How to Protect IP When Outsourcing Software Development

intellectual property and contracts

We live in an era when technology permeates every aspect of our lives. Amazon and app-based services have changed our shopping habits, strangers control our hospitality experiences, and human connection takes place online as often, or possibly even more often, than it does in person.

Our commercial marketplace is ripe for innovation, and if you’re building a business right now, you’re probably thinking about how to streamline or disrupt an industry that’s been stagnant—just doing business as usual—for decades.

For a lot of non-technical founders—that is, entrepreneurs with a business idea but without technical expertise—sourcing software development talent is critical. In many areas, however, the high demand for tech talent appears to be larger than the supply of qualified tech and software developers for hire.

As a result, a lot of founders are turning to international outsourcing. While this may be an innovative solution to your immediate need for tech talent needs, the question of how to protect your intellectual property when outsourcing software development has probably crossed your mind.

The last thing you want is to have simply handed your idea and your intellectual property over to a potential competitor. It’s a valid concern. The best thing you can do is create an IP protection strategy and document it in a business plan, so you’ve integrated it into your larger business strategy.

If you’re in the early stages of starting your tech-based or SaaS business, it makes good sense to consider IP (intellectual property) protection a critical part of your business model. The benefits of obtaining protection will be far-reaching if you ever find yourself needing to deal with infringers. It’s a way to reduce your business’s risk.

IP protection is especially important when your company’s ethos is unique and one-of-a-kind, and you want to protect against the possibility of copycats. It also comes in handy with monetization and licensing opportunities.

So how can you protect your intellectual property when you outsource software development work? Start with a contract.

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Protect your IP with a carefully-crafted contract

Ultimately, it’s up to you to make sure you’ve covered your bases in all areas of risk management. One of the best ways to do that right out of the gate is to start with carefully-crafted contracts.

Even if you’re just hiring a project-based, short-term software development freelancer, you will need to have an airtight and carefully-constructed contract—even with one-time freelancers—especially if you decide to hire internationally.

JD Houvener, CEO and founder of Bold Patents, says, “The first big step is to make sure that your contract with the software hire will be enforceable in all countries involved. To do this correctly, you should hire an attorney from the home country of the person you will be working with, or any other countries you find necessary to involve, to make sure it will be binding there if breached.”

Use non-disclosure agreements

Confidentiality is key, as is specificity around what exactly you intend to keep confidential. In outsourcing to hire an international employee, a non-disclosure agreement (NDA) is crucial.

Your NDA must be worded broadly enough to cover anything under the scope of the outsourced talent’s work, as well as specific enough to clarify what cannot be shared, circulated, or kept by the employee. It is acceptable to have one standard-form NDA to utilize for every hire, as long as the document is flexible enough to accommodate modifications as needed.

When it is time to end the arrangement with your contractor, it is important to reinforce what the NDA covers once you part ways. Be sure to conduct an exit interview and reiterate what exactly they’re obligated to keep confidential.

Include these crucial clauses in your employment contracts

When you hire an employee, especially an international independent contractor, the importance of a well-written employment contract cannot be understated. The following are crucial clauses that you must include in any employment contract.

IP assignment clause

This specifies how any intellectual property generated by the nature of the work will be owned by the business entity doing the outsourcing/hiring.

Work for hire clause

This specifies how any work performed by the talent during their time working with the hiring company shall be considered “Work Made for Hire” as defined in the U.S. Copyright laws. This means that any work the independent contractor does shall be owned by and for the express benefit of the hiring company so that an employer is considered the author even if the outsourced employee actually created the work.

The contract should specify that this clause would apply to the development of any software. While the actual software code itself would be considered a trade secret, any software that is published, shared, licensed, or sold is akin to copyright and should be protected that way, much like a book is written. For example, source code will likely be kept internally as a trade secret, but the functionality or UX of software will be protected.

Compensation

For a contract to be binding, there must be consideration. This comes from a quid pro quo or a bargained-for-exchange of values.

This means that there must be adequate compensation for the talent’s work, such as equity or a fee so that the relationship is two-sided. Make it clear how, when, and what types of compensation your working relationship will contain.

