Reply to: Self Invoicing - what's that about?

[Morlock]

Double-entry Bookkeeping

If you don't raise your own invoices then you can't keep track of your debtors in a double-entry book-keeping system. The self-billing system instead relies on you as the supplier "remembering" what you're owed from the customer rather than accounting for it properly; effectively the timesheet becomes your record of sale - problem is there's no monetary amounts recorded on the timesheet. So, agencies self-billing you is probably fine if you've only got one customer and 12 timesheets per year, but otherwise it's got potential to lead to accounting errors.

[Ardesco]

You dont need to raise your own invoice to spot a mistake.

No but if it is done for me i'm more likely to be lazy and assume it's right.

And, how can self billing be anything to do with permiedom!?

Self billing doesnt even have any relevance to IR35 either in case anyone thinks it does.

I didn't say it was anything to do with permiedom, or anything to do with IR35, it just doesn't feel like the sort of thing a small business owner should do to me. I feel happier making my own invoices, it's personal preference.

The arrangement the agent has with hmrc is that if you are self billing, you dont raise an invoice as you create another tax point for VAT.

I dont have a problem with invoicing or using self billing. My last contract was self billing. One before that I invoiced.

As I said, I dont see why anyone has any qualms over it.

Some like it, some don't, each to thier own I say. Me personally, I don't.

[Brussels Slumdog]

Copy of Self Billing

Have you thought of asking your agent- Payroll company for a copy of the
Self Billing invoice for your own records:
Self Billing is a common SAP Logistics functionality. I cannot imagine multi national companies receiving payments via self billing not receiving a copy of the invoice.

[BolshieBastard]

I prefer to raise my own invoices, that way I know when the agency makes a mistake and pays me the wrong amount (It has happened before).

Never really liked the idea of self billing and I have always declined the offer personally (Always seems a bit to permie like, not to mention I didn't get a company logo designed so I could never stick it on an invoice!). Go for it if you want to do it though.

You dont need to raise your own invoice to spot a mistake.

And, how can self billing be anything to do with permiedom!?

Self billing doesnt even have any relevance to IR35 either in case anyone thinks it does.

The arrangement the agent has with hmrc is that if you are self billing, you dont raise an invoice as you create another tax point for VAT.

I dont have a problem with invoicing or using self billing. My last contract was self billing. One before that I invoiced.

As I said, I dont see why anyone has any qualms over it.

[Ardesco]

I prefer to raise my own invoices, that way I know when the agency makes a mistake and pays me the wrong amount (It has happened before).

Never really liked the idea of self billing and I have always declined the offer personally (Always seems a bit to permie like, not to mention I didn't get a company logo designed so I could never stick it on an invoice!). Go for it if you want to do it though.

[BolshieBastard]

Dont know why people have an issue with self billing. It just saves you from raising an invoice.

[Dark Black]

Personally I prefer to raise an invoice. The agency that I currently use (and have used a lot in the past) usually send me a form for agreeing to use self-billing each time I start a new contract through them. I always politely decline and continue to issue invoices.

As others have said, keeps the paperwork tidy. Also I don't like the idea of relying solely on timesheets - feels too much like the sort of thing an employee would do.

[RichardCranium]

I will do it my way and you do it yours. There is no right or wrong

<sigh>

Hector, the Great Obfuscator of Small Business Tax Management, strikes again.

[TheFaQQer]

My ex-accountant (I no longer have one) told me not to create invoices. That was his interpretation of this:


Their bold, not mine.

That was my interpretation, too, when I read up on it.

If you need an aide memoir, then great - however I decided that I would just use their invoices with their invoice numbers on them for ease.

[malvolio]

Yeah, right. It goes on to talk about mutual agreements and all sorts of stuff. IT also says that you shouldn't submit them for payment: that doesn't mean you can't raise one for your own purposes. It also says it is a mutual agreement, is voluntary but can be made a condition of trade. Did you agree to it?

Thing is, this is not an EDI arrangement, it's the agency saving some admin time. While it might look like an invoice, it isn't one, it's a substitute that you have both agreed to use to track payments. Nobody's making you raise your own, but I will do it my way and you do it yours. There is no right or wrong

[RichardCranium]

My ex-accountant (I no longer have one) told me not to create invoices. That was his interpretation of this:

6.3 Main rules for self-billees
If you are a self-billee, you must:
* not raise sales invoices for any transactions with your self-biller for the period of your self-billing agreement with him. The agreement will last either for a period of 12 months or, if you have a contract with your customer, for the duration of that contract;

Their bold, not mine.

[Fred Bloggs]

Agreed. The only requirement is that you don't send the invoice to the supplier, since they are paying on the delivery of the service , as evidenced by the timesheet (Actually it's all about speeding up JIT delivery in manufacturing originally, so think of how that works).

How I organise my business and provide audit trails is up to me. And I'm sticking to sequentially numbered invoices as prrof of money owed.

+1 to that too.

[Fred Bloggs]

But it's not an invoice, strictly speaking, it's a remiitance advice. Makes no practical difference, but being a bit of a pedant I raise my own invoice anyway - to check the numbers as much as anything - and file it. If nothing else it keeps my own books consistent.

Only thing to watch is VAT treatment on expenses. Some agenices have a nasty habit of deducting VAT paid from the expense claim and pocketing the difference.

+1. I do this too, if anything it keeps my books straight and shows that the agency is paying me what I reckon they should.

[TheFaQQer]

I'm pretty sure you are wrong to do so.

I thought that under self-billing HMRC say you must not create an invoice. (Which does indeed bugger up both my processes and my record keeping).

WHS.

You should still get a copy of the invoice that has been raised by the client / agency - e.g. Parity used to email mine to me as a PDF each week.

Of course, that was back when I had a job.

[malvolio]

I think it's the other way around - you should create an invoice for your own records. Should HMRC come knocking to investigate they will want to see your records, and that will include copies of invoices you've raised.

Self billing is to make the administration of the agent easier, it's not a replacement for your own.

Agreed. The only requirement is that you don't send the invoice to the supplier, since they are paying on the delivery of the service , as evidenced by the timesheet (Actually it's all about speeding up JIT delivery in manufacturing originally, so think of how that works).

How I organise my business and provide audit trails is up to me. And I'm sticking to sequentially numbered invoices as prrof of money owed.