How to Invoice a Company as an Individual
Learn how to properly invoice a company as an individual, from preparing your bill to understanding the financial steps for getting paid.
As an individual providing services or goods to a company, understanding how to properly invoice is key for timely payment and maintaining clear financial records. An invoice serves as a formal request for payment, detailing the work performed or products supplied. It acts as a document for both parties, facilitating accurate accounting and serving as a legal record of the transaction.
Required Information for Your Invoice
For efficient processing, your invoice needs accurate and complete information. Your full legal name, current address, phone number, and email address should be clearly displayed. Include the company’s full legal name, their official address, and, if known, the name or department of the relevant contact person for payments.
Each invoice requires a unique identifier, such as an invoice number, along with the date the invoice was issued and the specified payment due date or payment terms, like “Net 30” for payment within 30 days. You must provide an itemized list of services rendered or goods provided. This includes specific dates of service, a clear description of each item, the quantity, the agreed-upon rate, and the individual subtotal for each line item.
The grand total amount payable should be prominently displayed. Detail your preferred payment instructions, such as bank transfer details, a PayPal address, or the mailing address for checks. Your Taxpayer Identification Number (TIN), which can be your Social Security Number (SSN) or Employer Identification Number (EIN), may be required for tax reporting, especially if a company requests a W-9 form. Provide this sensitive information only when specifically requested and for legitimate tax compliance reasons.
Creating Your Invoice
Once you have gathered the necessary information, assemble it into a professional document. Several methods exist for creating an invoice. You can use pre-made templates from word processing software or online sites, which offer a structured format.
Alternatively, simple invoicing software or online tools provide user-friendly interfaces to generate invoices. For those who prefer a customized approach, creating an invoice from scratch using a word processor or spreadsheet program allows full control over the layout. Regardless of the method chosen, ensure the design is clean, clear, and professional, prominently featuring “Invoice” as a header. Before sending, save the completed invoice as a Portable Document Format (PDF) file to preserve its formatting and prevent unauthorized alterations.
Submitting Your Invoice
Once your invoice is prepared, submit it to the company. Email is the most common and efficient submission method; when sending, use a clear subject line, such as “Invoice [Your Name] – [Invoice Number] – [Company Name],” attach the invoice as a PDF, and include a brief, professional message in the email body. Some companies use specific online vendor portals for invoice submission, which may require you to register and upload the document directly through their system.
Physical mail remains an option where electronic submission is not feasible or preferred, requiring you to print and send the invoice via postal service. After submission, confirm receipt, especially with new clients, to ensure the invoice is received and processing. If payment is not received by the stated due date, a polite reminder email or phone call can serve as a follow-up.
Understanding Your Tax Obligations
As an individual earning income through invoicing, these earnings are considered self-employment income by the Internal Revenue Service (IRS). You are responsible for reporting this income on your annual tax return, often through Schedule C, Profit or Loss from Business, which calculates your net profit or loss from your business, determining your taxable self-employment income.
Self-employed individuals are required to make estimated tax payments quarterly to cover their income tax and self-employment taxes. These estimated payments include Social Security and Medicare taxes, which total 15.3% of your net earnings from self-employment (12.4% for Social Security and 2.9% for Medicare). This is necessary because, unlike traditional employees, no employer withholds these taxes from your payments throughout the year. Quarterly payment due dates are April 15, June 15, September 15, and January 15 of the following year.
Maintaining meticulous records of income and business expenses is important. Deductible expenses, such as supplies, home office costs, or professional development, can reduce your taxable income, which is important for tax preparation. Companies might issue you a Form 1099-NEC (Nonemployee Compensation) if they pay you $600 or more for services in a calendar year. This form reports the income you received to both you and the IRS. This information is for general guidance; consulting with a qualified tax professional can provide personalized advice tailored to your specific financial situation.