How to invoice as a sole trader, with a filled-in ABN sample

Do you actually have to send an invoice?

There is no single law that says a sole trader must issue an invoice for every sale. Three separate rules decide it between them, and for most jobs at least one of them applies — which is why the practical answer is yes.

If you sell to a consumer, the Australian Consumer Law requires you to give proof of the transaction for a sale of $75 or more excluding GST, as soon as practicable. Below that you only have to provide it if the customer asks, and then you have seven days. A tax invoice counts as proof; so does a plain invoice or a receipt, provided it shows who you are, your ABN, the date, what you supplied and the price.

If you are registered for GST and a customer asks you for a tax invoice, you must provide one within 28 days of the request — unless the sale is $82.50 including GST or less. If you are not registered for GST, this rule cannot apply to you, because you are not allowed to issue a tax invoice at all.

And separately from both: a business customer paying you needs your ABN in writing, or it has to withhold tax from your payment. That is covered below, and on its own it settles the question for business-to-business work.

• Selling to a consumer, $75 or more ex GST — proof of transaction required
• Selling to a consumer, under $75 ex GST — only if asked, within 7 days
• Registered for GST and asked for a tax invoice — within 28 days, unless the sale is $82.50 inc GST or less
• Billing a business — no ABN on the paperwork means tax withheld from your payment
• Every case — you need the record yourself, for five years

Invoice or tax invoice — which one you are allowed to issue

This is the fork in the road, and it is decided by one thing: whether you are registered for GST. It is not decided by whether you have an ABN. Plenty of sole traders have an ABN and are not registered, which is normal and legal.

If you are not registered, you must not head the document "tax invoice" and you must not charge or show a GST amount. Head it "Invoice" and leave GST off the page entirely. If you are registered, you issue a tax invoice and the GST rules apply in full.

The fields on a sole trader's invoice

Short list, and none of it is decoration. Every line here is either required or is the difference between being paid this month and chasing it next month.

• Your name or trading name, and your ABN.
• The word Invoice — or Tax invoice, only if you are registered for GST.
• A unique invoice number you can find again.
• The date you issued it.
• The customer's name, and their ABN if they have one.
• What you did, with quantity or hours and the rate.
• The total, and a GST line only if you are registered.
• A real due date, written as a date rather than "net 14".
• Bank details in full, including the account name.

Sample sole trader invoice — not registered for GST

A filled-in example you can copy line for line. The business, customer and figures are made up; swap in your own. Note what is missing on purpose: the words tax invoice and any GST line.

The same invoice once you are registered for GST

Same job, same customer, after registering. Three things change: the heading, a GST line appears, and the total goes up by 10% if GST goes on top of your price. If you would rather keep the total at $600 and absorb the GST, the GST inside it is $600 divided by 11, which is $54.55.

How to invoice with an ABN, step by step

The whole process, in the order you actually do it. The first step decides what the rest of the invoice looks like.

• 1. Check whether you are registered for GST. That decides Invoice or Tax invoice.
• 2. Put your name or trading name and your ABN at the top.
• 3. Give it the next number in your series and today's date.
• 4. Add the customer's name, and their ABN if they have one.
• 5. List what you did — hours or quantity, rate and line total.
• 6. Add the total, with a GST line only if you are registered.
• 7. Write a due date as an actual date, and your full bank details.
• 8. Send it as a PDF the day the work finishes, and keep a copy for five years.

Leaving the ABN off can cost you 47%

This is the expensive one. Where a business pays another business for goods or services and the supplier does not quote an ABN on the invoice, the payer is generally required to withhold tax from the payment at the top rate and send it to the ATO. You eventually get it back through your return — but not this quarter, and not without paperwork.

There are exemptions, including for payments under a threshold and for supplies that are not made in the course of an enterprise. The practical rule is simpler than the exemptions: put your ABN on every invoice and the question never arises. Check the ATO's guidance on withholding where no ABN is quoted if your situation is unusual.

When you have to register for GST

GST registration is a turnover question, not a preference. You must register once your GST turnover reaches the registration threshold, and immediately if you drive taxis or rideshare regardless of turnover. Below the threshold registration is optional.

The thresholds are set by the ATO and are different for non-profits, so check the current figure on the ATO's own page rather than a number copied from a blog. What matters for your template is the consequence: the day you register, your invoices change heading, gain a GST line, and your prices need a decision about whether GST comes out of your rate or goes on top of it.

GST is 10%, so a $100 fee becomes $110 with GST added, and a $110 GST-inclusive total contains $10 of GST — divide the total by 11, not 10% off the total.

Numbering, and keeping the records

Number invoices sequentially from one series, with no gaps you cannot explain. INV-0001 upwards is enough. Numbering by date alone falls apart the day you issue two on one day, and restarting each year makes an old invoice ambiguous.

Keep every invoice for five years from when you prepared it or from when the transaction was completed, whichever is later, in English and readable. PDFs in a folder named by invoice number satisfy that. A spreadsheet you overwrite does not.

How to send it

Send a PDF, not a word processor file and not a spreadsheet. A PDF looks the same on the recipient's screen as it did on yours, cannot be edited into a different number by accident, and is what an accounts inbox expects. Attach it; do not put the invoice in the body of the email and leave it at that, because the person who pays it is rarely the person who reads the email.

Name the file so it survives being saved into somebody else's folder — your name, the invoice number and nothing else. INV-0007-JaneSmith.pdf is findable six months later; invoice.pdf is the fourth file called invoice.pdf in that folder.

Put the invoice number, the amount and the due date in the subject line. Accounts teams work from a queue, and an email whose subject is "Invoice" joins the back of it. Ask who invoices should go to the first time you work with a business — the person who hired you and the person who pays you are usually different, and an invoice sitting in the wrong inbox is the most common reason a correct invoice goes unpaid.

Keep your own copy at the moment you send it rather than later. The five-year clock is on you, not on your customer.

Getting paid, which is the actual point

A sole trader's invoice fails commercially long before it fails legally. These are the things that move the payment date.

• Send it the day the work finishes, not at month end.
• Put the due date in words and figures on the invoice, not in the covering email.
• Include the purchase order or job reference if the customer uses one — invoices without it stall in accounts payable.
• Give one payment method with complete details. A missing account name gets a phone call, and a phone call gets forgotten.
• Keep your own copy in the same place every time, so a follow-up takes a minute.