Governing law and forum for dispute resolution

These clauses clarify which set of laws the parties to the contract will follow if there is a breach, and what country’s courts will be used to adjudicate the dispute.

Overall, while these guidelines are a great jumping off point to be on the right track with protecting your IP, it is a good idea to work with your attorney as well as an attorney from the country of the person you will be working with.

Keep in mind that software talent is in high demand and the pool of talent is likely aware of this, so your contract should be fair and beneficial to both sides so your talent is willing to agree to your strict terms about IP protection. In addition, your willingness to strike a fair and honest deal can make you a more desirable employer, and even be a leg up in the future if you decide to maintain a longer-term working relationship with your contractor.

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Carly Klein
Carly Klein

Carly Klein is a law student at Loyola Law School in Los Angeles. A graduate from Boston University with a B.A. in political science and philosophy, she has experience in marketing, communications, and sales. She is a Los Angeles native and seeks to pursue a career in IP and business litigation.

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Last-Minute (and Year-Round) Tax Tips for Small Businesses

year round tax tips

If you haven’t already filed your taxes, now is the time to get your information together to ensure that they’re filed on time and avoid costly penalties and unnecessary stress. It’s also the perfect opportunity to start organizing your taxes for the next filing season.

There are a few steps you can take now to develop healthy financial habits that will make filing much easier now and in the future. Here are just a few to get started.

1. Know the important dates for your business’s tax filings

While exact due dates may vary year-to-year because of holidays or weekends, it’s essential to be aware of the general annual due dates:

  • Partnerships, S corporations, and multiple-member LLCs are generally due by March 15 each year
  • Sole proprietorships and single-member LLCs, which are filed on the schedule C of the personal tax returns, are due by April 15 each year
  • Corporations that use the calendar year as a fiscal year are also generally due by April 15 each year

Set an alert in your calendar for at least two weeks before each of the IRS’s quarterly filing dates; otherwise, you could end up with late-payment penalties for missed filings. Check your state’s deadlines, too—they’re typically aligned with the IRS’s, but not always.

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2. File your year-end taxes on time

If you haven’t already filed your taxes, you should at least have your financial information ready for your accountant. Take these steps ahead of time:

Ensure that your business financials are complete and schedule a meeting with your accountant. If you are a sole proprietor or single-owner LLC and file your personal and business taxes together, make sure you come prepared with your personal financials as well. Gather all pertinent income and expense information, as well as receipts. Bookkeeping software programs like QuickBooks and Xero make it easier to track income and expenses. These programs are affordable (or even free), so we encourage all small business owners to use them to manage financials online.

Follow up with your accountant at least a week before your company’s filing deadline to ensure that your taxes are submitted on time and make sure to request a filing receipt. If your accountant doesn’t have all the information they need to file it can cause delays, so be sure to respond quickly to your accountant’s calls or emails.

3. Prepare now for next season’s taxes

Make sure you’ve got the right accountant for your business.

A great accountant is an essential part of your team—someone who ensures that your books are set up properly, and also helps you make strategic decisions about business investments, expenses, loans, and other financial matters.

Early in this new tax year, assess whether you’ve got the right accountant for your business:

  • Meet with your accountant quarterly (starting just after tax season) to learn strategies for tax savings and long-term growth. This can reveal whether your accountant is on board as a part of your business’s success team or is simply acting as a tax preparer.
  • Ask about how their experience and clients align with your business or industry. Having knowledge related to your business shows that your accountant has nuanced insight that can benefit your company.
  • If you know of their other clients (or can get references), ask if they’re satisfied with the relationship. It’s also advisable to check accreditations and licensing.

4. Update and maintain your financial records throughout the year

It takes about a month to form good habits (or to break not-so-productive ones), and the benefits of maintaining business financials on a daily basis are well worth the time investment. You’ll make smart, on-point and timely strategy changes and if you apply for a loan, potential lenders can easily assess your company’s financial position and will appreciate your great management skills.

