The first invoice: What needs to be included?
You’ve finally taken the plunge and started your own business. But the early stages, in particular, involve a fair amount of administrative work and come with their fair share of challenges. Our tax advisors in Düsseldorf and Oberhausen have already helped many entrepreneurs get their businesses off the ground. But one question is on the minds of many new business owners: What information must be included on an invoice? To ensure you don’t make any mistakes on your first invoices, let our tax advisors walk you through the basic requirements for an invoice today.
What information is required?
How you design your invoice is generally up to you. However, there are a number of mandatory details. To avoid trouble with the tax office and your customers, you should make sure that these details are included on your invoices. These mandatory details are stipulated in sales tax law. It is important to distinguish between “standard” invoices and small-amount invoices. Small-amount invoices are defined as all invoices up to an amount of 250 euros. For these, certain details may be omitted. First, we’ll list the general mandatory details before moving on to the exceptions for small amounts at the end.
1. Name and Address
First, it is important that your full name and address, as well as those of your customer, are included on the invoice. Pay particular attention if your customer’s shipping address and billing address differ. The shipping address is irrelevant for your invoice; only the billing address belongs on the final document.
2. Tax ID or VAT ID?
Another mandatory detail is the tax ID number. If you’re a new business owner who only issues invoices in Germany, you’re on the safe side with the tax ID number (an eight-digit number). However, if you’re issuing an invoice to customers abroad, you must provide your VAT identification number (VAT ID) instead of the tax ID number.
3. Issue Date and Delivery Date
The issue date is essential for an invoice. In addition, you should specify the delivery date. This applies to both goods and services. If an exact delivery date is unknown, you can specify the calendar week or month instead. The issue date of the invoice, however, should be precise.
4. The invoice number
Every invoice must also have an invoice number. You can generally choose the invoice number as you see fit. A combination with letters is also permitted. The only important thing is that the invoice numbers are unique and sequential! Example:
- 00001, 00002, 00003, etc.
- ABC-0001, ABC-0002, ABC-0003, etc.
As long as the numbers follow a system and are sequential, the combination is therefore freely selectable.
5. Scope and Type of Service
The core of the invoice consists of the service you have provided to the customer. In addition to the type of service, the respective quantity must also be included. This “standard commercial description” must be specified on the respective invoice for goods delivered or services rendered. Always ensure that unambiguous identification is easily possible. Always keep in mind that the tax authority must also understand what service is being provided—not just the customer or you. In case of doubt, it’s better to include too much (rather than too little) information!
6. Invoice Total and Sales Tax
In addition to all this information, you mustn’t forget the most important part: the price or invoice total! Each listed service is assigned an amount on the invoice. It is important to note that amounts subject to different tax rates must be listed separately. Below this, all amounts are totaled to give a net amount.
At the bottom of the invoice, you must list the sales tax (7% or 19%). This is followed by the calculated tax total and the gross total amount. The various items should be listed separately one below the other to ensure clarity and an organized layout.
Exception: Small-amount invoices under 250 euros or small businesses
As mentioned earlier, there are exceptions for small-amount invoices and small businesses. As tax advisors in Düsseldorf, we also serve clients with smaller businesses. If you are a new business owner issuing only small invoices up to 250 euros, special rules apply to you. The following items are no longer required:
- The customer’s name and address are not required.
- The invoice number is not required.
- If you are a small business owner exempt from sales tax, you may omit the itemized listing of individual amounts. The gross total and a note regarding the tax exemption are sufficient.
We’ll cover the specifics for small business owners in another post.
Check the invoice thoroughly
This overview of the most important details for your first invoice as a new business owner can serve as a guide. Of course, it is important that you thoroughly check your first invoices in particular. If you want to play it safe, you should seek advice from an expert. Our tax advisors in Düsseldorf and Oberhausen can help you review your invoice with industry-specific knowledge, thereby making your start as a business owner easier.
