All entrepreneurs are obliged to issue invoices for services rendered or goods delivered. Here the entrepreneur informs about the due fee, which is usually based on a sales contract. Services rendered are officially billed with the help of such a document, whereby the recipient of the service becomes the debtor. The total amount or the final amount of an invoice is called the invoice amount. This is ultimately made up of various factors that can differ depending on the type of company.
How is the invoice amount composed?
Of course, the invoice amount is one of the mandatory information that an invoice must contain. It represents the amount actually payable that the debtor transfers to the biller’s account. The biller must list the individual invoice items in a clearly and comprehensible manner. First and foremost is the amount that is made up of the individual products sold or services provided. The sum of the costs, minus discounts , represents the net amount.
The net amount is then supplemented by the respective tax rate, the so-called sales tax . Here, the biller must deduct the tax amount from the net amount. As a rule, this is 19%, in exceptional cases 7%. This amount is added to the net amount, resulting in the gross total amount. If you are a small business owner, you do not show any sales tax and you have to enter a corresponding note on tax exemption. Certain professional fields are also exempt from VAT . You should definitely consult the responsible tax office here.
According to PHONECATIONS, the final amount can now be determined based on the gross total amount.
The invoice amount on the invoice
At this point we differentiate between gross invoice and net invoice . The two invoice amounts do not differ, but the breakdowns look different.
The net bill
You state all amounts and items in net terms. At the end of the invoice, there is the total net amount, which together with the sales tax amount results in the total gross amount. In B2B transactions, you generally issue net invoices.
You can reclaim the required sales tax from the tax office. It is therefore a so-called transitory item . For the company, only the net invoice amount is decisive, the sales tax is initially paid, but is reclaimed in your own tax return.
The gross invoice
Gross invoices show the individual items in gross, whereby you also show the sales tax amount here. However, this amount is only used to provide information about the composition of the gross total amount. These invoices are common for transactions with private customers, because the private customer can no longer claim the VAT back from the tax office.
Small amount invoices – exception in invoicing
Anyone who issues an invoice for small amounts does not need to include too much mandatory information, as the total, including sales tax, does not exceed 250 euros . You can only enter the final amount here as a gross amount. There is therefore no breakdown of the net amount plus tax amount.
What is the small business regulation?
According to the small business regulation, small business owners do not have an annual turnover of 17,500 euros and are therefore exempt from sales tax. This means that the invoice amount does not include any sales tax. The net amount is the same as the gross amount. However, the biller undertakes to comment on the tax exemption.
“According to the small business regulation §19 UstG no sales tax is shown.”
Write an invoice – mandatory information on an invoice
The invoice amount, whether gross or net, with or without sales tax, is one of the mandatory details of an invoice. After all, the invoice recipient must have the amount in mind that he is to pay. In addition, there are other mandatory information that must appear on an invoice:
- Name & address of the service recipient
- Company name & address
- Tax number / VAT ID
- Date of issue or invoice date
- Delivery time / date of service provision
- Invoice number (consecutive, one-time)
- Quantity & type of service or delivery
- Net amount
- Tax rate
- Tax amount
- Total amount
- Account details
- Company contact details
- Customer number
- Payment term
It should be important for a company to issue the invoice correctly and professionally. If the customer later disputes or fails to pay, the invoice is the basis for further steps in the dunning procedure.
What is a discount on the invoice amount and how can you calculate the discount?
Whether a company grants a discount is up to it, so there is no obligation here. However, a company can benefit from it. As a rule, the given percentage is linked to a quick payment, usually 3% of the net invoice amount. The company receives less money, but it does so much faster. In general, the discount offer is used to improve the customer’s payment behavior.
In order to be able to calculate the discount , you simply have to calculate the respective discount rate, for example 3% of the net amount.
Discount: 3% for payment within 10 days,
net amount: € 1,000
Discount = € 1,000 x 3%
discount = € 1,000 x 3/100
discount = € 30
The customer is granted a reduction in the purchase price or the service to be paid in the amount of € 30 if he pays within the first 10 days after the invoice date .
Tax number / tax ID or sales tax ID?
For companies with headquarters in Germany, it is mandatory to indicate the tax number or tax ID on the invoice. The tax number / tax ID are applying for you at the tax office. You can use it to identify and identify yourself as a taxpayer.
In the case of intra-community deliveries , for example to business partners from other EU countries, the sales tax ID must be on the invoice. You can only issue this VAT ID to a company with its own legal personality. For such an identification number you have to submit an application to the Federal Central Tax Office. This allows you to identify yourself as a company within the EU.
It is important to know that even small businesses that are exempt from VAT must apply for a VAT ID if they want to do business outside of Germany. The small business status is only valid within Germany, but not in other EU countries.
Transmission of invoices
You can send your invoices by email , by invoice program or in paper form. The respective mandatory information must of course not be missing in all forms of transmission. Incidentally, you do not have to sign or sign invoices. The invoice signature has not been mandatory since 2011, although some companies still insist on it.
You can therefore also use electronic signatures for electronic invoices . In the meantime, however, it has been largely dispensed with, which has the advantage that invoices can be sent quickly and the company saves time and paper.
Do I always have to keep invoices?
You have to keep or save invoices – regardless of the form – for 10 years . Of course, this only applies to the company that issued the invoice. The invoice recipient (private customer) does not have this obligation. In the case of invoices in paper form, copies must also be made, although you must also keep them for 10 years. The statutory retention period always begins on December 31st of the year in which the invoice was issued. It will therefore end again on December 31 after the ten years have elapsed.
Example : Invoicing on May 6, 2008 = retention obligation until December 31, 2018.
Do I have to issue a receipt?
Anyone who pays an invoice receives a receipt as proof of the payment made. At least that is how it is known when a claim has expired. This is particularly useful for cash payments. However, the receipt is less necessary if payment is made by bank transfer. Then the account statement represents the payment slip and replaces the receipt. Incidentally, the same legal requirements apply to receipts as to small-value invoices. Of course, the paying customer has the right to issue a receipt, regardless of which form of payment he has chosen.
Incorrect invoice amount – what now?
Typos, incorrectly calculated invoice amounts, inaccuracies or incorrect information – this can always happen in a company. As a rule, the exhibitor can correct the invoice. The customer also has the right to a new and corrected invoice.
If there are typographical errors , for example in the recipient’s address, you do not have to correct the invoice, provided that the meaningfulness is not distorted.
If the invoice amounts are incorrect , however, corrections should be made. The invoice date and the invoice number can remain the same, while only the wrong numbers are corrected.
Within the limitation period, it is also possible to subsequently charge a forgotten invoice item. In this case, payment can be requested by means of a further invoice, but we recommend consulting the customer with a request for goodwill. The invoice recipient can rely on his legitimate expectation and trust the lawfulness of the invoice. If the customer has transferred the wrong amount, the invoice can be canceled in order to issue a separate invoice.
In general, however, do not panic! Mistakes can happen and most customers understand them. It only becomes complicated for the company’s internal bookkeeping when incorrect invoices have already been posted.