They provide all the information you need to prove what you are owed, which can help if you need legal help to collect payments. Invoices are legitimate documents that can protect small businesses against missed payments for services rendered. Keeping a record of each invoice date and amount allows you to complete your business tax return with little to no issue. In fact, the IRS recommends keeping documents like invoices, sales receipts, and paid bills since they support the entries in your books for a minimum of 3 years.
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Paid invoices act like receipts, making filing for taxes much less complicated. #3: Easy tax filingīusinesses need to be prepared to provide their income and expenses from the previous fiscal year when they do their taxes. Having a clear and concise view of this information will make your profit and loss (P&L) statement and budget easier to manage. Invoices make key information quickly accessible by including the invoice date, the amount owed, and whether the customer has an outstanding balance or completed payment. #2: Maintain recordsīusinesses need to keep records of just about everything. This information is crucial during annual budget reviews and for tax filing purposes.
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This makes invoicing the easiest way to track payments.
Business invoices software#
However, it’s also a good idea to use official invoicing software to keep track of important information and records-and here’s why: #1: Payment trackingĪ formal invoice sent to a client or customer is an official record of what you provided and what your customer owes. It may be easy for small businesses to rely on third-party payment processors like Venmo, CashApp, and Zelle.