Invoice as a Private Individual - Is It Possible?
Many people wonder if they can send an invoice without having a registered business. Here is what you need to know.
Can Private Individuals Send Invoices?
Short answer: No, as a general rule private individuals cannot send invoices.
Long explanation: To send invoices, you need to be engaged in business activity, which typically requires business registration and a tax identification number.
Why Can't Private Individuals Invoice?
1. Business Registration Required
A valid invoice must include a business registration number. Private individuals do not have one.
2. Tax Obligations
When you invoice for work, you are conducting business activity and must comply with tax regulations for self-employed individuals.
3. Accounting Requirements
Business invoicing comes with bookkeeping obligations. You must maintain proper records of all transactions.
What Are the Alternatives?
Alternative 1: Register as a Sole Trader
The simplest and most common option:
In the UK:
- Registration via GOV.UK - It is completely free
- Register with HMRC for Self Assessment
- You receive a UTR (Unique Taxpayer Reference) number
- You can begin invoicing immediately
In the US:
- Register with your state as a sole proprietor
- Get an EIN (Employer Identification Number) from the IRS if needed
- Begin invoicing with your business name or personal name
Suits: Anyone planning to take on multiple assignments or invoice regularly.
Alternative 2: Use an Invoicing Service
Several services allow you to invoice without your own business:
- YunoJuno - Popular in the UK for freelancers
- Collective - US-focused service for the self-employed
- Cool Company - International focus
How it works:
- You register with the service
- They act as the invoice sender
- They take a percentage of the amount (typically 5-10%)
- You receive the money as pay after tax
Suits: One-off assignments or a trial period before starting your own business.
Alternative 3: Get Paid as an Employee
Ask the client to pay you as an employee instead:
- They handle tax deductions and employer contributions
- You avoid invoicing entirely
- Simpler for you, but more expensive for them
Suits: Short assignments with a single client.
Trading Allowance (UK)
In the UK, there is a GBP 1,000 trading allowance:
- You can earn up to GBP 1,000 per tax year from casual trading without registering as self-employed
- If your income exceeds GBP 1,000, you must register and file a Self Assessment tax return
- This is a useful provision for very small or occasional income
How to Register as a Sole Trader
Step 1: Go to GOV.UK (UK) or Your Country's Registration Portal
In the UK, log in to GOV.UK and register for Self Assessment. You will receive a UTR number.
Step 2: Complete the Registration
- Provide your personal details
- Describe your business activity
- Choose a business start date
- Provide contact information
Step 3: Free Registration
In the UK, registration as a sole trader is completely free.
Step 4: Await Confirmation
You will receive your UTR number, usually within 10 business days (or faster if registering online).
Step 5: Start Invoicing
You can now create professional invoices with your business details.
VAT Registration
Under the VAT threshold (GBP 90,000 in the UK):
- No obligation to register for VAT
- You do not need to add VAT to your invoices
Above the VAT threshold:
- You must register for VAT with HMRC
- Add the appropriate VAT rate to your invoices (20% standard rate in the UK)
- Submit VAT returns each period
Tax as a Sole Trader
As a sole trader you pay:
- Income tax - Based on your profits, using the standard tax bands
- National Insurance - Class 2 and Class 4 contributions
- Student loan repayments - If applicable
Tip: Set aside 30-40% of your income for tax and National Insurance. This ensures you have enough to cover your tax bill when it arrives.
Frequently Asked Questions
Can I invoice just once without a business?
In many countries, no. However, the UK trading allowance permits up to GBP 1,000 per year from casual trading without registration. Beyond that, use an invoicing service or register as a sole trader.
What happens if I invoice without proper registration?
The invoice may be considered invalid. Your client cannot claim tax deductions, and you risk penalties from the tax authority.
Is it expensive to be a sole trader?
In most countries, registration is free or very low cost. There are no fixed annual fees for sole traders in the UK.
Can I be a sole trader alongside regular employment?
Yes! Many people run a sole trader business as a side income alongside their main job. Just remember to declare all income on your tax return.
Summary
| Situation | Solution |
|-----------|----------|
| One-off assignment, small amount | Ask for salary or use invoicing service |
| Very small income (UK) | Use trading allowance (up to GBP 1,000) |
| Multiple assignments | Register as sole trader |
| Above VAT threshold | Register as sole trader + register for VAT |
Ready to Register?
Once you have your business registration, you can create professional invoices with Fakturagenerator.com:
- Professional design templates
- VAT calculated automatically
- PDF export with one click
- Completely free to use
Registering as a sole trader is quick and often free. Creating professional invoices takes less than a minute with the right tool.