Meanings of Small Business Invoice Part II
Sales tax on the small business invoice
VAT shown? This could get expensive! Under no circumstances should a small business invoice result in a sales tax amount. Because as a small business owner within the meaning of Section 19 (1) UStG, he is not entitled to claim sales tax from a business customer. But what happens if, by mistake, sales tax is shown without authorization ? In that case, you have to pay the sales tax amounts paid to you by the customer to the tax office . This also applies if the recipient of the service – i.e. the person who paid the sales tax – is not entitled to deduct input tax himself. If such an error is noticed, a corrected invoice must be sent to the customer immediately.
In the worst case, if the sales tax paid by the customer is not passed on to the tax office, criminal proceedings for fraud can ensue. Because in that case an amount was demanded to which there is no entitlement. In this case, the result can be a severe fine, and under certain circumstances even a prison sentence.
Correct incorrect small business invoice
It is not pleasant, but it can happen that you have incorrectly issued an invoice . However, this fact can have negative consequences for you and the invoice recipient:
- You may have to pay VAT inadvertently.
- The recipient of the invoice may not be able to claim input tax if, for example, information is incorrect.
In that case, it is important that you correct the small business bill .
But when exactly do you have to correct the invoice ? You always have to change an invoice if it contains incorrect or missing mandatory information. You do not have to correct typing errors if the meaning of the calculation is still clear. You have to differentiate between two types of incorrect invoices:
Invoices that have not yet been paid:
In this case you will write a new invoice with the old invoice number . Alternatively, you can write a correction document. In this document you correct the error or errors, refer to the invoice number and the date of the original invoice .
Invoices that have already been posted:
You have to cancel this invoice . To do this, you have to write an invoice correction and note a negative invoice amount there. In any case, you must give the invoice number and the invoice date of the original invoice. Then you have to write a new invoice with a new invoice number and send it to the customer.
Send small business invoice
With the small business invoice, the annoying paperwork is no longer necessary. Each invoice can of course be sent in the still valid paper form as well as by fax or email . This makes work considerably easier, but the valid invoice still has to meet some requirements.
- The invoice must be genuine – it must therefore clearly reflect the identity of the biller
- The invoice must be intact – so it must not be changed afterwards
- The recipient must be able to read the invoice .
Retention periods for invoices
There are special retention periods for invoices so that the tax office can check your documents at any time . These deadlines are regulated by law in Section 14b. But do these obligations also apply to small business owners? The answer is yes – in Section 19 UStG, which contains the small business regulation, reference is made to a number of exceptions that apply to small business owners. For this reason, even small business owners have to keep their invoices for ten years . The deadline applies to two types of invoices:
- Outgoing invoices: invoices that you have sent to your customer.
- Invoices : invoices that you get from a supplier or service provider for a received power from you or product.
Small business invoices to other EU countries
If you as a small business owner send an invoice abroad within the EU , then you are also subject to the small business regulation in this case. Specifically, this means that you are not allowed to show any sales tax on your outgoing invoice in accordance with the legal requirements of § 19 UStG. It doesn’t matter whether your small business owner’s invoice goes to a private individual or to a company.
Invoicing program for small business owners
According to USVSUKENGLISH.COM, an invoice program is very useful for you as a small business owner as well as for the self-employed . This also applies if you only write a few invoices a month. The advantages speak for themselves:
- You save a lot of time and nerves when writing the invoices as well as the bookkeeping .
- As a small business owner, you always have an up-to-date overview of your accounting.
- You only fill in the important information such as invoice recipient , delivery and service date , products, quantity, price, etc. – the program does the rest for you automatically .
- Invoices that you have written with an invoice program comply with the legal requirements – so you are always on the safe side.
If you, as an entrepreneur, meet the requirements of § 19 UStG , you can make use of the so-called small business regulation . This regulation makes your bookkeeping a lot easier and you can save yourself a lot of effort. However, the small business regulation is not suitable for everyone and there may well be reasons to forego it voluntarily. But it is important for you with the regulation that you pay close attention to your billing . Under no circumstances are you allowed to show sales tax on the small business invoice . In addition, you have to explicitly refer to the small business regulation on your invoice.