The invoice number is an identifier made up of numbers and / or letters that a company assigns to uniquely identify an outgoing invoice. According to §14 of the Sales Tax Act, this is a mandatory requirement for the exhibiting company.
How exactly you design the invoice number is up to you as an entrepreneur. It is specified that it is used for the calculation of a delivery or other service as a continuous and unique identifier. Above all, the criterion of uniqueness is important, as the tax office can assume multiple sales if the same invoice number is issued several times. In a tax audit, this can lead to a considerable increase in sales and the associated additional tax payments, in the worst case even to criminal consequences.
What is the purpose of the invoice number?
In fact, it is primarily a central criterion for the tax office in order to be able to clearly determine the correctness of your issued outgoing invoices. This possibility of clear allocation is important in order to be able to check the proper management of your bookkeeping and that of your customers. On the one hand, you have to pay the VAT to the tax office for every invoice you create. The consecutive, unique invoice number is an important indicator that you have done this in full, as it shows your sales in an orderly, comprehensible system. On the other hand, your business customers claim the sales tax paid to you as input tax on your issued invoice from the tax office. This means that your invoice number is also an important proof of entitlement to input tax deduction for your partner companies .
What are the legal requirements?
The exact legal text for the invoice number can be found in Section 14, Paragraph 4, Number 4 of the Sales Tax Act:
“(4) An invoice must contain the following information:
4. a consecutive number with one or more series of numbers that is issued once by the invoice issuer to identify the invoice”
This reflects the already mentioned criteria of continuous and one-time award. These are specified in the associated sales tax application decree. Among other things, you will find the following specifications:
- The sequential numbering of invoices does not necessarily have to be uninterrupted. However, it should be possible to explain a break in the ongoing system in a comprehensible manner so as not to create the impression of arbitrariness.
- Letters may also be used within the system.
- So-called number ranges can be used as additional allocation criteria, for example for temporal, geographical or organizational identifiers.
- Invoices for small amounts up to 250 euros and tickets are released from the obligation to provide a consecutive invoice number.
How should I structure my invoice number?
For you, of course, this has an impact on how you can design your own numbering of invoices. Especially if your company is still relatively new, you don’t have to start with number 1, for example, which may signal to your customer that you do not yet have a lot of experience as an entrepreneur. Instead, you can start with the numbering 364 or any other arbitrary number. And it is also incorrect that this number has to keep increasing. This makes sense for the consecutive design of the invoice number. Especially when you integrate number ranges, each of these ranges can (does not have to) have its own invoice number 1, as long as each number range only uses it once. When designing the invoice number, it ultimately depends on what exactly you want to depict with it.
This is how you make your invoice number as simple as possible
According to topbbacolleges, the easiest way to do this is actually to use simple sequential numbering. You start with 1 or any other number and give each new invoice the current invoice number +1. For example: 1, 2, 3, … or 364, 365, 366 …
Attention : Since you can only assign each invoice number once, it is not possible to simply start numbering again after a new year. Therefore, always keep the continuous character as long as you use this system.
This is how you integrate time components
It is of course not a problem to incorporate date components. For example, for the year 2020 you can start with the invoice number 2020001, 20001 or 2020/001 and let the number continue at the end of the identifier with each new invoice. In 2021 you simply start with invoice number 2021001, 21001 or 2021/001. The year identifier represents a number range that is a fixed criterion within the numbering. This can also be extended to the respective month or the very specific date, for example 20 / 11-001 for the first invoice in November 2020 or 20/11 / 20-001 for the first invoice on November 20, 2020. The smaller you are If you do that, the more you cover up the actual number of invoices you have issued.
This is how you integrate organizational components
Of course, your invoice number can say a lot more. This is possible by generating number ranges using letter or number codes that say, for example,
- in which city, which state or which country your service was provided,
- which employee or which team provided the service or
- The sales channel through which the service was provided.
So you can incorporate a lot of parameters, for example NRW-T3-2018-02651 (federal state team year number). However, the more complex it becomes, the more important it is to ensure that the invoice number is issued continuously. Otherwise you have a potential source of error here for the correct allocation.