Limited Company vs Sole Trader: How Invoicing Differs

Whether you operate as a sole trader or through a limited company affects more than just your tax return — it changes what you must include on your invoices, how you handle VAT, and how HMRC views your income.

What goes on a sole trader invoice

As a sole trader, your invoice must include:

• Your full name and address (your business name, if you use one, must also appear)
• Your client's name and address
• A unique invoice number
• The date of the invoice and the date the supply was made
• A clear description of the goods or services
• The amount charged

If you are registered for VAT, you must also include your VAT registration number, the VAT rate applied, and the VAT amount charged. A VAT-registered sole trader must issue a VAT invoice within 30 days of the supply date.

What goes on a limited company invoice

Limited companies have additional legal requirements under the Companies Act 2006. Your invoice must include:

• Your full company name exactly as it appears on the Companies House register
• Your registered company number
• Your registered office address (not just your trading address)
• If you mention directors by name anywhere on the invoice, you must list all directors

Everything required of a sole trader (invoice number, date, description, amount) also applies.

IR35 and invoicing

If your limited company engages clients under contracts that fall inside IR35, the invoicing process is the same — you still invoice via your company. The difference is in how that income is treated for tax: HMRC considers it deemed employment income, and your fee-payer may be required to deduct PAYE and National Insurance before paying you.

Invoicing correctly does not override IR35 status. The substance of how you work — not the paperwork — determines whether IR35 applies.

VAT differences

Both sole traders and limited companies must register for VAT once their taxable turnover exceeds £90,000 in a rolling 12-month period. The invoicing rules once registered are identical. The key difference is timing: many limited company contractors register for VAT voluntarily to reclaim input tax on expenses, even before hitting the threshold.

Key takeaways

• Sole traders need name, address, invoice number, date, description, and amount
• Limited companies must add company number, registered name, and registered office
• VAT invoices require VAT number, rate, and amount — regardless of structure
• IR35 affects your tax position, not your invoicing format

Invoa handles both structures. If you operate through a limited company, add your company number and registered address in Settings and they will appear on every invoice automatically.