02 Sep How To Pay Yourself
So, you’ve taken the jump into self-employment. You’ve won your first client and done the work. Now how do you get paid?
Quite simply, you must issue an invoice to your customer and provide with them with the means of making a payment.
What an invoice must contain
Firstly, the document that you produce must display the word ‘Invoice’, beyond that it must contain the following details:
- A unique ID – we suggest sequential numbering to avoid duplication
- The date that the invoice is created
- The business name, address and contact information
- The name and address of the person or business being invoiced
- A description of the goods or services supplied
- The amount charged
If the business is VAT registered, the invoice must also contain the following:
- The VAT registration number
- The amount of VAT included on the invoice
- The total amount of the invoice, including VAT.
In some circumstances, such as if work is sourced via an agency, instead of issuing an invoice to the customer, they will create their own invoice called a ‘self-bill’ based on a timesheet and provide a copy. Where self-billing arrangements are used, the supplier should not create their own versions of invoices as HMRC require that accounts and VAT calculations use the details form the self-bill.
At Alchemy Accountancy, we advocate the use of two cloud bookkeeping services, FreeAgent and Xero, (the recommendation will depend on your business requirements). Each of these systems will automatically create invoices which contain all the required information and can be configured to send automatic chaser emails to late payers.
Providing your business bank details to a client will enable them to make payment via BACS, CHAPS or Faster Payments. However, some businesses may benefit from implementing Direct Debit services for recurring payments, card payment services for online payments or a Point of Sales system if dealing with the public. Through our recommended bookkeeping applications, these services are more accessible than ever and will integrate with the bookkeeping applications to provide the most accurate and up to date information to business users.
To learn more about how to get paid, or if you have any questions in general about how best to run your business, get in touch with a member of the Alchemy Accountancy team today! Email us on firstname.lastname@example.org or call us on 01772 965550.