Invoicing is one of the most important skills every independent contractor should have. It's the easiest way to outline the service rendered in monetary terms to help calculate the rate per hour or project. This helps ease the accounting process for both contractors and clients.
There are many free invoice templates that can be downloaded and customized online but if you want to take your invoicing to the next level, we’ve put together this guide for you. This article will also show you how to get paid for free using TransferWise Multi-currency account.
Let’s get started!
1. Invoice label - This will make it easier for your clients to identify the invoice. Some companies deal with a handful of invoices everyday and having a clear label on yours can help them settle it faster.
2. A unique invoice number - It’s important to add a unique invoice number to help track payments easily both for you and your clients.
3. Your business details in the header - This includes your name/company name, address, contact information as well as your logo.
4. Your client’s contact details - Make sure to address it to the correct department to avoid confusion. Some companies might have different billing departments.
5. Invoice date - Date is very important in an invoice. Most companies use it to identify and track their payments. Make sure to put it close to the header where it can be easily seen.
6. Details of the rendered services - The easiest way to present this is through a 4 - column table. First column is for the description of the service, second is for the number of hours worked/quantity, third is your rate and the last one for the subtotal for each service.
7. Total amount due - List the amount due including applicable tax.
8. Your payment terms - List your preferred payment methods with a brief instruction together with your account details. You can also include your late payment policy.
9. Payment due date - Write the exact due date at the bottom of the invoice and highlight it in bold to make it noticeable to the reader.
10. Leave spaces for additional notes - It's important to leave some spaces for anything that needs to be added to the invoice either by you or your clients. This makes the invoice look more neat and easy to read.
There’s more to invoicing than just creating a document outlining the rendered service. You’d need to keep track of a few other things in order to make the invoicing process smoother. This guide will help you get paid faster:
1. Keep track of your hours - If you’re getting paid hourly, you’d need a smart system to track the hours you’ve put in a certain task. You can set a target/goal per day and calculate how many hours it’ll take to finish that task. There are many automated time tracking systems that work specifically for this purpose but if you’re doing it manually, it's easy to overwork or simply lose track of time.
2. Personalise your invoice - You can find a lot of free invoice templates that you can download and customize, however, creating your own personalised one can help market your service better. It's not rocket science to make your own invoice. You’ll only have to design it once and just change the details for new clients.
3. Calculate tax- As an independent contractor, you’re responsible to calculate and pay taxes to the IRS at the end of the year when you fill out a 1099 form in order to comply with the federal, state and city tax requirements.¹
4. Send your invoice on time - Sending the invoice at the point of engagement wouldn’t hurt especially if terms were clearly discussed between you and your client. The invoice will just be a written proposal from you for your client to review. This will make the agreement even more clear for both parties before rendering any services.
5. Choose the best payment provider - If your clients are based overseas, they’ll most likely make an international transfer to your account. If you’re using a traditional bank to receive this payment, it’ll incur a receiving fee and you might receive a lesser amount than originally sent. To avoid this, you can choose a payment provider that’ll help you receive transfers for free and provide detailed instructions to your client in the invoice on how to execute the transfer.
To avoid losing money on receiving fees, use TransferWise Multi-currency account to receive your payment. It saves you and your clients some money on international transfer fees. Using the multi-currency account, you can receive payments locally for free.
He’re how to set up a free international account:
- Create an account with TransferWise
- Go to the Balances tab on your TransferWise account on the computer, or the Activity tab in the app. You'll need to add some money and verify your identity first to keep your account safe.
- Choose which currencies you’d like to hold money in by clicking Open a balance.
Once you're all set up, you're ready to:
- Receive money to your own unique account details and get paid like a local in AUD, EUR, GBP, NZD, USD, and PLN.
- Add and hold some money in 40+ currencies
- Convert money between your currencies in seconds whenever you need at the real exchange rate with a low conversion fee.
- Send money directly from any currency in your account to pay bills, send money to friends and family, and more.
- You can also connect the account to an accounting software called Xero to help ease tax reconciliation.
- IRS website
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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