Here are some good reasons why a small business owner needs an invoice.
Record Keeping The most basic purpose of a sales invoice is to keep a record of the sale. It provides a way to track the date a good was sold, how much money was paid, and any outstanding debt. An invoice is an invaluable tool for accounting. It can also track which employees make sales and the items they sell.
Tax Purposes The government does not have a set system or template for the type of invoice a business should have. However, for tax purposes, it is imperative to record and maintain all sales invoices. The Internal Revenue Service suggests small business owners keep a running summary of all business transactions, of which invoices are a crucial part. This aids a company in filing taxes, ensuring the proper amount is paid, and avoiding an audit.
Legal Sales invoices help to protect small business owners from fraudulent or petty civil lawsuits. The invoice shows that particular good or service was provided at a certain time. An invoice with a customer’s signature proves especially valuable since they illustrate an agreement between a vendor and a customer. Without an invoice, there is no record that the sale occurred, which also opens a business up to conflicts regarding pricing.
Marketing A company that keeps close track of all sales invoices can utilize the information to target its customer base. For example, businesses can input data such as dates of sales, products sold, and the amount for which they sold. Computer programs or marketing firms can then compile the information to see peak buying times, popular products, and earning trends. This proves valuable when developing business marketing strategies