How To Issue An Invoice

invoices-taxMany new business owners are faced with something of a challenge when it comes time to issue their first batch of invoices. For VAT-registered businesses, issuing invoices correctly is of vital importance because it has an impact on the bottom line. Without proper tax invoicing, a small business could find itself out of pocket or on the wrong side of the taxman – two pitfalls that can easily be avoided.

Invoices vs. Tax Invoices

The concept of sending an invoice is very simple: whenever a business (or person acting as a sole proprietor) requires payment on a transaction, an invoice is issued to the person or business responsible for making the payment. The transaction may be the purchase of stock, goods or services such as accountant’s fees or a cleaning service. Whatever goods or services have been purchased, the invoice notifies the buyer that payment is due.

A tax invoice is a specific document, which must keep to the requirements laid out in the VAT Act of 1991, that allows a vendor (supplier of goods or services) to claim input tax on the total value of goods or services supplied to a customer. In order for a tax invoice to be valid, it must comply with several requirements:

  • The invoice must be issued with 21 days of the goods being supplied. The invoice must be issued whether the customer requests it or not.
  • A full tax invoice must be issued for all purchases exceeding a R3000 value. For items between R50 and R3000, an abridged tax invoice may be issued – this type of invoice contains fewer details about the goods supplied than the full tax invoice.
  • All VAT invoices must state the rate of VAT charged – in South Africa the current rate is 14%

If you require an in-depth consultation on invoicing, don’t hesitate to contact one of our support staff who will gladly assist you with any queries.

8 thoughts on “How To Issue An Invoice

  1. Please help. I want to invoice a company as an individual, not a company, for service provided. What should i take into consideration in terms of tax?

    • I am not sure that I understand your question. If a company does business with you, your relationship is with the company.

      Should an individual do business with you, the individual should be invoiced. In each case your legal relationship is defined by who received the service.

      It is therefore obvious that the receiver benefitted from the service and is responsible for payment.

      In your situation that is the company. A company is usually a juristic person. I cannot work out why a company would not pay. Sorry.

  2. A governmental body constantly requests me to change multiple invoice dates to accommodate their “requirements” of payment terms. Is it legal to constantly alter an invoice’s date as it presents a skew picture as to when the service was delivered as well as abiding by issuing an invoice within 21 days of service delivery? I know credit notes become applicable, but this has its own challenges as auditors require lengthy reports as to why credit notes for large amounts are issued. My question simply then, without changing the invoice number, what is the possible consequences of altering invoice dates as per governmental request legal wise?

    • The date of a TAX invoice is the date it was ISSUED The request to alter invoice dates is NOT legal – once a TAX invoice has been issued & dated – the date cannot be changed This has VAT implications for the company paying over the output tax & the company claiming the input tax

  3. Hi There

    I need to find out whether there are legalities against the following:

    – Can a sole proprietor invoice a regular client?

    eg. He (sole proprietor) does freelance work for a company, and also for the company CEO (personal). He spends 50% of his time doing work for each. Are there any legalities stopping him from invoicing both, or either?

    Please let me know as soon as possible.

    Nadia

    • I am not sure that I understand your question. An invoice is simply a document indicating the amount owing. If a service was offered, and needs to be paid for, an invoice would be the method to do so.

  4. If my Invoice is not charging the Vat 14% rate, is a TAX INVOICE OR IS AN INVOICE?
    If I’m charging 14% VAT in my invoice is a tax invoice or an invoice?

    • If you are not Vat registered, then it is s simply an invoice. For it to be considered to be a VAT invoice, you would have to comply with a number of Regulatory requirements.

      The tax invoice should be in the South African currency (Rand) and must have the words TAX INVOICE in a prominent place. It must include your name, address, and Vat Registration Number. You also need to have the same details for the vendor receiving the goods. The invoices must be dated and have a serial number. The full description of goods offered must be disclosed.

      Abridged Tax Invoice

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