How to Make an Invoice: A Step-by-Step Guide for US Small Businesses

You've finished the job or shipped the order — now you need to get paid. This guide shows you how to make an invoice that a US customer can approve and pay without a single follow-up email. You'll get the elements every invoice needs, how to show sales tax correctly, how to set payment terms such as Net 30 or an early-payment discount, how to number invoices, when you can charge late fees, and the 1099 rules that kick in when you pay contractors' invoices. A sample invoice laid out as a table shows it all together.

Quick answer

To make an invoice, put your business name and contact details at the top, add the customer's details, a unique invoice number, the invoice date and due date, then list each product or service with quantity, rate and amount. Finish with the subtotal, any sales tax on its own line, the total due, your payment terms and how to pay. Send it as a PDF and keep a copy.

• Give every invoice a unique sequential number, e.g. 2026-0042

• Show sales tax as a separate line — Texas, for example, requires it unless you post a tax-included notice

• Write the actual due date, not just “Net 30”

• Late fees are enforceable mainly when agreed before the work starts

• Paying contractors? 1099-NEC applies from $2,000 a year in 2026

What an invoice is (and isn't)

An invoice is a written request for payment for goods or services you've already delivered, or will deliver, on credit. It is also a record: the IRS lists invoices among the documents that support the gross receipts you report, and your customer uses your invoice to support their expense deduction.

An invoice is different from:

• A quote or estimate — sent before the work, describing what you propose to charge.
• A purchase order — sent by the customer to you, authorizing a purchase.
• A receipt — issued after payment, confirming the money arrived.
• A credit note — issued to reduce or cancel an invoice already sent.

There's no federal law dictating what a private business invoice must look like. What makes an invoice "required" is practical: customers' accounts payable teams reject invoices that lack a number, a PO reference or clear line items, and the IRS expects your records to show who paid, how much, when and for what.

The 12 elements every invoice needs

Put these on every invoice

0/12

• The word INVOICE, clearly at the top
• Your legal business name — and DBA if you use one — with address, phone and email
• Customer's name, company, billing address and contact person
• A unique invoice number
• Invoice date (the date you issue it)
• Due date and payment terms, e.g. Net 30 — due November 6, 2026
• Customer's PO or job number, if they gave you one
• Itemized lines: description, quantity or hours, rate and line amount
• Subtotal, discounts, sales tax (with rate) and shipping on separate lines
• Total amount due, in bold
• How to pay: ACH or bank details, card link, check payee name and address
• Late fee or early-pay discount terms, if agreed

Share Print

If you trade under a brand name, show both — Lopez Ventures LLC dba Sunrise Cafe — so checks are payable to a name your bank will accept. Our DBA guide explains why. Many businesses also print their EIN on invoices for customers who need it for 1099 reporting; you can give it on a Form W-9 instead if you prefer to keep it off documents.

How to make an invoice, step by step

From finished job to paid invoice

1. 1

   Choose a tool

   A free invoice generator, your accounting software, or a spreadsheet template. Whatever you use, it must keep numbers sequential and save a copy.

   Open the invoice generator
2. 2

   Add your details and the customer's

   Use the customer's exact legal or billing name and ask whether they need a PO number on the invoice — large companies often won't pay without it.

3. 3

   Assign the next invoice number and today's date

   Use the next number in your sequence. Never reuse a number, even for a cancelled invoice.

4. 4

   Itemize the work

   One line per product or service, with quantity, unit price and amount. For hourly work, show dates and hours. Vague lines like “Services — $3,000” cause queries and delays.

5. 5

   Add tax, discounts and the total

   Calculate sales tax only on taxable items, at the rate for the delivery location. Show discounts and shipping on their own lines.

6. 6

   State terms and how to pay

   Write the due date, accepted payment methods and any agreed late fee or early-pay discount.

7. 7

   Send as a PDF and track it

   Email the invoice to the person who approves payment, not just your project contact. Diary the due date and send a reminder a few days before.

