whether your business is officially registered.
If you have a registered business name, you should default to using it on your invoices. It will appear more professional than using your personal name. However, even if your business is unregistered you can and should still use your business’ given name. The US government allows you to operate an unregistered business under a fictitious name, so long as that name is not legally registered and claimable by anyone else. This is known as your Doing Business As (DBA) name, which you may see as “d/b/a” when you receive payments.
2. Seller’s contact information
When you create invoice documents to send to clients, you’re considered the seller. You should include all of the relevant contact information for your business. At a minimum, this would include your phone number and email address. However, you may also want or need to include a physical mailing address and your business website address.
3. Invoice number
If you DIY your process for how to create an invoice, you’ll need to use an official numbering system. There’s no one way to do this, but you’ll find it makes your and your clients’ lives easier if you use a numbering system that avoids repeating the same numbers.
Online invoicing system will take care of this for you by automatically assigning numbers. The most common numbering systems you’ll find for invoices include sequential systems (1, 2, 3, etc.), or systems that incorporate the year, month, and the invoice number for that year.
4. Invoice date
There’s nothing complicated in how to create an invoice date. Just use the date you plan to send the invoice. Note that this should always be the date you send the invoice, not the date you created the invoice.
5. Total cost
Provide the total cost of the product or service you’re invoicing for. Make sure this number is easily visible. Many invoice templates and designs make the total cost among the largest and most easily-identified text on the page.
6. Payment due date
Want to know how to create an invoice that gets paid on time? Make sure the clients know when the payment is due! Make sure the due date is easy to see. Some invoice templates may put the due date right next to the amount due.
7. Bill to
Your invoice “Bill to” section should include the name and contact information of the individual or business who will be making the payment for the services rendered. Ensure you have the correct name or business entity here listed here.
Should a business try to contest payment, having the wrong entity name may make it more difficult to legally defend your right to payment. If you aren’t sure what the “Bill to” name for a client should be, ask the client how to create an invoice with the correct entity name.
8. Product details and/or service description
You won’t need to spend too much time researching how to create an invoice details section. Just list a brief description of the product or service you offered. You should also include the pricing information in the details section, to include cost per item or cost per hour, as well as how many items created and sent, or how many hours were worked.
9. Accepted payment methods
The steps you’ll follow for how to create an invoice don’t need to include accepted payment methods. Some platforms that allow you to create and send an invoice also serve as integrated payment processors. These services make it easy to accept payments online regardless of which payment methods the client uses; they typically handle the processing for you.
If you do plan to give the client alternative methods of payment, list all of the forms of payment you accept.
10. Discounts and tax
You don’t need to have discounts or taxes sections on your invoice if you don’t offer discounts or if you aren’t required to collect taxes for your products or services. If you do provide discounts, or if you’re legally required to impose a sales or services tax, create a section that identifies the amount incorporated into the final payment due amount.
11. Seller notes
Many invoice templates have a “Notes” section incorporated onto them by default. If you’re creating your own invoices, you may want to have a notes section for any details that extend beyond just the product details.
12. Terms and conditions
You may want to provide a section that explains the terms and conditions of the service of your service, products, or payment. This could include your return or cancellation policy, or the penalty for late payments.
13. Company logo
Although a company logo is not necessary, it’s a valuable addition to your invoice. The logo helps instill a sense of confidence in the client that your business is professional. A professional logo is excellent for building your brand and for customer relationships across every type of business, from freelancing to consulting.
How to Create an Online Invoice with HoneyBook
Don’t waste precious time trying to figure out how to create an invoice on Microsoft Word or Excel. Instead, create an invoice online in seconds using HoneyBook. Just grab one of HoneyBook’s invoice templates, or create your own. Then, automate the process for long-term clients with on-going work, or quickly plug in a new client name and contact information.
With HoneyBook invoicing you get:
- Invoice templates
- Custom invoice scheduling
- Tracking for invoice status (opened, viewed, and paid)
- Option for clients to turn on auto-pay
- Automatic payment reminders for both upcoming and overdue invoices
- Optional gratuity payments from clients
- Booking services and integration with Quickbooks
Whether you’re on a laptop, desktop, or mobile device, you can create, send, and track payments for all of your invoices using HoneyBook. Just do the following:
- Sign up for a HoneyBook account (with a 7-day free trial)
- Choose your industry
- Select from one of HoneyBook’s preloaded templates, or create your own
- Enter all necessary invoice data, including amount due, product/service details, and payment due date
- Send a test invoice to yourself for quality assurance
- Schedule your invoice, set it to recurring payment, or send immediately
- BONUS: Toggle on automatic payment reminders that will send clients notifications of upcoming due dates, or remind them of overdue payments
That’s it! You can sign up with HoneyBook and send your first invoice in minutes. Your clients will love the professional look and appreciate the easy and broad payment options through HoneyBook’s payment processing system.
Level Up Your Business and Get Paid Faster with HoneyBook
Start your business on the best possible footing with fast, efficient, and professional invoicing. HoneyBook is an all-in-one business management platform that will help you avoid many of the invoicing and communication pitfalls associated with running a business.
HoneyBook offers over a dozen small business management tools, including:
- Contracts and Proposals
- Google Calendar and Gmail integration
- Client communication
- Client scheduling
- Task management
- Embeddable contact forms
- Project and earnings reports
- Time tracker
See all HoneyBook features.
The entire system is designed to save you time and money while streamlining your business management and client communications. HoneyBook is the perfect solution for small businesses thanks to its simple and intuitive invoicing and business management tools.