The basics of invoicing: A practical guide for Kiwi small businesses

Invoicing is a good way to know where your business is at. It's also a legal requirement. Which means creating, sending, and storing invoices is a big task for businesses. There are formats to follow, recording requirements to meet, guidelines to be aware of—it's just a lot of work, frankly. That's why this post aims to cover the important aspects of invoicing for New Zealand businesses.

When New Zealand businesses should create an invoice

When you sell products or services worth $50 or more (inclusive of GST), you should issue a tax invoice to your customer. If your customer is GST-registered and requests an invoice, you should issue the invoice within 28 days of the request. Most accounting software systems will have a built-in invoicing tool you can use to create your invoices. However, if you don't use an accounting software, you can also use dedicated invoicing apps, like Zoho Invoice, to create, send, and manage your invoices.

Buyer-created tax invoices: If both the buyer and seller agree, then the buyer can issue the invoice instead of the seller. To do this, both parties must be GST-registered and have a written agreement outlining why they decided to have this agreement. Learn more about buyer-created tax invoices on the Inland Revenue Department's website.

What to include in your sales invoices

The Inland Revenue Department (IRD) requires businesses to include the following mandatory elements in sales invoices:

• Date of issue and the phrase "tax invoice"
• Seller’s details such as business name, address, and GST number
• Description of items sold, quantity, and price
• GST details. You can either specify GST exclusive rates, GST amounts, and the full amount payable, or you can specify only the full amount and a statement indicating that the price includes GST. Note that the price should always be in New Zealand dollars.

If the total value of the sale (including GST) exceeds $1,000, you should also include the buyer’s details, such as business name, address, and their GST number.

Based on the nature of your business, you might also want to include other details such as terms and conditions of the sales, return or refund policies, or a personal note to the buyer.

e-Invoicing

e-Invoicing is an easier way to issue and receive invoices. Instead of creating and emailing or posting an invoice to your buyer, you can send a digital invoice directly to your buyer's accounting or invoicing software. You can do this even if you use different software, as long as they're both compliant with the international e-invoicing framework. When you issue an invoice from your software, the framework will verify both parties' NZBNs and then send it to the right buyer.

This framework is called Peppol, a set of e-invoicing standards. Australia and New Zealand adopted the framework in 2019, making it simpler for businesses to send and record invoices. To be Peppol-enabled, accounting and invoicing software vendors should implement the framework into their software. You can learn more on the e-invoicing website.

At the time of writing, Zoho Invoice doesn't support e-invoicing. You can still create invoices with it and email them to your clients.

Changes to tax invoices requirements - 1 April 2023

As of April 2023, you're no longer required to record all necessary tax information in a single invoice.

This doesn't mean you don't have to issue invoices, though. It only means you don't have to record everything in one place. Instead, you can choose to have those details in multiple places, such as your accounting software, an invoice, a quotation document, and other contractual agreements. Collectively, these will be referred to as "taxable supply information." As long as you have all the information, they will be considered compliant under the IRD.

What constitutes taxable supply information depends on the value of your sales. Have a look at the dropdown menu on this page to identify what type of information you need to keep for tax purposes as of April 2023.

Parting thoughts

These updates to tax invoices are meant to simplify record keeping for businesses. If you're overwhelmed by the changes, you can choose to continue issuing tax invoices in the format you always did; it won't affect your tax obligations. We also recommend contacting the IRD or a tax agent to clarify any concerns or questions you may have about tax and record keeping requirements for your business.