The Difference Between Invoice and Tax Invoice
Wondering why some invoices say Tax Invoice and others just say Invoice? Officaid automatically labels your invoice based on whether tax is applied to any line item. This keeps your documents compliant without any extra effort on your part.
How Officaid Labels Your Invoices
The label on your invoice document depends on whether tax is applied:
- Invoice – No tax applied to any line items. The document is labelled simply as "Invoice."
- Tax Invoice – Tax applied to at least one line item. The document is labelled as "Tax Invoice."
Officaid handles this automatically. When you add tax to any line item, your invoice becomes a Tax Invoice. If you remove all tax from the line items, it reverts to a standard Invoice.
Why the Label Matters
In many countries, businesses registered for sales tax, VAT, or GST are required to issue a Tax Invoice when charging tax. The specific term and requirements vary by jurisdiction, but the principle is the same: when you charge tax, your invoice must clearly indicate this.
A Tax Invoice serves as official proof of the tax charged and allows your clients to claim input tax credits or deductions where applicable. Tax authorities typically require both you and your clients to retain these documents for a minimum period, often several years.
By automatically labelling your invoices correctly, Officaid helps ensure your documents meet these requirements without you having to think about it.
What's Included in a Tax Invoice
A proper Tax Invoice typically includes specific information required by tax authorities. Officaid automatically includes all of this when you create an invoice with tax applied:
- Document label – The words "Tax Invoice" appear prominently on the document.
- Your business details – Company name, address, and contact information.
- Tax registration number – Your GST, VAT, or sales tax registration number (if configured in your settings).
- Invoice details – Invoice number and issue date.
- Client details – Client's name and billing address.
- Line item descriptions – Clear description of goods or services provided.
- Tax breakdown – The tax rate applied to each line item.
- Amount excluding tax – Subtotal before tax is added.
- Tax amount – Total tax charged on the invoice.
- Total amount – Final amount including tax.
All of this information is pulled from your company settings and the invoice details you enter. Make sure your business information and tax registration number are correctly configured so they appear on your invoices.
Setting Up Your Tax Information
For your Tax Invoices to be complete and compliant, you'll need to configure a few things in Officaid:
- Business details – Add your company name, address, and contact information in Admin → Company.
- Tax registration number – Enter your GST, VAT, or sales tax registration number in your company settings.
- Tax rates – Set up the tax rates you charge so they're available when creating invoices.
Once configured, this information appears automatically on every invoice you create.
Tax-Inclusive vs Tax-Exclusive Pricing
When adding line items to an invoice, you can choose whether your prices include tax or not:
- Tax excluded (default) – Enter the price before tax. Officaid calculates and adds the tax on top.
- Tax included – Enter the final price including tax. Officaid calculates and displays the tax component separately.
Either way, the Tax Invoice will show the breakdown clearly: subtotal, tax amount, and total. This flexibility lets you work with prices however your business prefers while still producing compliant documents.
Frequently Asked Questions
Yes. Edit the invoice and add tax to at least one line item. Officaid will automatically update the document label to Tax Invoice. The change happens instantly when you save, so you don't need to recreate the invoice.
Yes. Edit the invoice and remove tax from all line items by turning off the Taxable switch for each item. Once no tax is applied, the document will be labelled as Invoice instead of Tax Invoice.
If your business is not registered for sales tax, VAT, or GST, you should not charge tax on your invoices. Simply leave the Taxable switch off for all line items. Your invoices will be labelled as Invoice without any tax breakdown, which is correct for non-registered businesses.
Your tax registration number appears in your company details section at the top of the invoice, typically near your business name and address. Make sure it's added in Admin → Company before issuing Tax Invoices. If the field is empty, it won't appear on your invoices.
Yes. You can apply tax to specific line items while leaving others tax-free. This is useful when some products or services are taxable and others are exempt. The invoice will still be labelled as Tax Invoice as long as at least one line item has tax applied.
The label itself doesn't change how Officaid processes the invoice internally. It's primarily for compliance and documentation purposes. However, your clients may need a Tax Invoice specifically to claim input tax credits, so the correct label matters for their records.
What's Next?
Now that you understand the difference between Invoice and Tax Invoice, explore these related guides:
- Creating Your First Invoice – Learn the basics of creating invoices in Officaid
- Recording a Payment – Mark invoices as paid when you receive funds
- Understanding Invoice Statuses – Track where each invoice stands in the payment cycle