How To Invoice As A Sole Trader In The UK + FREE Invoice Template

Creating your own business means a lot of hard work and determination. At some point, your business will move from potential and a work in progress to a real, fully functioning business with paid clients. 

This is an exciting moment – but there is one small hurdle that might stand in your way: invoicing.

If you’ve never had to create an invoice before or are looking for the best way to invoice for your business, we’re here for you. Discover the answers in this guide for how to invoice as a sole trader in the UK. And to make it even easier, we’re also giving away a free invoicing template that you can use today to start invoicing your clients.

What is an invoice?

An invoice is a document recording the goods or services provided, the cost of these items, and terms of payment. Basically, it’s like a detailed bill that you send to clients in order to get paid. 

Invoices are more than a request for payment, though.

They also have an important purpose in maintaining your records, tracking payments, and providing legal protection by serving as proof of the agreement between buyer and seller.

If anything goes wrong, you need to make sure that you have correct and accurate invoices to back you up. 

What do I need to include on an invoice? 

There are a few different types of invoices that you can create (we’ll cover that later!) but as a bare minimum, there are some pieces of information that need to be on there. This includes: 

  • A unique identification number, so you can identify each invoice that you send out in your records
  • Your name and any business name that’s being used
  • Your contact information, including an address where legal documents can be delivered to you if you’re using a business name
  • The name and information of the client, including business information if you’re providing goods or services to a business
  • A description of what you are charging for. Make sure this is clear as possible to avoid any uncertainty down the line
  • The supply date, i.e. the date the goods or services were provided
  • The date of the invoice
  • The total amount being charged, including VAT amount if that’s relevant
  • The total amount owed and the date owed by

You’ll also need to include information on how clients can pay your invoice. If you’re expecting payment by bank, this includes your bank name, account name, account number, and reference number. 

If you haven’t already, this is a good time to think about making sure you have a business bank account set up. 

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We’ve included all the above in a FREE downloadable invoice ready for you to edit and customise to your needs. Click here to download a copy of our free sole trader invoice template.

What types of invoices are there?

There are different types of invoices that you can send, based on the goods/services on offer and how they are priced. For example, some sole traders will charge a set price for a completed service, others may have to charge for individual parts and labour, while others charge based on time. 

The different types of invoices are: 

1. Pro forma invoices 

A pro forma invoice is like a typical invoice in which the goods and services are listed at a set price. However, this one is sent before any goods or work are provided, with an agreement that the work will be supplied on a specific date. 

This is an invoice that you would use to make sure clients pay upfront before using your services. If you’re worried about people not paying, this type of invoice could be a good idea for you to use. 

However, some clients won’t like the idea of paying upfront for goods they haven’t received, especially if they haven’t worked with you before. If you’re just starting out as a sole trader and haven’t got any reviews yet, this one might be a hard sell. 

2. Commercial invoice

You should only worry about commercial invoices if you are selling internationally.

This is an invoice that’s used for customs declarations if you’re selling across borders. This document is designed to help customs authorities process your goods and correctly work out the right taxes and import duties to apply, reducing delays. 

If you’re not selling internationally, then you don’t need to worry about this one. 

3. Credit notes

Credit notes are technically a form of an invoice, but where credit is issued when someone returns goods due to damages or mistakes. It’s basically a negative invoice. Depending on what is returned and the cost, this might mean that customers completely cancel an invoice amount out, or pay a reduced rate. 

4. Timesheet invoice

A timesheet invoice is an invoice in which you are paid for your time. In it, you will list your hourly rate and the amount of time that you’ve spent on the client to create the total owed amount. 

So if you offered photo editing services at £50 an hour and spent 5 hours on a project for a client, the total amount would come to £250. 

If you work on a time basis, there are certain accounting tools that will track time for you and automatically create invoices based on this. Find out more in our review of the best accounting software for sole traders here. 

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5. Retainer invoices 

A retainer invoice is a way of getting clients to pay upfront for goods or services that they will access over the coming weeks or months. 

