How to Create an Invoice

Invoicing is a must for running a modern business. Invoices help you track what you charge customers, keep your cash flow in check, and stay compliant.

That’s why it’s important to know how to create invoices correctly and include all the right details. Mistakes can lead to delays and unhappy customers—so it’s worth getting it right.

With QuickBooks, much of the work is done for you. We simplify the invoicing process and offer helpful resources to guide you step by step.

Are you wondering, “How do I create an invoice?” This article is here to help. We’ll walk you through the key parts of an invoice, your tax obligations, formatting tips, and how to automate your invoicing for a seamless workflow.

What is an invoice?

An invoice is a document that is produced either before or after a business transaction that details payment obligations and expectations. It ensures the buyer knows exactly what to pay and when to pay it by.

Invoices are very important in a world where so much business is conducted virtually. Detailed and accurate financial records make business compliance easier, and ensure that all financial transactions can be accounted for. They also make sure you can get paid exactly what you’re owed—and on time.

An invoice is not the same as a receipt or remittance. These are created after a transaction is completed. An invoice, on the other hand, provides all the necessary details beforehand—so the transaction can be completed.

Need more clarification? Take a look at our article on what invoices are and how they work.

Key elements of an invoice

It’s in the best interests of a business to make sure its invoices are standardised. This will reduce the risk of confusion and disputes arising.

Let’s start by taking a look at the key elements that should form the basis of any invoice:

• Invoice number: Every invoice should include a unique invoice number. This helps you track and manage invoices easily in your financial system. Without one, invoices can be overlooked or go unpaid.
• Business and client information: It’s important to include the key business information of both the buying and selling parties. This will include details such as the business addresses, an accounting email through which communications can be conducted, and a company’s unique tax number (if applicable).
• Descriptions of goods and/or services: A business that is required to pay an invoice will expect to see a detailed breakdown of what they are paying for. Most invoices will usually list items on a line-by-line basis to make it easier to determine what is being transacted.
• Prices, taxes and total amount: The initial prices of the ordered items/services should be clearly listed. This will allow a business to cross-reference with their initial purchase order. There should also be a pre-tax amount and a final, grand total line for the entire cost.
• Payment terms and due dates: All invoices should have clearly-listed payment terms. This means the buying party has a clear obligation stated and will have no room to misinterpret the invoice.

How to include taxes on your invoice

Tax on the business transactions of goods and services is a mandatory expectation on most invoices. These expectations will vary depending on your location.

In most cases, you’ll need to make it clearly identifiable that the invoice being received is a tax invoice. If your business is not tax registered, then this is not a requirement. If your business is tax registered, then your unique company tax number should be added to the invoice.

It’s important that the buying party receives this information because, in some instances, they will be able to reclaim the tax amount back.

With QuickBooks, we make this easy with our simple tax calculation feature, which can be used for all regional requirements.

How to format your invoice professionally

Make your invoice easy to read and navigate.

When businesses don’t have to figure out confusing details, they’re more likely to pay you quickly and without issue. A clear, well-organized invoice helps remove barriers and keeps the payment process smooth.

A clear and well-organised invoice removes the risk of misunderstanding on the part of the receiver. There is a risk of delayed and/or incorrect payments occurring if the information is not presented logically, which can negatively impact your cash flow and overall financial management.

Your invoice should have concise headings that are easily legible. Use a clean format that eliminates clutter. Then, organise information in a logical way to keep things easy to read.

With QuickBooks, you can create professional-looking invoices easily using pre-built templates that remove the need for extensive design expertise.

Steps to create an invoice manually

There are a number of options out there for invoice templates and formats.

Some businesses may even choose to create their invoices from scratch. One reason for this could be that a business has specific, standardised marketing features that need to remain consistent across all business practices.

However, all of the same features and processes apply, regardless of whether it is a templated or custom version.

How to generate an invoice using QuickBooks

At QuickBooks, we make things easy for businesses when it comes to learning how to make an invoice. This can be done by using the following steps:

1. Log in to your QuickBooks account. From there, you can select from several template options.
2. Once you have selected the one that best matches your business, add the necessary information for both the buying and selling parties.
3. List all transacted items and services, ensuring that tax obligations and payment terms are clearly stated.
4. Make sure to preview the entire invoice, removing any errors.
5. Send your invoice directly to your customers.

You can also set up automated invoicing. This is useful when handling recurring or subscription-based payments, and can save your finance team time and effort.

QuickBooks will let you set up automated reminders to ensure that invoices are settled quickly and according to your terms, keeping your cash flow healthy.

Common mistakes to avoid when creating an invoice

Errors happen despite our best efforts and intentions.

When it comes to invoicing, errors can have a profound impact on cash flow and overall stability. That means it’s all the more important to limit these mistakes.

Wondering how to create an invoice that is both accurate and efficient? Try to avoid the following mistakes:

• Missing essential information: Some important details often get left off invoices—like accounts receivable information, the business’s accounting address, and the invoice number. These are all essential for ensuring your invoice is processed and paid correctly.
• Incorrect pricing and taxes: The prices listed on an invoice must match those that were quoted/stated on the customer’s initial purchase order. If they are mismatched, it can lead to disputes and delays. Likewise, incorrect or missing tax amounts will impact a business’s financial accuracy and ability to reclaim the correct amounts (if applicable).
• Unclear payment terms: If you don’t clearly state the payment terms, clients may delay paying. This can make it harder to manage your finances and hurt your cash flow. Always include a clear due date to help keep payments on track.

Want to learn more? Check out our full guide on common invoicing mistakes

Streamline your invoices with QuickBooks

Business processes related to finance can often be stressful because of how important they are to overall success.

With QuickBooks, we do everything we can to take the stress away. With our simple yet intuitive invoicing software, we make it easy to create professional invoices that your customers will appreciate—as well as handling your tax calculations. With our automated features, you can save time and ensure your business will never miss receiving another payment.

Want to try for yourself? Register today for a free 30-day trial and see what you can achieve with QuickBooks.