Friday, March 3, 2017

9 Different Invoice Types for the Self-Employed



If you’re a new self-employed business owner unfamiliar with how to create an invoice, it can be tough to know where to start.

First, you can find an easy-to-use invoice template on the QuickBooks website. Next, enter your company information and the customer information for the party you are billing. Finally, provide a description of the product and/or service provided, and send the entire invoice to the customer via email, postal service or another preferred method of communication.

For a more detailed approach, there are nine types of invoices in accounts payable and accounts receivable procedures that you should be familiar with. The following is a quick-start guide to get you familiar with the basics of how to create an invoice.

1. Standard Invoice

Standard invoices are issued by a supplier of products or services to a buyer. They show the amount the buyer owes the supplier. For example, if you’re a bookkeeping consultant and you’re billing a client for 40 hours of bookkeeping, you would multiply your hourly rate by 40 and put this amount on the invoice. A standard invoice often shows a purchase number to identify what was bought, but it doesn’t have to. If you’re the one issuing the invoice, the dollar amount shown must be positive because you are owed money.

2. Credit Memo

A credit memo, also known as a credit invoice, is issued by a seller to a buyer and shows an amount the seller owes the buyer. This number should always be negative. For example, if you are issuing a client a refund for $100, you would issue a credit memo for $-100.

You could use a credit memo to issue a refund for returned goods, to give a discount, to write off a billing amount, to issue prepayment credit, to correcting a billing error or to resolve a pricing dispute.




3. Debit Memo

A debit memo, also known as a debit invoice, is issued by a seller to a buyer and shows an increase in the amount of debt the buyer owes the seller. For example, if one of your clients has an account balance of $-1,000 credit with you and you want to charge them for an additional $100 service, you would create a debit memo for $100 to reduce their credit to $-900. A debit amount is expressed as a positive number owed.

Banks often use a debit memo to charge fees to customer accounts, and companies sometimes use a debit memo to clear a small amount of money owed to a customer as a credit balance. Most businesses rarely use debit memos, but they can be useful if you need an incremental billing adjustment. For instance, if you underestimated the amount of hours when billing a project, you might issue a debit memo to adjust the amount owed. Alternately, many businesses choose to reissue the original standard invoice with the adjusted amount.

4. Mixed Invoice


Mixed invoices can have either positive or negative amounts when they are matched to purchase orders or invoices. For example, if you have a mixed invoice for $-500, you could match this to an invoice for $-500 or a purchase order for $500.



5. Prepayment Invoice

A prepayment invoice is used to record a down payment paid by a buyer to a seller. For instance, if you require a client to pay a $1,000 down payment on a consulting project, you would use a prepayment invoice. When issued by a seller, a prepayment is expressed in a positive amount. A buyer also may submit a prepayment invoice as a negative amount.

6. Withholding Tax Invoice

A withholding tax invoice serves as a record for when you remit withholding tax to the tax authority. Use withholding tax invoices when you need to create records of payroll withholdings. You can create withholding tax invoices automatically or manually. When creating one automatically, decide in advance whether you want to create them during the invoice validation process or the payment process.

7. Expense Report

An expense report is an invoice to record an amount an employee is owed for business-related expenses they incurred while doing work for you. For instance, if a sales representatives has to travel to meet one of your company’s prospects, they would bill their travel hours to you as an expense. You then can report these expenses on your business tax returns. Use expense reports whenever you or your employees are paying for business-related expenses that you want to document for reimbursement or tax purposes.

8. PO Default Invoice

PO default invoices, also known as PO price adjustment invoices, record the difference in price between an original invoice and a new purchase order invoice. For instance, if you’ve already matched an invoice to a purchase order and the supplier changes the unit price, you would use a PO default invoice to adjust the unit price without having to change the quantity billed.


9. Quick Match Invoice

Quick match invoices are used to save time when you have a large volume of invoices that do not need to go through an extensive validation and default process. You can import them into your payables system after entry, after which validation and default procedures get applied.

After you familiarize yourself with the basic types of invoices, identify the types that are most applicable to your company’s business procedures. Then, find sample invoice templates online and customize them to meet your needs. Invoice template files are available for both word processing and spreadsheet programs.


Source: http://quickbooks.intuit.com/


Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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