Use this next month to get your business’s financials in order:

  • Update your online financials daily. Some businesses, like restaurants and retail, will have many transactions throughout the day, and others may only have a few all month long. Regardless of which bucket your business falls into, get in the habit of checking your financials at the end of each day. Over time, you’ll find that you’re far more in-tune with how money is earned and spent and where there’s potential for growth or savings.
  • Inform your accountant of all fixed-asset purchases that you’re planning (or have made) and about your company’s debt. The interest you pay on loans made to the business will be added to your company’s profit-and-loss statement as an expense, decreasing your taxable income. You can also use this information to leverage the tax code, as many large business expenses may qualify as business write-offs.

5. Stay on top of tax payments throughout the year

Far too many small businesses are derailed by unpaid taxes that accumulate throughout the year and, sometimes, over several years.

To avoid this:

  • Keep track of due dates for quarterly and year-end filings for your estimated income taxes, as well as others like sales tax, and set reminders on your calendar of tax-payment due dates.
  • Set aside estimated tax payments from your monthly revenues and deposit them in a separate bank account. This way, you’ll always have the money on hand to pay your taxes. If you haven’t already set up a separate business bank account, do it right away and don’t mix your personal and business expenses.

Small business taxes: You’ve got to pay them, so be smart about them

There can be tremendous business benefits when you approach tax seasons strategically—as well as painful financial consequences when you don’t.

Use these simple tips, as well as others that your accountant can share that are specific to your business or industry, to help you make the most of this inevitable business expense.

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Steven Cohen
Steven Cohen

Steven Cohen is president of Excelsior Growth Fund (EGF), which helps New York State small businesses grow by providing streamlined access to business loans and advisory services. Excelsior Growth Fund is a not-for-profit 501(c)(3) and certified by the U.S. Department of Treasury as a Community Development Financial Institution (CDFI). Steven has a bachelor’s degree from UC Berkeley and a master’s in public administration from Harvard’s Kennedy School.

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How to Create a Simple Small Business Lead Generation Process

Getting a small business up and running is hard work—there’s no easy way to rake in profits. And lead generation can be time-consuming if you don’t know how to approach it.

Some small businesses struggle with lead generation because their level of effort and their desired outcomes aren’t aligned. Some entrepreneurs might think you just make a couple of calls, send a couple of emails, and poof—customers are trying to beat down your door.

But the truth is, like any other aspect of starting a business, you get out of lead generation only what you put into it. If you invest tons of thought, energy, and resources into your long-term sales and marketing strategies, such as content marketing and SEO, but you throw phone calls and emails at the wall as a short-term way to supplement your pipeline, you’re missing a huge revenue opportunity.

I get it: Not everyone has a dedicated employee or team who can anguish over the details of every outbound email or call script. For some organizations, that’s just not feasible. But every team, even a team of one, can spare the time to devote some degree of attention to these areas. Doing so will lead to a substantial increase in both your reply rates and your conversion rates.

Nurturing leads is key

Lead generation is especially important for small businesses because it’s a way to level the playing field. As HubSpot’s guide to lead generation suggests, lead generation options aside from cold emails and calls can include live events, online content, coupons, job applications, and blog posts.

Lead generation is a major priority for companies of all sizes. A Content Marketing Institute study found that 80 percent of respondents were prioritizing lead generation in their content marketing strategies. Additionally, companies that focus on nurturing their leads generate 50 percent more sales, but it costs them 33 percent less, according to Forrester research.

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Sure, companies from large to small are using these tools, but those that wield them best are the ones that win. Even if your competitor has 10 times the people, software, and resources, any creative team has a chance to succeed. If you have an employee willing to take the time to prospect, engage, and nurture the right leads—or you’re ready to do it yourself—you’ll win every time.

Implementing a lead generation plan that can help your small business starts with four simple steps:

1. Build your buyer personas

Identifying and creating buyer or user personas doesn’t have to be a long, drawn-out process. A buyer persona is a fictional representation of your ideal customer—your personal should have a name, a specific age and occupation, and a particular reason for being in your ideal target market.  

