Posting invoices is a process of entering the invoices into the accounting system. The form of conducted activity determines if it is a simplified accountancy system or full accounting compliant with the International Financial Reporting Standards (IFRS). The legal regulations require bookkeeping from business owners. It is essential to establish the value of tax due and provide the full information about the state of finance in the company. How in practice the posting invoices process is done? Read the article to find out more.
What is posting invoices – table of contents:
- Before posting the invoice
- How correctly post the invoice?
- What are the benefits of posting invoices?
- Full accounting and simplified accounting
- Posting invoices and a VAT invoice
Before posting the invoice
Before the process of posting the invoice, you have to check the accuracy and correctness of the document. This applies to all types of invoices, no matter if there are any known mistakes in them. You should make sure you have ordered any products or services shown on the invoice. If any products are shown on the invoice, that haven’t been ordered, you should contact the seller and clarify the matter of the badly issued invoice.
In case of financial errors or inconsistencies in prices or types of products (services), you have to turn to the seller with the request for issuing corrective memos. Even the inconsistent invoice has to be recorded in the accounts, and after receiving a credit note or debit note (there is an obligation to book them as well) you will have a set of documents without mistakes.
How correctly post the invoice?
While entering the invoice into the booking system you have to keep the chronological order of events. It means that you have to start with invoices you have received at the earliest. The document has to be grouped accordingly to the types, such that refer to the sales and those that refer to purchases.
This will help keep an eye on all company’s revenues and costs, which are usually sorted accordingly to the month. You have to pay careful attention to financial details, such as the value of entered invoices because there should be no errors during the posting invoices process.
What are the benefits of posting invoices?
Posting invoices cannot be postponed. Regular entering of the documents into the accounting system gives you better insight into the state of the finances of the company. Besides, you should remember, that bookkeeping is a procedure required by law.
Accounting departments of big companies always have a lot to do, there are bills, sales invoices, and other documents each day. In the case of businesses run by freelancers or individuals that have small companies, the situation may be different. After all, it is worth making all accounting timely to be able to calculate all due taxes at the end of the month.
Posting invoices makes it easy to reconcile invoices because you can be sure that no cost or claim was omitted. At this stage of the process, you can find out all missing sales documents and during the check, you have all the data from bank statements with invoices and all needed documents.
Full accounting and simplified accounting
The law obliges every business owner to run accounting processes, the type of accounting you will be able to choose depends on the form of your business. In this case, the chronological order of documents regarding sales and expenses has to be entered into the right box references in the accounting statement.
Large companies are obliged to keep full accounting. All types of business activity have to be recorded in the accounting books and this includes invoices issued, bills received receipts of money, proofs of withdrawals, and payments in cash.
This makes the finances of the company more transparent and gives the investors reliable information about the current condition of the business.
Posting invoices and a VAT invoice
If you are a VAT payer you must pay VAT tax and this obligation appears the moment at the time of issuing the invoice, regardless of the fact whether you have been paid by your contractor or not. Even if the contractor refuses to pay, you still have to pay taxes. You may not be able to recover your debt, then you will get the refund of overpaid tax, but initially, there is a need to transfer the tax to the right revenue office.
Posting invoices significantly facilitates the fulfillment of all tax obligations. To generate a statement one can use an accounting program to generate statements easily. But not only accounting systems contain the data needed to prepare tax declarations. You may use the Free Invoicing App, where you can sort out invoices accordingly to the date of issuing. Thanks to this in an easy way you can obtain the data needed to issue invoices.
All you have to remember is that in the case of VAT tax only the invoices issued are important because the value of the tax is influenced by the bills received from contractors. With Free Invoicing Appyou will be able to check all the inflows and outflows of your company and calculate the tax easily.
Read also: When should you issue an invoice?