For example, a sole trader could sign up a client onto a £500 monthly retainer. They’ll be sent this as a retainer invoice, and then all work done for this client will be deducted from the retainer.

This type of invoice tends to be used by clients that request multiple works and projects, so they can request work as and when they need it rather than pay multiple bills for each task. 

6. Recurring invoices

These are invoices that… are, well, recurring. They are set up for regular ongoing payments for goods or services like subscription fees. 

If you’re using accounting software for your invoices, you will be able to set these up automatically to avoid the manual labour of sending them out every month, quarter, or year. 

No matter which type of invoice you want to use, get started with our free downloadable template here.

Do you need to use VAT invoices as a sole trader? 

If both you and your customer are VAT registered, you must provide a VAT invoice.  VAT invoices are essential for VAT purposes. Yeah, that sentence doesn’t sound exciting out loud – but it’s basically a way of breaking down all the VAT charged on goods and services so that companies can correctly do their VAT returns. 

VAT invoices also must be issued within 30 days. If you provide the goods or services upfront, this date will be within 30 days of supply. If a customer is prepaying for goods or services, you need to provide a VAT invoice within 30 days of payment. 

You don’t need to verify if a customer is registered for VAT before providing a VAT invoice. If you’re registered for VAT, it can be a good idea to use VAT invoices as common practice. Otherwise, you can send VAT invoices out to those who request it. 

What is a VAT invoice? 

A VAT invoice is like a standard invoice, except that it also includes a breakdown of the VAT charges and your VAT registration number. 

When charging for VAT, there are 3 types of rates that you can use: Standard, reduced and zero-rated. Most goods and services will be charged at the standard rate of 20%, making it relatively easy to work out the cost.

If you’re using the free invoice template, a VAT invoice would follow the same rules – but have an extra VAT column at the end, like this: 

Goods providedUnit priceQuantitySubtotalVAT @ 20% 
Phone case£151£15£3
Key chain£101£10£2
Screen protectors£54£20£4

There are certain items that have a reduced VAT rate of 5%, such as child car seats, domestic fuel or power or even mobility aids if they’re for someone over 60 and installed in their home. 

If you’re exporting goods from Great Britain outside the UK, or from Northern Ireland to somewhere outside the UK and EU (or a VAT-registered EU business) – you will charge a zero rate VAT on these items. That means that you will charge 0% – but you need to ensure that you still account for and list this charge on the VAT invoice. 

In practice, the invoice might look like this: 

Goods providedUnit priceQuantitySubtotalVAT @ 0% 
Phone case£151£150
Key chain£101£100
Screen protectors£54£200

Can I invoice international clients as a sole trader? 

You can absolutely invoice international clients as a sole trader. For the most part, you can use your invoice template as normal. However, there is a choice you must make when it comes to currency. 

Some people prefer keeping sterling as the currency amount to make it easier and keep it the same as the rest of their business. However, some clients prefer to pay in their own currency, so you need to decide if you will bill in other currencies, such as dollars or euros and how you will manage the exchange rate for the transaction. 

It’s also worth checking the VAT rules on selling goods overseas, as you might need to include zero rate VAT on your invoices depending on who you’re selling to (see above!). 

Before you create invoices for international clients, it’s a good idea to check to see if your bank account is set up to take non-sterling transactions. If it’s not, you might want to consider opening up a business bank account with international features – particularly if this will be a common occurrence for you. If you do a lot of international sales, it might also be worth getting forward cover (Forward Exchange Contracts) from your bank. This cover locks in the current exchange rate when invoicing, so you don’t lose out if the rate suddenly drops while waiting for payments to arrive. 

Can you use software to create invoices?

Software is one of the easiest and fastest ways to create your invoices.

Absolutely! There are dozens of platforms that you can use to automatically create your invoices for you, saving you the time and effort of making them yourself. All you’ll have to do is use their template, fill in your information, and you’re good to send. 