I highly recommend taking the time to build out detailed personas. Dozens of examples are waiting online. Data points like title, industry, revenue, challenges, and goals are great to have in your buyer personas.

If you’re not sure where to start, conduct an audit of your current clients. What industries do they focus on? What is the title of the decision maker who greenlit your contract? Identify the most frequently appearing industries, titles, and more, and use those as a foundation for building a persona. You can’t effectively create marketing messaging or content campaigns until you know exactly who it is you’re trying to attract. Similarly, you or your salesperson need to know what kind of leads you need to convert.

2. Obtain a small email list

Let’s say your buyer persona research gave you two clear winners: You sign more CEOs of SaaS companies and CTOs of logistics companies, for example, than any other customer segment. Consider how different messaging might appeal to each of these types of people before you launch your email campaign. Once you’ve determined what message your emails will contain, generate the list of people you’re contacting.

Ideally, your list will start out with 500 to 1,000 emails of relevant recipients. There are dozens, if not hundreds, of list resources out there. But if you don’t want to purchase a list, you can always look at your inbound marketing-qualified leads who are “stuck” in the pipeline. For whatever reason, sales conversations haven’t taken place with these people. They could use a push, and marketing content can be the perfect nudge in the right direction.

3. Write two email sequences

Write clear, relevant emails to your target audience. Start with an introduction. The sweet spot is between 90 and 120 words. The intro should serve as an introduction to your company and should compel recipients to respond. Follow up with two “bump” emails—that’s right, you’ll need multiple follow-up emails.

These should serve as a reminder that you and your company still exist. Your best strategy here is to use one or two lines to point the recipient back to your intro. Remember that all people, your email recipients included, would rather be talked to, not at. That’s why tailored emails lead to 58 percent of total revenue for certain businesses.

If you don’t receive a response, the fourth email should be used to reintroduce the reader to your company. Try a different value proposition than you used in your introduction. Your last message should concede that perhaps you haven’t reached the reader at the right time. Say that you’ll reach back out in a few months. The secret sixth step is that you actually do reach out in a few months. Your goal is to get a response—it’s important to keep trying until you get a clear answer.

4. Send email sequence A to half of your email list and email sequence B to the other half

Following our example of primary buyer personas above, let’s say that 250 to 500 of your emails go to CEOs of SaaS companies, and the other 250 to 500 go to CTOs of logistics companies. Monitor the results and field responses as they come in.

Monitor the right metrics

Once this campaign is complete, consider what worked and what didn’t. Did you have a low open rate? Try out a new subject line and different preview text. Did you have a low rate of replies? See whether a different value proposition offers more for your audience to resonate with.

Identify benchmarks and set goals

Some easy benchmarks to aim for are a 20 percent open rate and a 3 percent reply rate. If your results aren’t quite there, keep tweaking until they exceed these benchmarks. If your results are exceeding these thresholds, on the other hand, spend some time reverse-engineering what worked so well. While you don’t want to use the identical messaging in every campaign, having some underlying principles from the get-go will save you time and get you more leads in the future.

Dedicating time and energy to lead generation is one of the best ways for small companies to level the playing field. Like any good marketing strategy, lead generation is a long-term process; when done well, it brings about huge results. Use these four steps to implement a plan that helps your business keep up with—or even overtake—the competition.

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The Importance of TAM, SAM, and SOM in Your Business Plan

TAM SAM SOM

Having viewed several business plans over the years, a common (and very important) item missing from most plans is a breakdown of the company’s TAM, SAM, and SOM in the marketing section of their plan.

Wondering what these acronyms mean? Well, you’re not alone—many entrepreneurs are not familiar with these terms.

Here’s a quick explanation of what they mean, followed by an example:

  • TAM = Your Total Available or Addressable Market (everyone you wish to reach with your product)
  • SAM = Your Segmented Addressable Market or Served Available Market (the portion of TAM you will target)
  • SOM = Your Share of the Market (the subset of your SAM that you will realistically reach—particularly in the first few years of your business—this is your target market)

Identifying your TAM, SAM, and SOM requires some market research (levels of research vary depending on your product and market potential), but once you gather the research through your market analysis, you’ll have a better idea of the percentages that coincide with each area.