   Tip: Our payment reminder tool writes polite, firm and final reminders for you.

A sample invoice

Here is how a complete invoice looks for a fictional Texas woodworking shop selling furniture to a café. It assumes a combined state and local sales tax rate of 8.25% at the delivery address; the Texas state rate is 6.25% and local rates are added on top.

Notice three things: tax appears on its own line with the rate, the due date is written out, and the late-fee line refers back to terms the customer already accepted.

Make this invoice in two minutesFree, no login — add your logo, line items, sales tax and terms, then download a PDF.

Showing sales tax correctly

Sales tax in the US is set by states and local governments, so the right rate depends on where the goods are delivered or the service is performed, and on whether the item is taxable at all. A few rules keep your invoices clean:

• Show the tax separately. Texas, for example, requires sellers to state the tax separately on the invoice unless they give the customer a written statement that "Texas state and local sales and use tax is included in the sales price" and post a sign saying so. Separating it is the simplest way to comply anywhere.
• Tax only taxable lines. Many states tax goods but not most services; shipping and installation rules vary. Mark non-taxable lines.
• Keep exemption paperwork. If a customer buys for resale or is tax-exempt, keep their resale or exemption certificate on file and show $0 tax.
• Use the delivery address rate. California's state rate is 7.25%, New York's 4% and Texas's 6.25%, before local add-ons.

You need a sales tax permit before you collect tax — see our business license guide. For the rate, use the sales tax calculator.

Payment terms: Net 30, due on receipt and early-pay discounts

What an early-pay discount really costs you. On 2/10 Net 30, a customer who pays on day 10 instead of day 30 gets 2% for paying 20 days early. Annualized, that's about 37% (2 ÷ 98 × 365 ÷ 20). It works when you badly need cash now, but it's an expensive way to borrow. On the $1,200 sample, it costs you $24.

If your customer is the federal government, the Prompt Payment Act generally requires agencies to pay a proper invoice within 30 days and to add interest if they pay late, at 4.75% a year for July–December 2026. The interest is only owed on a proper invoice, so match the contract's invoicing instructions exactly.

Invoice numbering that holds up

A good numbering system is unique, sequential and never reused. Common formats:

• Simple sequence: 0001, 0002, 0003
• Year + sequence: 2026-0042 (restart or continue each January, but stay consistent)
• Client prefix: BLUE-0007, useful when you bill a few large customers

Don't delete invoices that were sent in error. Mark them void, or issue a credit note referencing the original number, so your records show a complete trail. The IRS's general rule is to keep records for three years from filing, with longer periods in some situations — four years for employment tax records and longer for property — so store invoices and credit notes at least that long.

Late fees: when they're legal

You can usually charge a late fee or interest on overdue business invoices, but enforceability depends on two things:

1. It was agreed in advance. Put the fee in your contract, quote or terms the customer accepts before you start work, and repeat it on each invoice. A fee announced only after the bill is overdue is hard to collect.
2. It's within your state's limits. States regulate interest through usury and consumer-protection laws. Commercial accounts often have more room than consumer accounts, but there's no single national cap. A charge a court views as a penalty rather than a reasonable estimate of your loss may be unenforceable.

Many businesses use 1% to 1.5% a month or a flat fee. On the $1,299 sample, 1.5% a month is $19.49 for each month it's late. Before you pick a rate, check your state's rules or ask a lawyer — especially if you bill consumers.

