I know you are not an accountant, I know numbers are not your thing, I know tax invoices are not the most exciting topic, but sending out invalid invoices says a lot about your business – and it is not all good news.
“I know I shouldn’t judge, but I hustle just as hard as the next entrepreneur, I work 60+ hours per week, have two kids, pay my taxes, always pay my staff before myself – and if you are running a business it is vital you get this basic step right.”
So what are your invoices saying about you? Are you even issuing valid invoices? What the heck is a valid invoice? Why should you even care?
Ok, so let me give you an example. Earlier today I was doing a bit of “Instagram surfing” and spotted something that would be perfect for my mum and sister who have birthday’s in January and February (my Christmas shopping is done so I am planning ahead). As I was adding items to my cart – and one for me for good measure – and I thought to myself, these would make great gifts to clients at end of financial year – so for 30th June 2017.
Yes, as a business owner I plan my business up to 6 months in advance. I even get a bit excited for grabbing a bargain in the Christmas sales, supporting another local business owner and knowing that my clients will receive a funky and original gift. Heck – hit me up if you have things you think my clients would love (Australian businesses only – that’s my rule).
So, you can imagine my shock that the invoice I received by email did not have an ABN on it, the business website I ordered from had a different name to the emailed invoice and there was no mention of GST whatsoever.
“Yes, I might be at times an anal accountant, but there are very strict rules around business names, ABN’s and valid tax invoices.”
So sadly, this business just lost $1000 of sales as I can’t buy anything for my business if the supplier does not provide a valid invoice – as that cost is then not a tax deduction. Why would I risk it?
So how can you ensure your invoices are valid, correct and not upsetting your potential sales funnel:
- Always make sure your invoice has your business ABN on it. This is a mandatory requirement from the ATO (not my rule – so don’t get cranky at me).
- Always make sure your business name that you are trading under is attached to that ABN. For sole traders, this is vital. In plain English, this means if I was a sole trader my invoices could just say “Stacey Price”. However they could not say “Stacey Price Accounting & Bookkeeping” – as that is not my name (thank god). So if I wanted to trade under that name as a sole trader I would need to register that trading name with ASIC and link it to my ABN.
- Always send an invoice. I know, I know – but that is time consuming and boring (I can hear you from here!). But why is it time consuming – your website or bookkeeping software should do this for you at the click of a button.
- Understand the difference between a hobby and a business. Just because you are not earning “a shit load” does not mean you are automatically a hobby. Don’t ever make that assumption without understanding the rules. In this day and age, social media is a great market place, but the ATO can deem that to be running in a commercially viable manner – so that could mean business. Know the ATO rules (and get a great accountant on your team)
“Running a business is hard work. Bloody hard work. There is so much to get your head around – and if numbers are not your thing, then stop bashing your head against a brick wall and get the qualified help that you need.”