Guidelines To Run A Successful Business With Tax Invoice
We are all familiar with taxes, but up until this very moment you probably were unaware that such a thing as a tax invoice existed. A tax invoice is a legal document that lists the goods and services tax (GST) in any given transaction. If you are a business owner, it is important to know that you have obligations when it comes to the many different tax invoices in existence. In order to claim a GST credit for supplies totaling more than $50, you must have a tax invoice. When you supply goods or services to a registered business or individual, you must be able to provide a tax invoice within 28 days if the registered business or person requests one. Failure to provide a tax invoice when requested can result in penalties.
If you are a business owner, claims for supplies that are worth $50 or more, but no more than $1,000, require you to have a tax invoice in order to get a credit. Without a tax invoice you cannot claim a credit when your return is due if you do not have a tax invoice. However, there is a loophole available if you find yourself in this position. To take advantage of it all that is required is that you still obtain the GST for the transaction, and then claim the credit for the purchase in a later return. In this case, a simplified tax invoice is acceptable, but the tax invoice must clearly show the words ‘tax invoice’ in a prominent place, the name and GST number of the supplier, the date that it was issued, a description of the goods or services that were supplied, and the total amount that is payable, as well as a statement that the GST is included.
For supplies or services less than $50, no tax invoice is needed. However, it is important you still keep a record of such items as invoices, vouchers or receipts for these purchases. Though a problem is most likely to never arise, you should try and keep a minimum amount of documentation just to be safe. Nobody likes the idea of an IRS audit, especially when you can’t provide requested documentation. When dealing with supplies worth $1,000 or more, the process of claiming a credit is a little more involved. The tax invoice must clearly display the following: the words ‘tax invoice’; the GST number; the name, or trade name; the name and address of the recipient; the date it was issued; the quantity of the goods or services supplied; and a description of the goods or services. The invoice should also include the amount (excluding the tax) that was charged for the supply or service, the GST content and the total amount paid for the supply. If you don’t have this information, then the invoice must include a statement to the effect that the GST was included in the final price. It should also be noted that if the tax invoice covers multiple supplies or services totaling $1,000 or more, then all the details listed above are required for each supply or service. The helpful descriptions provided here can be the difference between an IRS audit and a thriving business.
This is especially true for many small business owners who may not have all of the resources most of the big corporations have at their disposal. In a society where the tax code grows more and more convoluted each year, it is in the best interests of small businesses to have a firm grasp of these rules and procedures.