No matter the size of your business, it is very important to know how to properly invoice your customers. It is a fundamental skill that ensures that you get paid properly for all the goods and services you have delivered and also prevents any mistakes that may occur in terms of calculations, taxes, etc.
How To Create A Detailed Invoice For Your Small Scale Business Including GST?
An invoice is a formal assurance that works between you and your customer and also goes a long way in building a rapport. In a country like India, you will have to learn to create a GST tax invoice. Is it complicated? Not if you understand the nuances of an invoice and basics of GST. Let’s talk about creating a GST Tax invoice for your small business.
A GST invoice showcases the indirect tax amount for every good or service that you have charged to your customer. The amount of GST tax applied varies from country to country. In India, the goods are divided into four slabs of 5% GST, 12% GST, 18% GST and 28% GST. There are also some products that do not qualify for any GST rate.
As a business owner, you will have to understand the slab you fall in and know your GST. To start, you will have to register for GST. In India, GST was implemented in 2017, and since then, it is mandatory for all eligible business owners. You can register/enrol for GST online. Once you have registered your business, you are all set to use your GST slab when you invoice your customers. Now, let’s learn how to create a detailed invoice for your small-scale business, including GST.
- Start With Name and Address
GST or no GST, every invoice should start with mentioning your name and full address. If you have multiple office addresses, use the one that you have used to register your GST number with. This step is very crucial for creating a legally acceptable invoice, so do not take it lightly. Place your name and address right on top of your invoice and then move ahead to other details.
- Mention GST Number
The next most important information to include in your invoice is your registered GST number. This information will be used by the customer to verify that you are a registered service provider or seller. In India, this number has 15 digits, the first two of which represent the state you are registered in followed by your PAN Number.
- Provide Your Invoice Number
A GST tax invoice needs an invoice number just like a regular invoice. This number has to be a consecutive serial number that contains letters and/or numerals is unique to the invoice in question. It is illegal to have two invoices with the same number. It means you are a fraud who is not following the proper rules to manage your earnings, and you may as well be doing a tax fraud.
- Mention Date of Invoice
This point is also similar to a regular invoice. It is mandatory to have a date of invoice on your GST invoice. This date is mostly the date when your invoice was issued and in most cases is within 30 days of delivering the service.
- Mention Customer Details
You have to mention your customer or invoice recipient’s details, just like you mentioned yours. These details have to include the customer’s GST number along with the name of the customer (registered), address and state along with pin code.
- Describe Goods and Services
This is the section where you describe the details of the goods and services sold by you and their quantity. You have to mention the sales value of every element in this segment and calculate the total based on the amount and number of items.
- Add the Taxable Value
This is the most crucial step where you calculate the tax applicable to your goods/services. You have to calculate the tax value on the sales value using the tax slab that your business falls in. Both the sales value, as well as the tax value, have to be separated and clearly mentioned on the invoice. If you are offering a discount, you will have to mention that before you display your total amount.
- Mention Tax Payable on Reverse Charges
If GST is payable in reverse charges, you have to mention that on your GST invoice. You have to clearly write - GST PAID ON REVERSE CHARGES.
- Clearly Mention if it’s a Supplementary Invoice
If your GST invoice is a supplementary invoice to a previously issued invoice, you must mention that in the invoice number section. You need not mention your invoice number, rather you have to simply write ‘Supplementary Invoice'.
- Provide Your Terms of Payment and Details
You have to mention how you would receive the payment. So, you can give your bank details or details of any other mode that you prefer. You can also mention the due date of the invoice with your payment details.
- Sign the Invoice
Every invoice should have a signature of an authorized signatory. You can also use a digital signature to move things quickly. Use an app like KhataBook to take care of your invoices. It can help you manage your business by taking care of personal ledgers and all your transactions.
If you want to know more about GST, you should Google What is GST bill in India and learn all the little and significant details attached to this bill that was created with the aim of only one tax across the nation.