Educational guide
How to Invoice in the United States
Understand what US buyers and tax authorities typically expect on invoices, without a national VAT system.
This page is for general education only. Tax law, e-invoicing rules, and invoice mandates vary by sector, threshold, and updates from authorities. Confirm requirements with a qualified accountant, lawyer, or government guidance for your situation.
Invoicing in the United States operates differently from most countries because there is no federal VAT or GST. Instead, sales tax is imposed at the state and local level, with rates and rules varying dramatically across more than 11,000 tax jurisdictions. Combined state and local rates can range from 0% to over 10%, and five states — Oregon, Montana, New Hampshire, Delaware, and Alaska (partially) — impose no general state sales tax. Businesses must collect sales tax where they have 'nexus,' a sufficient connection to a state now primarily established through economic activity thresholds since the landmark 2018 South Dakota v. Wayfair Supreme Court decision.
Unlike countries with VAT systems, the US has no government-mandated invoice format at the federal level. There is no requirement for tax identification numbers, sequential numbering, or specific fields enforced by a federal tax authority. However, best practice for professional invoicing includes your business name, EIN (Employer Identification Number) or state tax ID, clear line items, applicable sales tax, payment terms, and bank or payment details. Many states require sellers to display their state sales tax permit number on invoices.
Payment is commonly by ACH bank transfer, check (still prevalent in many industries), credit card, or digital platforms like Zelle, Venmo, PayPal, and Stripe. The IRS requires business records to be kept for at least three years from the filing date, though longer retention is advisable for specific situations. For contractor payments, businesses paying $600 or more to an individual or unincorporated entity in a year must file Form 1099-NEC, making W-9 collection from vendors essential. Net 30 payment terms are standard across most industries, though large corporations often push for net 45 or net 60.
Invoice checklist: common fields in United States
What buyers, auditors, and tax authorities often expect to see on a commercial invoice. “Required” reflects typical compliance expectations for registered businesses—not every sole trader scenario.
Seller Name & Address
Usually requiredBusiness legal name, DBA (doing business as) if applicable, and full address. Include your state sales tax permit number where required by state law for taxable transactions.
Buyer Name & Address
Usually requiredRecommended for clarity, collections, and record-keeping. Required for resale or tax-exempt transactions where an exemption certificate must be kept on file by the seller.
Invoice Number
Usually requiredA unique number for internal tracking and audit purposes. There is no federal format requirement, but sequential numbering is best practice for clean records and easier IRS compliance.
Invoice Date
Usually requiredDate of issue for accounting, collections, and revenue recognition purposes. The date helps determine the tax period for sales tax reporting where applicable.
EIN / Tax ID
Often optionalNot federally required on invoices, but commonly included for professionalism. Some states require the seller's sales tax permit number to be displayed on invoices for taxable sales.
Tax Breakdown
Usually requiredShow state and local sales tax as separate line items where collected, with the rate and jurisdiction clearly identified. Tax-exempt sales should reference the buyer's exemption certificate on file.
Currency
Usually requiredUSD for domestic transactions. For international invoices, specify the currency clearly and include any conversion terms agreed upon with the buyer.
Payment Terms
Often optionalNet 30 is the most common standard. Net 15 or due on receipt is used for smaller businesses. Large corporations often negotiate net 45 or net 60. Early payment discounts like 2/10 net 30 are also common.
Description of Goods or Services
Usually requiredClear, itemized descriptions with quantities and unit prices. Detailed line items help the buyer verify the invoice against their purchase order and are essential for accurate sales tax classification.
Tax and regulatory themes in United States
State & Local Sales Tax
Rates range from 0% to over 10% combined, varying by state, county, and city. 45 states plus DC impose sales tax. Nexus rules (physical and economic) determine collection obligations.
Economic Nexus (Wayfair)
Since the 2018 South Dakota v. Wayfair ruling, states can require sales tax collection from remote sellers exceeding thresholds (commonly $100,000 in sales or 200 transactions in the state).
1099 Reporting
Businesses paying $600+ to a contractor in a year must file Form 1099-NEC. Collect W-9 forms from vendors before first payment to ensure proper tax ID reporting.
Popular payment methods in United States
Methods commonly used for B2B and freelance payments. Availability depends on banks, platforms, and contract terms.
- ACH bank transfer
- Check (still common in many industries)
- Credit/debit cards
- Zelle / Venmo (small business)
- PayPal / Stripe / Square
Business and cultural tips for United States
- The US has no federal invoice format requirements. Focus on clarity: who, what, how much, and when to pay.
- Always clarify if your price includes or excludes sales tax. Buyers in the US expect tax to be added on top of the listed price.
- Collect W-9 forms from US vendors early — you'll need their TIN for year-end 1099 reporting.
- Net 30 is the most common payment term, but large corporations may push for net 45 or net 60. Negotiate early.
- Include multiple payment options on your invoice (ACH, card, check) to give the buyer flexibility and speed up collections.
- For SaaS and digital services, be aware that many states now tax these under economic nexus rules. Research your sales tax obligations in each state where you have customers.
- Early payment discounts like '2/10 net 30' (2% discount if paid within 10 days) are a common US practice for incentivizing prompt payment.
- When invoicing government agencies at any level (federal, state, local), check their specific invoicing requirements — many use portals and require SAM.gov registration.
Invoicing in United States: common questions
Invoicing guides for other countries
Prefer a product overview for this market? See Billed for United States.
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