Disclaimer: Please note that this article contains general legal information and doesn’t contain legal or tax advice, and isn’t intended to constitute legal or tax advice.
You’re probably already aware that invoices are essentially payment requests to your clients following your successful freelance work. However, an invoice is sometimes confused with a receipt, which is an acknowledgment and proof of your client’s payment.
Find out when and how to issue an invoice and when it’s time and how to give a receipt to your freelance clients. Deal with your freelance business finances right and avoid issues!
Before the Payment: Invoice Your Freelance Clients
An invoice is an essential financial document stating, in particular, the specific services and/or products sold, their quantities, and the amount payable by your freelance client.
An invoice is a notice for your clients to pay you for the goods and services that you’ve provided and also serves as a record for tax purposes. Issuing invoices may be required by law.
Your invoices should contain some specific information to make sure they’re legally binding.
Find out how to invoice for your freelance work and download a free invoice template to make invoicing your freelance clients even easier!
After the Payment: Give Your Freelance Client a Receipt
A receipt is a document evidencing that your customer has purchased, paid, and taken possession of the goods or services you rendered.
It’s generally good practice to offer a receipt or another type of proof of purchase to your customers, immediately upon payment, regardless of the total amount.
In many jurisdictions, you’re legally obligated to give your customers a receipt or proof of purchase over a specific amount.
Additionally, as a rule, your client has the right to ask you for a receipt for any purchase of goods or services. If your client makes a request, you must provide them with a receipt.
There are some countries in which you’re not obliged to issue receipts to your clients (and some customers might not even ask for them or want to receive yet another unnecessary document). This means that whether you issue receipts to freelance clients depends on the law in the jurisdiction you’re operating the freelance business in, as well as the client’s preferences.
A receipt or other proof of purchase should contain, in particular:
1. Your freelance business’s name,
2. Your business (company) number, if applicable,
3. Transaction date (when the customer paid),
4. Detailed description of the goods or services purchased (what was bought),
5. Amount paid,
6. Form of payment (how the customer paid – cash, card, etc., although it shouldn’t show specific payment data such as the entire credit card number).
Quick Overview – Receipt vs Invoice for Freelancers
|Payment request for goods or services||Proof of payment of goods or services|
|Issued before payment||Issued after payment|
|Tracks the sale of goods or services||Acknowledges payment for goods or services|
|Lists the total amount due and the payment deadline||Lists how much has been paid and how|
|Can’t be used as proof of payment for goods or services||Constitutes a proof of payment for goods or services|
|Should be maintained and tracked||Should be maintained and tracked|
- You should always invoice your client to request payment. Additionally, it’s always a good idea to provide your freelance client with a receipt or other proof of purchase, if required in your jurisdiction or in your field.
- If your clients have any issues with the goods or services, they may use the receipt or other proof of purchase when seeking a refund, repair, or replacement of the goods or services you sold them.
- Written proofs of business transactions can come in very handy – especially with problematic clients.
Find out how to avoid scam freelance clients and exercise freelance due diligence. Implement a few simple measures and learn which red flags to pay attention to when accepting a new freelance client. Verify that they can and will pay you!
Check Out Our Free Fee Calculators!
See how much PayPal, Fiverr, or Stripe will subtract in fees – and how much you should ask your client for to get the right amount after fees:
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Check our freelance guide to getting paid on time, a simple and highly effective procedure to prevent overdue invoices. Learn how to get paid on time for your freelance work. No more overdue invoices!
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FAQs – Receipt vs Invoice When Self-Employed
You should use invoices as a notice for your clients to pay you for the services you’ve rendered and/or goods you sold. Receipts should be used as proof of your sales made to your customers. Check out our quick overview – receipt vs invoice for freelancers.
Yes, as the owner of your freelance business you should keep your business records including receipts and other proof of payment. Keeping receipts concerning your freelance business will help you monitor your freelance business costs and keep track in case of any deductible expenses.
You have to create an invoice in line with the invoicing and payment terms agreed upon with your freelance client.
Your invoice must include specific information such as, in particular, but not limited to: agreed payment terms, invoice date and number, your and your client’s (company) name, address and contact information, description of services/products sold, supply date, the amount(s) being charged, and the tax rates applicable. Discover how to write an invoice for freelance work.