Many people decide to start up their own business. Being self-employed is not a simple path, because in addition to the complexity of making a business viable and profitable, there is the multitude of tasks that entrepreneurs have to carry out and the many obligations that must be fulfilled. One of the most important obligations for freelancers and entrepreneurs is invoicing.

In order to comply with the invoicing obligation properly, it is essential to know not only how to make an invoice, but also other questions about the conservation of invoices or about the types of invoices that exist.

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What is an invoice?

The invoice is a commercial document that is given legal and fiscal validity and has the purpose of indicating the purchase and sale of a product or service. The invoice will include all the information related to the purchase and sale operation, so that the operation is accredited.

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Invoice types

There are different types of invoices depending on the circumstances indicated in the invoice and the commercial operation that has been carried out. The types of invoices are as follows:

Ordinary invoice

The ordinary invoice is the most commonly used invoice model, since it indicates a commercial transaction of sale or purchase of a product or service. The ordinary invoice, therefore, will include detailed information about the purchase and sale transaction.

The data that an ordinary invoice must contain for it to be valid are as follows:

Invoice number.
Date of issue of the invoice.
Identity or company name of the issuer. In case it is an individual issuing the invoice, the name and surname must appear, while if the issuer is a company, the company name must appear.
Tax Identification Number of the issuer.
Address of the issuer and the recipient.
Personal income tax withholding.
Tax quota.
Total price of the sale and purchase transaction.
Date on which the purchase/sale or the provision of a service was made.

Invoice-correction

The corrective invoice is a consequence of the correction of the ordinary invoice. Thus, when the ordinary invoice does not comply with the requirements described above required by the invoicing regulations, a rectifying invoice will be issued. This invoice model is also used when products are returned or when discounts are applied after the purchase/sale transaction.

This type of invoices only can be issued provided that no more than 4 years have elapsed since the ordinary invoice that is intended to be rectified was issued. In any case, the rectifying invoice must contain the following data, in addition to the data that must be indicated in the ordinary invoice:

- - Identification, number and date of issue of the corrective invoice.
  - Rectification and reasons why it is carried out.
  - Rectification and reasons why it is carried out.
  - Rectifying invoice condition.
  - Tax rate and tax charge.
  - Ordinary invoice to be rectified.

Recapitulative invoice

This type of invoice includes more than one commercial operation, provided that the recipient is the same and the commercial operations have been carried out on different dates but within the same month. However, when the recipient of the invoice is another businessman acting as such, the corrective invoice must be issued before the 16th day of the month following the month in which the commercial operation indicated in the invoice was carried out.

Proforma invoice

Proforma invoices document a commercial offer, so that they determine a determined price at which the entrepreneur will sell a series of products or services. This type of invoice has no accounting value or validity as a supporting document, as it only contains as much information as possible about the commercial operation.

Invoice simplified and invoice complete

Depending on the amount of information they contain, invoices can be either simplified or complete.

- - Simplified invoice: it is the one issued when the amount of the operation does not exceed 400 euros, VAT included. This type of invoice must be requested by the issuer. It only contains the issuer’s data.

- - Full invoice: this type of invoice is the same as the ordinary invoice. In fact, it contains the same data and elements that an ordinary invoice contains.

Electronic invoice

The electronic invoice is that which is transmitted telematically, although it is equivalent to a paper invoice. However, the validity of the electronic invoice will depend on the fulfillment or not of the requirements that any type of invoice must comply with.

How to make an invoice

Knowing how to properly make an invoice is essential for any freelancer or entrepreneur. However, understanding invoicing legislation and complying with it scrupulously can be tricky. Let’s take a look at the most important issues on how to make an invoice.

Mandatory data on an invoice

For an invoice to be valid it is essential that it contains the following data, in accordance with the invoicing regulations:

- - - Invoice number and series.
    - Date of issue.
    - Date of the business transaction. However, this data need not appear if the trade and shipping dates coincide.
    - NIF, identity or company name of the invoice issuer.
    - Tax rate and tax liability.
    - Identification of the goods and services that are the object of the commercial operation.
    - VAT exemption if the invoice is exempt of this tax.
    - Total price paid for the goods and services.
    - Advances or discounts if any.
    - Discounts if any.
    - Certain circumstances such as the application of the Special Travel or Used Goods Regimes, among other circumstances.

Who can issue invoices? Who is obliged to issue invoices?

Article 1 of the Regulation on the Regulation of Invoicing Obligations establishes that entrepreneurs or professionals shall be obliged to issue invoices in the development of their professional activity in any of the following cases:

- When the customer is a private individual who requires the issuance of an invoice.
- When the customer is another entrepreneur or self-employed person.
- Where the sale is subject to excise duty.
- Where the sale is at a distance.
- When the invoice reflects the export of goods exempt from VAT taxation.
- When the customer is a Public Administration body.
- When the client is a legal entity that is not considered a company or self-employed person.

Timelines: for how long should invoices be kept?

Entrepreneurs and freelancers are not only obliged to issue invoices, they are also obliged to keep the invoices in the following cases:

- - Albaranes when the invoice references the same.
  - Proof of payment and collection.
  - Invoices issued or received by freelancers

Keeping invoices is essential in case of a possible accounting or tax inspection. However, for how long should invoices be kept? There are different criteria in this regard:

- - - Tax criteria: it is necessary to keep the invoices for 4 years, since this is the statute of limitations period for taxes. In this way, during 4 years from the declaration of a tax Hacienda will be able to make an inspection and will demand the invoices.
    - Commercial criterion: it is necessary to keep the invoices for 6 years counting from the date on which the last entry was made in the books or from when the business ceased.
    - Criminal criterion: it is necessary to keep the invoices for evidentiary purposes in trial for 10 years.
    - Criterion of the Money Laundering Prevention Act: this regulation requires entrepreneurs and freelancers to keep invoices for a period of at least 10 years.
    - VAT criterion: according to the VAT regulatory legislation, invoices must be kept for 4 years in the case of movable goods and 9 years in the case of immovable goods.

No doubt, the billing obligation is quite complex. That’s why we’ve made the STEL Order invoicing program available to you so that you can simplify the management of your company.