How to invoice a limited company: what sole traders need to know

Winning a contract with a limited company is great for your business. Getting paid by them can be a different story. Large companies often have formal accounts payable processes, purchase order systems, and payment runs that small sole traders are not used to dealing with.

This guide covers exactly what your invoice needs to include when billing a limited company, how CIS and VAT affect things, and the practical steps to make sure you actually get paid.

What must your invoice include?

Whether your customer is a sole trader, partnership, or limited company, the basic legal requirements for a UK invoice are the same. Your invoice must include:

• The word "invoice" at the top
• A unique sequential invoice number
• Your name and address (or trading name and address)
• The date you issued the invoice
• The date of supply (when the work was done or goods delivered)
• A clear description of the work or goods
• The amount charged for each item
• The total amount due

If you are VAT-registered, you also need to include your VAT number, the VAT rate, and the VAT amount split out on the invoice. See our full guide on what to include on a UK invoice legally for a complete checklist.

What to add when billing a limited company specifically

Limited companies have extra requirements that you need to accommodate if you want to get paid without delays.

Purchase order (PO) number

Most medium and large limited companies require a purchase order number on your invoice before they will process payment. This is an internal reference the company assigns when they approve the work. Always ask for a PO number before you start the job, and include it prominently on your invoice. Accounts payable teams will often reject or hold invoices that arrive without one, no matter how good the work was.

The company's full legal name

Address your invoice to the company's full registered name as it appears on the Companies House register — not just a trading name or an abbreviation. You can check the registered name at Companies House. Getting this wrong can cause delays with automated accounts payable systems.

The right billing address

Large companies often have a central accounts payable address that is different from the site address where you did the work. Always confirm the billing address before sending your invoice.

Bank details

Include your bank account name, sort code, and account number so the company can set you up as a supplier in their system. Many companies will only pay by BACS, so make sure your details are clearly visible.

CIS deductions: what happens if you are a subcontractor

If you are working as a subcontractor in the construction industry and your client is a limited company acting as a contractor, the Construction Industry Scheme (CIS) applies. Under CIS, the limited company is required to deduct tax from your payment before they pay you.

The standard CIS deduction rate is 20% if you are registered with HMRC as a subcontractor, or 30% if you are not registered. If you have gross payment status, no deduction is made.

On your invoice, you should show the gross amount you are owed. The company then deducts the CIS tax and pays you the net amount, giving you a CIS deduction statement. Your invoice should make clear it is a CIS invoice and ideally note the applicable deduction rate. Our CIS deduction calculator can help you work out the numbers before you invoice.

For a full breakdown of how CIS works, see our CIS guide for subcontractors.

VAT on invoices to limited companies

If you are VAT-registered and the limited company is also VAT-registered, they will reclaim the VAT you charge, so it does not cost them anything extra. Always charge VAT at the correct rate and show your VAT number clearly.

If you are not VAT-registered, you simply do not charge VAT. This is not a problem — just make sure your invoice does not show a VAT number or any VAT line, as that would be fraudulent.

The current VAT registration threshold is £90,000 in a rolling 12-month period. If you are approaching that, read our guide on when to register for VAT.

Payment terms and getting paid on time

Limited companies are legally required to pay invoices within the agreed terms, and many have standard terms of 30 days. The Late Payment of Commercial Debts Act 1998 gives you the right to charge statutory interest of 8% over the Bank of England base rate plus £40–£100 in compensation if they pay late.

Set your payment terms clearly on every invoice. The default under the Late Payment Act, if no terms are agreed, is 30 days for business-to-business transactions. For more on how to chase late payers and use the statutory interest rules, see our guide on late payment rights for UK tradespeople.

Practical tips for getting paid by limited companies:

• Always get a PO number before starting work
• Confirm the billing address and accounts payable contact
• Send invoices promptly after completing work — do not let them pile up
• Follow up on the due date, not after it
• Keep a record of when you sent each invoice and to whom

Reverse charge VAT for construction services

If you are a VAT-registered subcontractor providing construction services to a VAT-registered contractor (a limited company in this case), the domestic reverse charge VAT rules may apply. Under these rules, the contractor accounts for the VAT rather than you charging it. Your invoice should state "Reverse charge: customer to pay the VAT to HMRC."

The reverse charge applies to most standard and reduced-rate construction services between VAT-registered businesses in the supply chain, except where the customer is an end user (such as a homeowner). It has been in force since March 2021.

Keeping your records straight

When you invoice a limited company, keep copies of every invoice you raise and every CIS deduction statement you receive. These are essential for your self-assessment tax return, where you will need to reconcile gross amounts invoiced against CIS deductions withheld. HMRC requires you to keep these records for at least five years after the January 31 filing deadline for the relevant tax year.

Using invoicing software like InvoiceAdept means all your invoices are stored automatically with their send history, making year-end reconciliation much simpler.

Summary

Invoicing a limited company is not complicated, but it does require a bit more preparation than invoicing a homeowner. Get the PO number first, use the full legal company name, and include your bank details. If CIS applies, show the gross amount and note the deduction rate. If you do construction work for VAT-registered contractors, check whether the domestic reverse charge applies. And always follow up on time — limited companies have payment run cycles and a missed email can push your payment back by weeks.