Invoicing numbers to know (2026)

$2,000

1099-NEC reporting threshold

Payments made after Dec 31, 2025

3 years

General IRS record retention

Longer in some cases

4.75%

Federal late-payment interest

Prompt Payment Act, Jul–Dec 2026

$19.49

1.5% monthly late fee on $1,299

Only if agreed in advance

Invoices and 1099s

Invoices also drive information reporting on the payer's side:

• If you pay contractors' invoices: for payments made after December 31, 2025, file Form 1099-NEC for each non-employee individual, partnership or LLC you paid at least $2,000 for services in a calendar year (up from $600). The threshold is indexed for inflation from 2027. Payments to most corporations are generally excluded, and payments made by card or through payment apps are reported by the processor on Form 1099-K instead.
• If you send invoices: expect business customers to ask for a Form W-9 with your legal name and taxpayer ID before they pay. Make sure the name on your W-9 and invoice match, or payments can be held up.
• Online payments: payment platforms send Form 1099-K once you reach their reporting threshold of $20,000 and more than 200 transactions in a year. Report all your income whether or not you get a form; your invoices are your record of it.

Your EIN guide explains how to get a free EIN to give customers instead of your Social Security number.

Official references

• IRS — What kind of records should I keepInvoices as supporting documents
• IRS — How long should I keep records?Retention periods
• IRS — Instructions for Forms 1099-MISC and 1099-NEC$2,000 threshold for payments after 2025
• IRS — Form W-9Request for taxpayer ID
• Texas Comptroller — Sales tax collection FAQsSeparately stating tax
• Treasury — Prompt PaymentInvoicing federal agencies and interest rates

What to do next

Set your standard terms once — due date, payment methods, late fee — and add them to your quote template so customers agree before work starts. Then create your first invoice with the free invoice generator, and issue a receipt with the receipt generator when the payment lands.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What must be on an invoice in the US?

No federal law prescribes a format for private business invoices, but a usable invoice shows your business name and contact details, the customer's name, a unique invoice number, the invoice date, a description of each item or service with quantity and price, the subtotal, any sales tax, the total due, the due date and how to pay. The IRS expects business records to show the payee, amount, date and a description.

What does Net 30 mean on an invoice?

Net 30 means the full invoice amount is due 30 days after the invoice date. Net 15 and Net 60 work the same way. A term such as 2/10 Net 30 adds an early-payment discount: the customer may take 2% off if they pay within 10 days, otherwise the full amount is due in 30 days. Always state the actual due date as well, so there is no argument.

Can I charge a late fee on an invoice?

Usually yes, if the customer agreed to it before the work started — in a contract, estimate or accepted terms. A fee added only after an invoice is overdue is hard to enforce. State usury and consumer protection laws limit what you can charge, and the rules are stricter for consumers than for businesses, so check your state's rules or ask a lawyer before setting a rate.

What's the difference between an invoice and a receipt?

An invoice asks for payment; a receipt confirms payment has been made. You send an invoice when you've delivered goods or services on credit, and issue a receipt when money changes hands, whether at a counter or after the customer pays your invoice. Keep both: the IRS lists invoices and receipt books among the documents that support your income.

Do I need to send a 1099 if I paid someone's invoice?

If your business paid a non-employee individual, partnership or LLC at least $2,000 for services during 2026, you generally must file Form 1099-NEC, under the higher threshold that applies to payments made after December 31, 2025. Payments to most corporations and payments by card or payment app are generally excluded. Collect a Form W-9 before you pay the first invoice.

How should I number my invoices?

Use a simple, unique, sequential system you never reuse, such as 2026-0001, 2026-0002. Prefixes for the year or client (ACME-0012) help with searching. Don't skip or delete numbers; if an invoice is wrong, void it or issue a credit note and keep it in your records, so the sequence shows a complete history.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.What kind of records should I keep — IRS · accessed 7 October 2026
2. 2.How long should I keep records? — IRS · accessed 7 October 2026
3. 3.Instructions for Forms 1099-MISC and 1099-NEC (12/2026) — IRS · accessed 7 October 2026
4. 4.Texas sales and use tax FAQs — collection — Texas Comptroller of Public Accounts · accessed 7 October 2026
5. 5.Prompt Payment — Bureau of the Fiscal Service, U.S. Treasury · accessed 7 October 2026
6. 6.Late fees and interest on overdue invoices — Joist · accessed 7 October 2026