The Importance of Invoices
Invoicing isn’t the most enjoyable aspect of running a business, but it is a requirement for most sales. There are many businesses that don’t understand why they need to issue invoices or the benefits of doing so. Invoicing is not only a tax obligation, but it can also give you control over your business’s cash flow and finances.
When choosing an invoicing software for your business, you shouldn’t base your decision solely on the fact that you are required to issue invoices for your sales. You should also consider the other benefits that invoicing software can provide for your business.
This article explains the importance of invoices as a tax obligation, but also for business control over your taxes, cash flow, and management decisions.Start invoicing for free
Invoices as a tax obligation
In the US, it’s only mandatory to issue invoices for business-to-business (B2B) sales. Most freelancers and small businesses also opt to issue invoices to consumers in order to keep a thorough record of all their income and sales.
Therefore, both self-employed workers and companies can use their invoices for record-keeping purposes and to declare their income to the tax authorities.
The importance of invoices for business control
If you run a business, you can also manage your invoicing to be able to control your taxes, payments, purchases, and decisions.
Invoicing software can help you keep track of how much tax you’ll need to pay. Some invoicing software includes accounting features such as the sales tax report which outlines the tax accrued from sales and the input tax from purchases. From this report, you’ll be able to see how much you will owe the tax authorities, or how much will be refunded to you.
This is important to keep track of throughout your tax reporting period to make sure that you’re not handed a large tax bill that will negatively impact your cash flow.
In addition, if you’re a registered corporation, you can also keep track of corporate tax. Invoicing software will make it easier for you to find the information needed for your corporation tax return and calculate your tax bill.
Invoices for control of your cash flow
Another benefit to invoicing is to control your incoming and outgoing payments. Regardless of whether you’re a freelancer or a corporation, keeping track of your cash flow can help keep your business in a healthy financial state.
It’s important to regularly check which invoices have been paid, and which invoices are overdue and require follow-up. Invoicing software can assist you in making sure that no invoices are overlooked.
Invoicing software, like SumUp Invoices, can help you download a customer account statement, which includes the amount invoiced, the amount paid, and the remaining balance due. This can help your customer settle any outstanding balance quickly, without having to search for an old invoice.
This way, you can easily claim those invoices that have not been collected. You can also use these findings to determine which customers are good payers and which are not. If a customer regularly pays invoices late, you should consider stricter payment terms.
Invoices for management decisions
Invoicing can also help a business make important management decisions about its future activities. If your business is involved in several different projects, invoicing can help you determine which projects you invoice the most and which projects are not making an impact.
From there, you can determine which activities you should focus more on, and spend more time and money improving. Alternatively, you can also make decisions about which activities to stop spending money on or eliminate entirely.
SumUp Invoices: Invoicing software
SumUp Invoices is invoicing software that can help your business issue professional invoices and manage your finances.
Every invoice you create will be saved in the cloud so you can access your data from any device with an internet connection. You can also export your data, invite your accountant, and print your documents for your records.
SumUp Invoices can help you complete your tax return and keep track of your cash flow and taxes. With our simple and intuitive software, you can create invoices in less than 1 minute and send them to your customers’ email.
Every invoice will automatically include a payment link so your customer can pay instantly and effortlessly online. As soon as the customer has paid the invoice, the invoice will be reconciled and marked as paid.Start invoicing for free