Why is updating or deleting an invoice a big deal?

One of the most frequently asked questions we receive is, “why can’t I make a change to this invoice?” We get it — things happen: an item goes out of stock, the client changes their mind, something arrives damaged. In this blog post, we’ve outlined our best practice guidelines regarding changes to an invoice.

Always start with a proposal. Add your items. Verify that they are in-stock. Double-check the quantities that you need. Then send your proposal to your client for review and approval. Once the client has approved the proposal, convert your proposal to an invoice and collect payment on the invoice. If you are not ready to convert to an invoice, collect payment on a retainer. Once the proposal has been converted to an invoice, Business by the Book requests that you do not make any changes to the invoice without consulting your Account Manager.

The number one reason it is important to never update an invoice is sales tax. When you change items on the invoice, it changes your tax liability. If changes are made to your tax liability after the period has closed, you will then need to file an amended sales tax return which could result in penalties and interest, along with an administrative fee for your bookkeeper to file an amended return. 

The second reason that you do not want to change invoices is your income. Changing your income can result in an amended income tax return and/or your estimated quarterly taxes. This could also result in penalties and interest, along with the administrative fee of your CPA to file the amended income tax return.

As part of best practice, we recommend that you do not convert a proposal to an invoice until it is final. If changes need to be made once you have converted your proposal to an invoice, you will need to create a new invoice or credit. If you ever have questions about this process please contact your Account Manager.

Editing posted and/or paid invoices complicates your bookkeeping, and additional fees may apply.