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The Ultimate Contractor Invoice Compliance Checklist

Jody Linick
Posted by Jody Linick on Oct 19, 2023 2:05:59 PM

Many of us work with Independent Contractors (ICs), and if we don’t, our clients certainly do. While most ICs produce excellent work (that’s why they are hired), many produce less than excellent invoices for their services. This article is a primer and checklist you can share with independent contractors and clients when their invoices fall short of normal standards.  


A Message to Independent Contractors:

Being meticulous about your invoices isn't just a formality; it's a professional necessity. A well-structured invoice not only helps you get paid but also safeguards your client from any potential issues with regulatory bodies like the IRS. So, let's dive into what makes an invoice compliant and professional.

Checklist for a compliant invoice

  • Word "Invoice": Make sure to include the word "Invoice," usually positioned at the top of the document.
  • Unique Invoice Number: Each invoice should have a unique identification number for tracking and record-keeping.
  • Invoice Date: Clearly state the date the invoice is issued.
  • Due Date and Payment Terms: Not only should the due date be specified, but any payment terms like "Due Upon Receipt" or "Net 30" should also be included.
  • Sender's Information: The "From" section should specify your name or your company's name, full address, telephone number, and email.
  • Receiver's Information: The "Bill To" section should feature the client's name, company name, and full address.
  • Description of Services: Include a brief outline of services provided and the date they were rendered.
  • Work Details and Fee: Specify the number of hours worked and the billing rate per hour, or mention a flat fee for services.
    • Example: 7 Hours Worked at $75.00 per hour = $525.00 Due
  • Additional Charges: List any other charges like expense reimbursements for mileage or supplies on a separate line, and it's helpful to have a different subtotal.
  • Receipts for Reimbursement: Attach copies of receipts for any expense reimbursements, ideally in the same PDF as the invoice.
  • Total Amount Due: Clearly display the total amount due in a big, bold font, either at the top or bottom of the invoice.

Additional best practices when invoicing customers

  • Timely Submission: Send your invoice at a designated time, as outlined in your Service Agreement.
  • Avoid Timesheets: Don’t send something resembling a timesheet; you want to avoid raising IRS red flags about your employment status.
  • Use PDF Format: To protect yourself and the integrity of the invoice, always send it as a .pdf file.
  • Payment Instructions: Include information on how you would like to be paid, whether it's by check, Zelle, PayPal, or credit/debit card.
  • Tax Forms: Don't be surprised if your client asks for a W-9 form and later sends you a 1099 form, especially if they've paid you more than $600 in non-employee compensation for the year.

Why compliant invoicing matters

Sending a proper invoice isn't merely about administrative detail; it's a marker of your professionalism. Moreover, this can protect you and your customers from regulatory complications. 



Closing thoughts 

As a professional bookkeeper, I frequently advise my clients to reject an IC’s email-substituting-as-an-invoice and require a real invoice instead. For more information on independent contractor status, you can visit the IRS definition of an Independent Contractor, Independent Contractor or Employee? or find the W-9 Form here. Equip yourself and your clients with this knowledge by sharing this checklist with the independent contractors you work with to help them stay compliant and ensure a less stressful 1099 season for you!

Topics: Operational Advisory


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