If you use PayPal, you could even use their native invoice feature. However, the best place to make invoices is through accounting software, as this will be able to create time-saving templates that also integrate into your financial systems for easy bookkeeping.

With just a few clicks, you’ll be able to create and send an invoice, update your books and alter your financial projections and incomes all at once. If you use the time tracking method, some software also comes with time tracking tools to boot. 

Recommended Accounting Software To Create Invoices:

Accounting SoftwareCheapest PackageEase Of UseOur RatingReviewOfficial Site
ANNA ReviewFREEOutstanding
Read ReviewVisit Website
FreeAgent reviews£19/moExcellent
Read ReviewVisit Website
Quickbooks Reviews£12/moExcellent
Read ReviewVisit Website

Find the best accounting software to make invoicing and bookkeeping easy here.  

What happens if a client doesn’t pay an invoice?

The first step to making sure that a client pays is to make sure that the invoice you are providing is correct and accurate. This includes clear instructions on payment terms, including when payment is due. 

However, it’s worth noting that if you haven’t outlined any payment arrangements, you have a right to be paid within 30 days of issuing your invoice. 

If you haven’t heard from the client approaching the deadline, it’s worth sending out a friendly reminder to prompt them to make payment. 

If the deadline comes and goes, and you haven’t received any money, there are a couple of options that you can take. Firstly, try to reach out to them again. Although not being paid on time isn’t good for you, it might be a genuine mistake. So let them know that they’ve missed the deadline and what they owe. 

To prevent late payments, you could add a late payment fee to the terms of your invoice. For example, if payment is late, you could charge an extra 10% for the first 10 days.

If payment still hasn’t been received, you could then choose to charge an extra 20%. If clients see this in writing, they’ll be less inclined to take chances with late payment. 

​​If you still have not received any payment, or if a client is refusing to pay, then you can escalate this matter. These are some of the options you can take if you’re owed money: 

  • Mediation. This is where you are assigned an impartial 3rd party to step in and negotiate between both sides to see if you can come to an agreement. This is the easiest and less expensive method to use, so it’s always worth a try. 
  • Court action. If your client is uncooperative, you can take them to court by making a claim for the unpaid balance. If this balance is under £100,000 you can make a claim on the GOV.UK website. Otherwise, this will have to go through a country court. 
  • Statuary demand. This is a written warning from a creditor, where it threatens the client with starting court proceedings to make them bankrupt if they don’t pay the outstanding balance. Once this demand has been sent, the client has 21 days to pay or reach a new agreement with you. 

If further action is needed, you could apply to bankrupt your client or liquidate them, depending on the amount owed. If you’re worried about unpaid invoices, find out more about why a client might not pay and what can be done about it in our guide to unpaid invoices here. 

Invoicing as a sole trader in the UK 

In our guide, ‘how to invoice as a sole trader in the UK’, we covered what invoices are and the different types of invoices that you might want to send depending on the goods and services that you offer as a sole trader. 

Whichever method you go for, make sure that you always include the right information, such as a detailed description of the cost, payment information, and terms. If you want to create invoices yourself, we’ve got just the tool you need to get started with our FREE downloadable invoice for sole traders.

If you’re looking for quick and easy ways to invoice, doing it through your accounting software is the best method that you can do.  Creating invoices through your accounting software will also help keep your records accurate and up to date, as well as work out the right amount of tax to pay each year.

If you need a little more help on your taxes, make sure to check out our accounting help section, including helpful guides like what expenses you are able to claim as a sole trader.

Top-Rated Accounting Software:

Accounting SoftwareCheapest PackageEase Of UseOur RatingReviewOfficial Site
FreeAgent reviews£19/moExcellent
Read ReviewVisit Website
ANNA ReviewFREEOutstanding
Read ReviewVisit Website
Quickbooks Reviews£12/moExcellent
Read ReviewVisit Website

View All

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Business4Beginners has been advising new businesses owners since 2013. The founder, Paul Bryant, has created, grown and sold several successful businesses and remains the editor and fact-checker of all content published on the site.
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