Correct Invoices - What Requirements Do You Have to Meet?

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Hanifmr.com - Business start-ups have to deal with so many things that the obvious requirements are sometimes neglected.

A correct invoice is part of it.

In this article, you will find out what you have to consider when creating an invoice for a corporate customer and which mistakes you should avoid.

Note: The following information comes from my own experience and research. Since I am not a lawyer, this is of course not binding legal advice. If you have specific questions or problems, you should contact a lawyer *.

Why Are Correct Invoices Important?

Correct Invoices - What Requirements Do You Have to Meet?

On the one hand, there are legal regulations on how invoices should look. This precisely defines what an invoice must contain.

The tax office has been much stricter since 2004 and this often leads to incorrect invoices being denied input tax. This means that the invoice recipient does not get the VAT back from the tax office.

Therefore, a customer to whom you send an incorrect invoice will usually not pay until you have corrected the invoice. This can lead to significant delays in payment.

To avoid trouble with the tax office and customers, one should make sure that all mandatory information is given in the correct form.

In contrast to many other laws, these requirements are formulated clearly and unambiguously, which is good news.

Mandatory Information on Invoices

There is some mandatory information that must be included on an invoice to another company, sole proprietorship, etc.:

Full name and address of your own company.
Full name and address of the customer to whom the invoice is sent.
The date of the invoice.
Your tax number or any existing sales tax identification number.
The invoice must also contain a consecutive invoice number (can consist of numbers and/or letters), which is only issued once per invoice.
According to the sales tax law, it does not necessarily have to be “invoice” on the invoice, but for the sake of simplicity and clarity, I would recommend it.
List of the delivered products or services with number or scope.
Time of product delivery or service provision, whereby the month is sufficient.
Indication of the net price in euros.
Indication of the sales tax rate of 7% or 19%.
If not already included in the individual prices or the total price, previously agreed on discounts, bonuses and discounts must be stated.
Specification of the amount of sales tax or an indication that a tax exemption applies.

It is also advisable to specify the payment term (by when the invoice is to be paid) and complete and correct bank details so that the customer also knows where the money has to be transferred.

If the mandatory information is not correctly fulfilled, the invoice recipient can insist on a correction.

In addition, in some special cases, there is additional mandatory information, but these are usually not relevant for self-employed people on the Internet.

Small Business Regulation

A specialty is the small business regulation according to §19 of the sales tax law. Anyone who is a “small business” and submits an invoice is not allowed to show sales tax.

Instead, the invoice must include a sentence such as "The invoice amount shown does not include sales tax per Section 19 (1) of the UstG." However, all other mandatory information must be met.

If, on the other hand, you send an invoice to a small business owner while you are liable for sales tax yourself, you have to report sales tax as normal.

Small Amount Invoices

Small amount invoices of up to 150 euros represent a special case (from 2017 the limit for the sales tax small amount regulation is 200 euros).

The following invoice details are sufficient here:

Full name and address of your own company.
The date of the invoice.
List of the delivered products or services with number or scope.
The gross amount including sales tax.
Indication of the sales tax rate of 7% or 19%.

So a few details can be left out. However, I use the same information for all invoices, as I use a corresponding program and all information is automatically inserted there.

Bills Abroad

Invoices abroad are a special case. This is a topic that my accounting office also breaks into a sweat on from time to time. ;-)

A distinction is made primarily between where a turnover is carried out and what type it is.

For example, in the case of advertisements for foreign companies, the invoices are submitted net, but a corresponding note must be included and your own sales tax identification number must be on the invoice.

If in doubt, you should contact your accountant or tax advisor *.

Electronic Invoice or Paper

It is very good that within the framework of the Tax Simplification Act, electronic invoices (usually sent to the customer as PDF by email) have also been possible without an electronic signature since mid-2011. You can still use them, but there is no longer any pressure to do so. Nevertheless, you have to make sure that the invoice is created correctly and that it reaches the customer undamaged. That is of course such a thing, but normally there are no problems with it.

There are two more important points to note. On the one hand, electronic invoices must also be kept. This means that a hard copy is not enough, the file must be kept.

On the other hand, the customer must agree to receive an electronic invoice. If he wants a paper invoice, this must also be provided.

Check Incoming Invoices

These regulations should be observed not only when issuing invoices, but also when receiving invoices.

If you pay an incorrect invoice and do not object to it, the tax office can refuse to deduct the input tax. That is then cash that is lost.

Therefore, you should always check incoming invoices to ensure that they are correct.

Conclusion

Once you have familiarized yourself with the fundamentals of accounting and once you have created the necessary information, you don't have to do much in the future.

Desktop billing software and online billing services offer corresponding billing templates and request all legally required billing information.

Anyone who creates their invoices without such software can take a look at this article. There are some sources for Word and Excel templates there.

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