Understanding Invoices
Invoices are formal bills sent to clients. Depending on your registration status and local laws, you will issue either a tax invoice or a regular invoice.
Key Differences
- Tax Registration Number (TRN): A tax invoice must feature your official tax registration details, while a regular invoice does not.
- VAT/GST Calculation: Tax invoices detail the calculated Value Added Tax added to the service rate.
- Legal Purpose: Tax invoices allow corporate clients to claim tax credits or deductions, unlike regular receipts.
When to Use Each
Regular Invoice
Use a regular invoice if you are not registered for taxes, or if you are dealing with individuals or small clients outside tax frameworks.
Tax Invoice
Issue a tax invoice when you cross the local mandatory registration threshold and are legally required to collect sales tax or VAT.
