First Time Freelancing: Invoice/Tax Issues

V.A.T Is not needed... infact, you proberly wont need to be v.a.t registered for the future either. :)

Just send them an invoice for £500. With details of how to pay you and within a time limit... (within 30 days MAX).

Also, for the invoice number...add a few digits e.g:

invoice #234 (even though it is your first)

This way, it makes you look more experience.


Sorry if you know that already, just thought I'd help 🙂

Thank you for this 🙂

Hi there,

The rules for collecting VAT are based on how much you invoice for in a given year.

At the moment, you only need to register and collect VAT if you invoice more than £64,000 in a tax year.

If you are a sole trader, that means between the first April 6th after you start trading and April 6 the following year, if your are trading as a company it means the first full year from your incorporation date.

In short, your accountant will tell you when you need to register for VAT, so you do not have to worry about it. Assuming your accountant is doing his job properly.:eyes

VAT sucks. It makes you an unpaid tax collector for the state. It is one of the reasons I burn flags on weekends.

Regarding your invoice:

The 2007 budget has raised some fairly thorny issues concerning the transfer of tax debt for freelancers.

Without going into the detail, this means that a lot of firms will require (when their lawyers get around to reading the budget) verification of a freelancers tax status.

If you trade as a company (very foolish after the 2007 budget), your tax status verification is your registered company number. Stick that puppy under your company name on the invoice and it is all good. You should also include your registered office address, although with a company number anyone can get that from the web, so don't let anyone lecture you about your invoice because of an address. The number is the key.

If you trade as a sole trader, you must have a tax reference number on your invoice, your NIC number.

This tax reference is linked to your status as a sole trader by the HMRC. This is done when you complete and register your CWF1 form.

The CWF1, as we all know, is the form you must send to the HMRC when you become a sole trader. Right? Right.

On the other hand, under english law you can still agree verbally to do work and then accept cash payment.

As long as you and the client write the correct ledger entries in your respective books, jesus loves you. So the only real with invoices, as far as a sole trader is concerned, is to make sure they get paid.

The best way to get your invoices paid is to always sound confident when you ring up to ask when it will be paid. Sound like you totally expect it to be paid when they say it will be paid. Get offended if the format is questioned.

A lot of business play power games with freelancers, holding your money and watching you react. Partly this is to punish you for earning more than the norm, partly it is to show who is the boss.

I have other tips for making sure invoices get paid, but they are more legal advice on contracting, and not really forum discussion stuff.