Sole Trader Invoicing Guide

Running a business as a sole trader? For you, invoicing isn’t just an administrative necessity. It’s how you actually get paid and protect your ongoing cash flow. A good sole trader invoice should clearly break down what you sold, how much is payable, when it’s due and how the customer can pay. A great one helps you get paid faster and makes overdue invoices less likely. And after all, isn’t that what every time-poor business owner wants?

Learn the real difference between a good invoice and a dodgy one, how being GST-registered changes things and how to set payment terms that will deliver healthy cash flow for years to come.

Regular invoice vs tax invoice: What’s the difference?

An invoice is a request for payment. A tax invoice is a specific type of invoice used for GST purposes.

Put it this way: if you’re registered for GST, you’ll need to issue a tax invoice for taxable sales over $82.50 (including GST), and you have to provide it within 28 days of the sale, or within 28 days after the customer asks for it.

If you’re not registered for GST, you shouldn’t charge GST on any services provided or goods sold, and you shouldn’t label your invoice as a tax invoice (because you’re not actually issuing a GST document).

What to include on every sole trader invoice

Whether it’s a tax invoice or a normal invoice, professional invoices usually include the same details. Think of it as “who, what, when, how much and how do I pay?”. Make sure your invoice includes:

• Business name (your trading name) and contact details (email, phone, address, etc.).
• Your Australian Business Number (ABN).
• The client’s details (customer name, business name, address or email – whatever makes sense for your industry).
• Invoice number (reference for you and the customer).
• Date the invoice was issued.
• Description of goods sold or services provided.
• Quantity and pricing.
• Total cost and total price to be paid.
• Due date and payment terms.
• Payment options (e.g. bank transfer, card, PayID, direct debit, etc.) and where to pay.

If you’re registered for GST, what extra info is needed?

Once you’re GST registered as a sole trader, your invoicing has a few extra rules. Your document needs to show that it’s a tax invoice and the GST charged. In addition to the basics above, a compliant tax invoice should include:

• The words tax invoice – literally the words “tax invoice”.
• The GST amount, either shown for each line item separately or as a total.
• If the GST on the invoice is exactly one eleventh of the total, you can use a statement like “Total price includes GST” instead of listing GST line-by-line.
• If the invoice is $1,000 or more (including GST), it should include the buyer’s identity and/or their ABN.

If you sell a mix of taxable and non-taxable items (i.e. GST-free items), make that obvious on the invoice as well.

How to calculate GST

You’ll charge GST at 10% on taxable sales in Australia. That GST collected isn’t extra income for your pocket – it’s money you collect and later pass on to the tax office.

• If your pricing is ex-GST, multiply by 1.1 to get the GST-inclusive price.
• If your pricing is GST-included, the GST segment is the total divided by 11.
• You can list the amount per line or show a GST total at the bottom and include “Total price includes GST”.

For most sole traders, the easiest approach is to quote ex-GST if your customers are businesses and show GST on the invoice, or quote GST-inclusive if you sell to everyday consumers.

Payment terms that guard your cash flow

Good payment terms are about setting expectations so the money hits your bank account on time. To that end, make sure you send invoices immediately after the work is delivered. The longer you wait, the longer you usually wait to get paid.

Also, make the due date unmissable. Put it near the total, not buried at the bottom. Finally, give your customers simple payment options. The easier it is to pay, the faster you’re likely to get paid. Online invoicing tools include ‘Pay now’ links and automatic reminders to reduce delays.

If cash flow is tight, consider accepting deposits or allowing progress payments for larger jobs.

What to do about overdue invoices without burning the relationship

Even with a great system, overdue invoices can – and do – happen. What matters is having an easy-to-follow process every time. Think:

1. Friendly reminder the day after the due date – “Just checking you saw this as it’s now overdue.”
2. Follow up a few days later, attach the invoice again, and make a firm request for a payment date.
3. Phone call to confirm there isn’t an admin issue or a missing purchase order.
4. If you’ve set it out in your terms, mention late fees and next steps (politely).
5. If needed, pause further work until the invoice is paid, or agree to a short payment plan.

Record-keeping invoices

Invoices are also evidence for accounting, GST, resolving disputes, and more. Keep copies of every invoice you send, notes on what was delivered, and proof of payment received. The ATO expects businesses to keep records for at least five years.

If you’re using accounting software, reconcile your invoices against bank transactions. That way, you can see what’s been paid and what’s still left unpaid.

Invoicing as a sole trader in a nutshell

Invoicing as a sole trader really comes down to clarity and consistency. Make sure you include all the correct details, clarify how GST applies if you’re GST-registered, and make payment terms easy for your customers to understand. Get the structure right once, and you’ll spend less time correcting invoices, and fewer customers will need to request extra-specific information. The result? You’ll be in a much better position when invoices go overdue.