Identifying your SOM, or your target market, is an important step because building a marketing plan around your TAM—in other words, everyone—is a huge waste of resources. Figuring out who exactly you think will actually buy your product will help you focus reach.

Hear more about market research and your target market with Peter and Jonathan on the twelfth episode of The Bcast, Bplans official podcast:

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TAM SAM SOM

Here’s an example:

You’re starting a concierge service in your city that focuses on doing tasks/running errands for busy people, and people who need additional assistance (the elderly, individuals who are handicapped, and so on).

Your TAM (total available market) would be all busy people, elderly, and handicapped people in your city. If your town has 150,000 people, you may find (through market research) that total possible demand for your business in your city is 15 percent (or 22,500 people).

Note: If you have a competitor in your market, your TAM would be smaller, since you will be sharing this market with another company.

Your SAM (segmented addressable market) would be the portion of that 22,500 whom your current business model is targeting (this will be outlined in your business plan). For example, your business model is being set up to service 7,500 people a year who are ages 35 to 55, with small children and disposable income who live or work within a 2-mile radius of downtown, this means your SAM would be 33 percent of your TAM (or 5 percent of your total city’s population).

Your SOM (share of the market) would be the portion of your SAM that your business model can currently realistically serve. For example, you may only have three employees (yourself and two others), so realistically what percentage of your SAM (7,500) can you reach in the first 2 to 3 years?

Let’s assume your company can effectively provide concierge services to 100 people a month or 1200 people a year. This means your SOM is about 16 percent of your SAM (or around 5 percent of your TAM, or a little under 1 percent of your total city’s population).

If you’re seeking funding, savvy investors will ask you for these items in your business plan, and they’ll want you to be able to back up your numbers. This is why conducting some market research up front is important—and even advisable before you begin writing your business plan. It gives you the validation of your market potential.

Hopefully, this clears up a bit of the market reach acronym soup!

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Caroline CummingsCaroline Cummings
Caroline Cummings

An entrepreneur. A disruptor. An advocate. Caroline has been the CEO and co-founder of two tech startups—one failed and one she sold. She is passionate about helping other entrepreneurs realize their full potential and learn how to step outside of their comfort zones to catalyze their growth.

Caroline is currently executive director of Oregon RAIN. She provides strategic leadership for the organization’s personnel, development, stakeholder relations, and community partnerships. In her dual role as the venture catalyst manager, Cummings oversees the execution of RAIN’s Rural Venture Catalyst programs. She provides outreach and support to small and rural communities; she coaches and mentors regional entrepreneurs, builds strategic local partnerships, and leads educational workshops.



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Cash Flow 101: The Basics

what is cash flow

This is the first installment in our Cash Flow 101 series—our ultimate guide to help you understand and manage your business’s cash flow, and prevent future cash flow problems.

What is cash flow? A definition

Cash flow measures how much money is moving into and out of your business during a specific period of time.

Broadly speaking, businesses bring in money through sales, financing, and returns on investments—that’s cash flowing in.

And they spend money on supplies and services, as well as utilities, taxes, loan payments, and other bills—that’s cash flowing out.

Being cash flow positive means that more money is coming into your business than is going out of your business.

Being cash flow negative means more money is leaving the business than you have coming in.

The easiest way to think about cash flow is to think about the total amount of money that moved into or out of your business checking account during a month. If you finish the month with more cash in the bank than when you started, your business is cash flow positive. If you have less cash at the end of the month, your business had negative cash flow.

Why monitoring cash flow is important for small businesses and startups

Running out of cash is the number one reason that small businesses fail. Even if you are making plenty of sales, if you don’t have enough cash in the bank, your business won’t be able to pay its bills and stay open.

When you measure your business’s cash flow, you are keeping track of how much actual cash is moving in and out of your business so you can ensure that your business is staying healthy. If you’re the type of business that invoices for your work or product after you’ve delivered and there’s a lag time while you wait to get paid, keep in mind that accounts receivable (money you are owed) isn’t the same thing as cash until you actually have those dollars in hand.

