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Blog post from July 7th, 2020

Typical mistakes when writing an invoice and how to avoid them

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Especially when you are at the very beginning of setting up your business, small errors can often occur when it comes to accounting. After all, very few self-employed people and freelancers are accounting experts.

Especially when writing the first invoice, mistakes often occur at the beginning of self-employment, which are annoying and can actually be avoided. In this article we would like to introduce you to typical mistakes when creating invoices, so that these little mishaps don't even happen to you in your bookkeeping.

The tax rate is incorrect or missing

One of the typical mistakes is the tax rate. If you fall under the small business regulation and only earn up to €22,000 a year from your self-employment, you can omit the tax rate entirely. As a small business owner, you are not subject to sales tax.

It is important that you note the addition for small businesses on your invoice to avoid problems with the tax office. A simple sentence like the following is sufficient: “As a small business owner within the meaning of Section 19 Paragraph 1 of the Sales Tax Act (UStG), sales tax is not charged.”

If your income is over €22,000 per year, you must show sales tax on your invoices. You should be sure in advance which tax rate applies to you. The sales tax in Germany is either 7 % or 19 %.

Find out from professional associations in your industry or a tax advisor about the tax rate that applies to your product or service so that you show it correctly on your invoice and you don't make any mistakes!

The invoice must therefore contain the net amount, any applicable tax amount as well as the tax rate and the gross amount.

Attention: In Germany, due to the worsened economic situation caused by the coronavirus, the sales tax rates will be reduced from 19 % to 16 % and from 7 % to 5 %. This applies from July 1st until December 31st, 2020.

Error in addresses

The legal information that must be included on an invoice in order to be considered legally valid also includes the address of the service provider and the address of the service recipient.

Be sure to ask your customer for their address or company address and use this when issuing the invoice. Also make sure your address is on the invoice and is correct.

Your tax number or sales tax identification number

Many entrepreneurs make the mistake of using the tax number or VAT identification number to be forgotten on the invoice. However, according to German law, this must be listed.

If you send your invoice to a customer based in Germany, you can choose whether to include your tax number or your VAT identification number on the invoice. One of the two numbers must always be found on the document.

In certain cases, you will need the VAT identification number for invoices that you issue to customers in other EU countries. The VAT ID is required if you, as a regular business subject to VAT, issue an invoice to another regular business in another EU country, i.e. for B2B transactions.

Data is missing or incorrectly dated

Another typical error that can happen when creating an invoice is omitting data or providing incorrect data. Data that must appear on the invoice are the following:

  • date of issue
  • Date of service provision/service period

If this data is missing, the invoice is not considered legally compliant. Additionally, your customer may refuse to pay the invoice as long as these two pieces of information are missing or incorrect.

Invoice number is not consecutive or incorrect

Your invoices must be clearly identifiable, which is why they must be provided with consecutive invoice numbers. None of your invoice numbers may be duplicated, the number must be clearly identifiable and follow a sequential sequence to ensure that each of your invoices is unique. An invoice is only permitted with a consecutive number.

Check carefully before sending

Before you send the invoice to your customer, you should check the document carefully and pay particular attention to whether all legally required information is included and whether there are any small spelling errors. Only after thorough checking should you send the invoice to the recipient.

Avoid errors on invoices with accounting software

These little mistakes are annoying, especially because they are actually avoidable and don't have to happen. Careless mistakes in particular can happen quickly, but they can have tax consequences that you should not underestimate.

With an invoicing program you can avoid errors that can creep in without automatic software. Most invoice tools offer legally compliant, ready-made invoice templates that contain all required information.

The Debitoor invoicing program can also be connected to your GetMyInvoices account. Richard Oehmig-Kuhn, who is Country Manager for Germany, Austria and Switzerland at Debitoor, says about the interface to GetMyInvoices:

Richard Oehmig-Kuhn, Country Manager at Debitoor

“We are very pleased that with GetMyInvoices we have gained a reliable partner with whom our customers can make their accounting even easier. Thanks to the interface, incoming invoices from GetMyInvoices are automatically transferred to Debitoor and created for each issue. In this way, all incoming invoices are stored in one place and the accounting remains clean and manageable.”

 

About Debitoor:
Debitor is one of the leading invoicing programs and is aimed primarily at freelancers, freelancers, small business owners and the self-employed. The company was founded in 2012 and the software is now used in more than 30 countries. Debitoor is characterized by a simple interface, automated functions and an intuitive workflow.

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