How to Invoice as a Sole Trader in Australia

As a sole trader in Australia creating a professional and correct invoice is essential to getting paid on time and ensuring that your business runs smoothly. This guide will step through the key elements you need to include in your invoices.

What is a Sole Trader?

A sole trader is the simplest form of a business structure in Australia. As a sole trader you personally are responsible for all aspects of your business, including debts and liabilities. Many freelancers, consultants, and small business owners operate as sole traders due to the ease of setup and minimal regulatory requirements.

Invoice vs Tax Invoice

It's important to understand the difference between a standard invoice and a tax invoice. A tax invoice is a specific type of invoice that includes additional information for GST registered businesses. If your business is registered for GST (Goods and Services Tax), you must issue a tax invoice for sales over $82.50 (including GST). If you're not registered for GST, you can simply issue a standard invoice.

Essential Invoice Requirements for Sole Traders

According to the ATO, a valid tax invoice must include specific information. Here's what you need to include:

1. Tax Invoice Heading

• Heading of "Tax Invoice": This should be prominently displayed at the top of the invoice.

2. Your Business Details

• Business name or your name: If you're trading under a business name, include it on the invoice
• ABN (Australian Business Number): Your ABN should be included on every tax invoice
• Contact details: It's a good idea to include your business address, phone number, and email

3. Your Client's Details

• Client's name or business name: Include the name of the person or business you're invoicing, this is required for tax invoices over $1,000
• Client's ABN: Include the ABN of the client, this is required for tax invoices over $1,000 where the client's name is not included
• Client's contact details: It's helpful to include the client's address and email for record keeping

4. Date of Issue

• Invoice date: The date the invoice is issued should be clearly stated
• Due date: The date by which payment should be made

5. Description of Goods or Services

• Description: Briefly describe the goods or services provided.
• Quantity: Include the quantity of items or hours worked

6. GST Amounts

• Include the GST amount payable, either separately, or if your GST amount is exactly 1/11th of the total price you can include a statement such as "Total price includes GST"
• If GST is included in the total price, include a statement such as "Total price includes GST", otherwise clearly state the GST amount payable for each sale, or $0.00 if no GST is payable on the sale item.

Best Practices for Sole Trader Invoicing

Keep It Professional

Your invoice is a reflection of your business. Use a clean, professional template to create a consistent brand experience.

Send Invoices Promptly

Don't delay sending your invoices, the sooner you send them the sooner you can expect payment. It's also a good look for your professionalism.

Make it Easy to Pay

Ensure you include clear payment instructions on your invoice. Specify accepted payment methods (e.g., bank transfer, credit card, PayPal) and provide all necessary details such as bank account numbers or payment links. The easier you make it for clients to pay, the more likely you are to receive timely payments.

Keep Detailed Records

For sole traders in Australia records must be kept for at least five years. Store copies of all invoices and their payment status in an organized system, whether digital or physical.

Use Invoice Software

While you can create invoices manually, using invoice software like Sole Invoice can save you time and reduce errors. Good software will:

• Automatically calculate GST
• Generate sequential invoice numbers
• Store client information for easy reuse
• Track payment status
• Provide easier reporting at tax time

What If You're Not Registered for GST?

If your annual turnover is below $75,000 and you're not registered for GST, you can't charge GST on your invoices. Instead of calling it a "tax invoice," simply use "invoice." You should still include your ABN and all other required information.

Making Invoicing Easier

Invoicing does not have to be complicated or time consuming, which is why software solutions have been built to simplify the process for sole traders and freelancers. Sole Invoice has been built especially for Australian sole traders and freelancers to make invoicing quick, easy, and compliant.