An Easy Guide to Small Business Invoicing
Being in business for yourself does not necessarily mean that you have a keen “business mind.” In all likelihood, the reason you became your own boss in the first place was so that you could put to good use your special talents and passions. Whatever your business entails—web development, decorating, writing, photography, etc.—those skills ought to take center stage. So the best thing you can do for yourself as an entrepreneur or sole proprietor is to keep the business end of your enterprise simple in order to keep the focus on what you do best.
As Entrepreneur Magazine points out, giving up a nine-to-five job comes with a trade-off. You can no longer count on your next paycheck to be in your bank on a particular day, and you are never quite sure where your next job will come from. And yet it is your willingness to accept those risks that sets you apart and makes you the one-in-three Americans who work for themselves.
The Guardian’s guide to invoicing addresses the importance of setting up a smart and simple invoicing system. You need to be paid in a timely manner so that you can continue doing what you love. Setting up your business in a way that allows you to enjoy your job is all about doing everything in advance. That includes deciding how much you are going to charge, how you will bill clients, and what your expectations are for payment.
Determine the Worth of Your Services
Common among the fears of owning your own company is that you will somehow bid yourself out of business, that if you ask clients to pay you what you are truly worth they will go to another freelancer who will charge less. But if a client comes to you for your expertise, it means that he does not possess the skill himself. He is not doing you a favor or giving you a break; he needs you to provide your service.
Consider what your own reaction would be to another business owner who seemed unsure of his rates. What if you called a plumber to repair a broken pipe and he said, “Well, I’ve only been doing this for a year or so and because you could probably hire someone cheaper, I’ll knock $100 off the job.”? That plumber instantly loses “expert” status and it would only be natural for you to worry about the quality of his work.
It is fine for you to gather information that allows you a clearer understanding of how much other freelancers in your field are charging, but the most important thing you can do is set a rate and stick to it. Do not forget to factor in your operating costs, including utilities, supplies, travel expenses, and any other cost of doing business that you will report to the IRS. Once you have determined what your services are worth it will be easier to send off that invoice at the end of the job.
Spell It Out In Black and White
The surest way to get into trouble as a freelancer is to be ambiguous about two things: the work you will do and the payment received for it. Before you begin any job, provide your client with a contract to sign that lays out the services you will perform as well as how much (and when) you expect to be paid. If you are going to offer your clients options—such as paying by PayPal, credit card, or cash—clearly spell those options out with specifics like the account information to which they send money.
Opt For A Specific Invoicing System
You have two options: go it alone, or employ the services of a vendor like Hiveage. If you decide to take on the task of invoicing alone, your invoice should include the following:
- Your company logo
- A reference number that will allow both you and your client to keep track of which job you are billing
- Your business information as well as your client’s
- An itemization of the tasks performed and how much was charged for each
- Any taxes that are applicable
- The total due
- A reminder of payment terms (such as, “Pay within 14 days of invoice”)
- A reminder of payment options, such as PayPal or Stripe, to make paying invoices easier for the client
If the idea of chasing clients down for payment makes you break out in hives, or if you would simply rather focus your energies on building your business, consider one of the many online billing software and invoicing systems. Our goal at Hiveage is to make these tasks easy and efficient for you.
If you have properly laid the groundwork in advance, there will be no wiggle room when it comes time for clients to pay their invoices. Clients will not only understand their options for payment, but will also be clear on when payment is due and what the repercussions are for late payments.
While it may not be the most enjoyable part of the job, setting up policies and procedures in advance is the best strategy you can employ to build the business you care so much about!