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What are the Invoice requirements in the USA?

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Last editedFeb 20232 min read

Compared to many countries, invoicing requirements in the USA are relaxed. There is no single regulatory format that you must follow, but it’s important to include all relevant details of your business transactions and check carefully for accounting errors.

What is an invoice?

Before you start writing your first company invoice, it helps to understand the purpose of this common business document. So, what is an invoice? It’s simply a document sent from a seller to a buyer after providing services or delivering goods. The purpose of the invoice is to request payment from the buyer.

  • Invoicing for sellers: The invoice is called a sales invoice and goes to accounts payable.

  • Invoicing for buyers: The invoice is called a purchase invoice and goes to accounts receivable.

While a physical invoice isn’t always required by law, it’s better both for tax and accounting purposes to have a written record of your transactions. Invoices can be referred to later when tracking revenue and expenses, compiling financial statements, and filing tax returns with the IRS.

How to write an invoice

There are a few differences between invoices in the United States and other countries. The biggest difference is that there is no national sales tax in the USA like VAT. Instead, each state has the authority to make its own taxation decisions. When figuring out how to write an invoice, you should consider state as well as federal law.

The IRS supplies businesses with identification numbers, but these aren’t legally required on invoices. However, if your business is located overseas and you’re submitting your first invoice to a US client, you’ll need to include a W-9 tax form that the business will keep on file.

Apart from tax invoice issues, here’s what should be included:

  • Business name and address

  • Client name and address

  • Project address (if different from usual business address)

  • Invoice number

  • Invoice date

  • Payment terms and due date

  • Description of services rendered, or products delivered

  • Quantity of products or services (in hours worked, for example)

  • Amount due in USD

  • Sales tax if applicable

Finally, you should include payment information at the bottom of the invoice. This will depend on the type of payments your business accepts. For example, if you accept credit card payments, you’ll need to include a relevant form or link to your payment processor. For ACH transfers or wire transfers, you’ll need to include your business’s name and address along with account and routing numbers. For checks, you’ll need a mailing address and order form.

How to send an invoice

Not every business will approach invoicing the same way. If you’re wondering how to send an invoice, you can choose from several options. To begin with, you’ll need to create the document using the guidelines above. Be sure to mark the invoice clearly with the word “Invoice” in the header along with the invoice date.

Here are three of the main ways to send a company invoice:

  1. Automated invoicing

  2. Emailed paperless invoices

  3. Paper invoice through the mail

Accounting software streamlines the invoicing process and sends paperless documents to clients on your behalf. You only need to choose a template and set it up with your business details, which cuts down significantly on paperwork and admin. However, for those who prefer an old-fashioned filing system it’s still widely accepted to mail paper invoices to clients.

How to number invoices

One final detail to keep in mind is that every invoice should have its own unique number. The requirements for invoice numbers aren’t as stringent in the US as some other countries, which means you can choose a numbering system that makes the most sense for you. Some might choose to number invoices in chronological order, while others will use special identifiers for each customer or product. Assigning a unique number for each document allows you to easily retrieve it in your system when you need to, whether it’s to deal with a payment dispute or for tax invoice purposes.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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