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Invoicing as a sole trader in in Lithuania

02.11.2023
Invoicing as a sole trader in in Lithuania

When we start our own business, we often face various administrative challenges. One of them is the correct handling of invoices. In this article, we will try to look in more detail at how invoices should be handled properly in a sole proprietorship, which mistakes are most common for beginners and how to avoid them.

What is an invoice?

Before starting to analyse invoicing in a sole proprietorship, it is important to understand what an invoice actually means. It is a document that records the sale of goods or services. Its main purpose is to ensure transparency on both the seller’s and the buyer’s side, as well as to verify and tax the relevant transactions.

Individual activities and their characteristics

Sole proprietorship is one of the ways of doing business in Lithuania. It is a specific form of activity in which a person is self-employed without employing others. Sole traders often face various accounting and administrative problems because they do not have sufficient experience in these areas.

Individuali veikla ir jos ypatumai

Individuali veikla Lietuvoje yra vienas iš verslo formavimo būdų. Tai yra specifinė veiklos forma, kurioje asmuo dirba savarankiškai, neįdarbindamas kitų asmenų. Individualia veikla besiverčiantys asmenys dažnai susiduria su įvairiomis buhalterinėmis ir administracinėmis problemomis, nes neturi pakankamai patirties šiose srityse.

How do I prepare an invoice correctly in a sole proprietorship?

It is important to comply with certain requirements when preparing an invoice:

  • Clear identification: Each invoice must be uniquely identifiable, which means that it must have a unique number.
  • Correct date: The date of the invoice must correspond to the date of sale of the goods or services.
  • Details of the seller and the buyer: Include all relevant information about the seller and the buyer to avoid misunderstandings in the future.
  • Clear specification of the goods or services: Ensure that it is clearly stated what goods or services are the subject of the sale, their price and quantity.

Common mistakes

When starting out as a sole trader, we often do not have enough experience in preparing invoices, so mistakes are inevitable. Here are some of the most common ones:

  • Incorrect date: The date should correspond to the date on which the goods or services were sold, not the date on which the invoice was issued.
  • Incomplete or incorrect data: This could be an incorrect address of the seller or buyer, VAT code or other essential information.
  • Incorrect VAT: VAT rates can vary depending on the goods or services, so it is important to make sure that your invoice calculates VAT correctly.
  • No guarantee or return policy: If the seller offers a guarantee or return policy, this must be clearly stated on the invoice.

Practical tips for beginners

The following tips are worth following in order to successfully handle invoices in your own business:

  • Use software: There are now many different programmes available for invoice management. They will help you to generate invoices automatically, as well as to store all the necessary information.
  • Learn from others: Network with other sole traders who already have experience in this field. They can share tips and recommendations.
  • Don’t underestimate the value of professional help: If you’re not sure how to invoice correctly or how to calculate your taxes, you can always ask an accountant or other professional.

This article is by no means a comprehensive guide, but I hope it has given you a basic understanding of invoicing in a sole proprietorship. As you can see, you need to pay enough attention to this area because even small mistakes can have serious consequences. However, with the right information and care, you can successfully handle all the challenges. Good luck!

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