How to make your first invoice as an independent contractor

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As an independent entrepreneur or small business owner, you have to manage every part of your business yourself. Because there is no specific workforce to handle bureaucratic and administrative responsibilities, mistakes are more likely to occur. This can lead to a build-up of fines and penalties, as well as overdue invoices that lead to late payments.

But, at least when it comes to writing an invoice, it’s not the end of the world. It won’t be too difficult for you to work as an independent contractor if you have developed a solid procedure and know what to put on each invoice.

In this article, we’ll go over everything you need to know about creating a professional invoice! By the end of the read, you’ll know how to charge contractor labor on autopilot, with dos and don’ts, pro tips, and important things covered.

How to invoice as an independent contractor?

This chapter offers general advice on how to create contractor invoices and how it relates to various aspects of self-employment (professionalism, taxes, time management, etc.). If you want to access more specific information, look below this section.

For self-employed workers and independent contractors who manage their own invoices, three factors are essential:

  • Keep track of time
  • Excellent planning
  • Consistency

While this is true for all employees, this is especially true for invoices from independent contractors. If you bill customers by the hour, time monitoring is obviously important.

Whether you are billing by word, by product / service / unit, or otherwise, it’s just as vital to know the actual number of hours that particular tasks require from your workday. This is not only an important aspect of effective time management, but it will also help you be more precise when estimating income for specific periods.

The most important part of the invoice form that you provide to your customers is the price per service / item. Incorporating the time it took you to complete them makes them appear more professional and clarifies the cost of your labor (especially for seemingly simple tasks that actually take hours).

Because a legitimate invoice requires a number of components, good organization is essential. Develop a logical method that covers all aspects of the job, and you’ll never have a billing problem again! When you add consistency to the equation, you’ve covered all the bases.

The importance of covering all of the above issues is underscored by the fact that filing income tax is a primary motivation for doing so. Since clients do not withhold anything for tax purposes, independent contractors must pay their taxes themselves.

You need to keep track of your income, business expenses, and tax deductions at all times to properly complete self-employment tax and pay your social security, health care, and income taxes.

What should be included in the invoice?

Include the following in your invoice to avoid mistakes, legal issues, and misunderstandings with your customers, as well as to maintain a professional image:

  • Document Name – this may sound simple, but be sure to accurately identify the billing document as such, preferably in black and bold type.
  • Your / company logo – to provide a sense of reliability and personalization.
  • Invoice number / code – To facilitate record keeping, assign dedicated numbers to each invoice; regular multi-digit numbers will suffice, but you can even create a custom code system that includes the invoice date and the customer’s name. This technique is more complex, but it can help you quickly find the specific invoice you need if there are a lot of them.
  • Include the send date in the invoice date to avoid miscalculation of the payment date (and others).
  • Your company information – logo, company name, your name and contact details (email, phone number and maybe address).
  • Customer contact details – same as in previous phase, but now add billing contact or billing department for large organizations.
  • List of Services – Include a brief explanation of each service you performed, along with the number of hours worked (or word count for writers), hourly charges, and the subtotal for each service.
  • Total Amount Due – the total cost of the above services; you can also include any applicable tax and flat rate if needed.
  • Payment terms – specify the payment methods you accept (PayPal, Payoneer, Skrill, bank account or other)
  • Payment deadline – Include a defined payment deadline to minimize the uncertainty that can arise if you write something ambiguous, such as “15 days from date of receipt of invoice”.
  • Late Payment Policy – if you have one, write down the facts and what happens if you are late.

You can customize the billing document as much as you want, as long as it covers the essential information. If you do too much for yourself, the solution is very close, you can just use a invoice generator to speed up the process.

Contractor billing errors to avoid

Here are the most common billing mistakes made by newcomers (and sometimes even seasoned entrepreneurs):

Forgetting to keep track of time

Tracking time can be as simple as putting start and end times in a notebook. However, using a time tracking software will do a lot more for you: in addition to a simple start / stop functionality, they can collect data that will help you know what is taking you longer than expected. , when you are most productive, etc. . In terms of billing, the use of software is much more transparent and reliable.

Have an invoice that is not ready

Prepare your invoice in advance; if you start to assemble it on the day you have to submit it, you might forget things or delay payment if you send it a day or two later. It’s best to start early and just fill it out as you complete the tasks according to the work order. In addition, if the invoice is sent in error with sales process errors or calculations, it is naturally very stressful for you.

Inconvenient bills to pay

Keep your invoices clean and simple with a simple, clean design – no tiny letters or fancy typefaces. Customers can lose critical information if this is not done.

Reluctant to request payment

People make honest mistakes, and sometimes they just forget to pay what they owe when they owe it. Creating a simple message and following up as soon as payment is overdue doesn’t have to be difficult or unpleasant.


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