Why cash flow forecasting is key

You’ll want to monitor your cash flow monthly so you can start spotting trends in what’s actually happening with your cash inflow and outflow. But it can be even more important to forecast your cash flow so you can anticipate when your business might run low on cash in the future.

You can then plan ahead and open a business line of credit or find other loans and investments to help you cover that point in the future when you’re going to need a little extra cash.

It’s a lot easier to get help from a bank or investor before you’re actually in a crisis where you’re not sure you can cover your bills. If you wait until you’re really in trouble to take action, lenders may see you as too much of a risk and turn down your request.

Your cash flow forecast can also help you plan the best time to make a big purchase, like a new piece of equipment or a company vehicle.

Don’t forget to account for the unknown, though. Business owners can’t predict the future—particularly when it comes to any unforeseen expenses they might incur (e.g., a truck breaking down prematurely and needing replacement, or a data breach resulting in a forced increase in IT spend). And they also can’t know for certain that their clients will pay their bills on time.

So, when you’re forecasting or looking at your actuals for the month on your cash flow statement, remember that having some buffer is a good thing. You don’t want to be in a position where you’ve allocated every single penny, to the point where you can’t accommodate unexpected expenses.

Part of reviewing your financials, like your cash flow, should be thinking about risk, and the effect an unexpected expense will have on your available cash—and ultimately, your ability to pay your bills.

Cash versus revenue and profits

It’s possible for your business to be profitable but run out of cash. That may not be intuitive at first, but it’s because cash and profits are very different things.

The difference between cash and profits:

  • Profits can include sales (revenue) that you’ve made but haven’t been paid for yet, also known as accounts receivable.
  • Cash, on the other hand, is the amount of money you actually have in your bank account. If you can’t use it right now to pay your bills, it’s not cash.

For example, if you’re making a lot of sales but you invoice your customers and they pay you “net 30,” you could have lots of revenue on paper but not a lot of cash in your bank account because your customers haven’t paid yet.

If the money your customer owes you hasn’t yet made it into your bank account, it won’t appear on your cash flow statement. It hasn’t flowed in our out of your business yet. It’s still in your customers’ hands, even though you’ve invoiced them for it.

Meanwhile, you can only pay your bills with real cash in your bank account. Without that cash in hand, it’s going to be tough to fulfill orders, meet payroll, and pay your rent. That’s why keeping track of cash flow is so important. To keep your business afloat, you need to have a good sense of what comes in and what goes out of your business on a monthly basis.

Ready to skip ahead and create your own cash flow statement? Download our free cash flow template now.

Free cash flow template download

How to analyze cash flow

When you’re analyzing your cash flow, you’re looking at the amount of real cash you have on hand at the beginning of the month, compared to your cash at the end of the month. You can also look at it on different time frames, like quarterly, but a good rule of thumb is that look at your cash flow more often is better.

Positive cash flow

Positive cash flow is defined as ending up with more liquid money on hand at the end of a given period of time compared to what was available when that period began.

Let’s say you started with $1000 in cash at the beginning of the month. You paid $500 in bills and expenses, and your customers paid you $2,000 for your services. Good news: Your cash flow is positive, at $2,500 for the month.

If you have positive trending cash flow, it’s easier to:

  • Pay your bills. Positive cash flow ensures employees get checks during each payroll cycle. It also gives decision makers the funds they need to pay suppliers, creditors, and the government.
  • Invest in new opportunities. Today’s business world moves quickly. When cash is readily available, business owners can invest in opportunities that may arise at any given point in time.
  • Stomach the unpredictable. Having access to cash means that whenever equipment breaks, clients don’t pay their invoices on time, or new government regulations come into effect, businesses can survive.

Negative cash flow

Negative cash flow is when more cash is leaving the business than is coming in. When cash flow is negative, the amount of cash in your business bank account is shrinking. This might not be a problem if your business has plenty of cash in the bank. But, it does mean that your business will eventually run out of money if it doesn’t become cash flow positive at some point.

Let’s say you started with $1,000 in the bank at the beginning of the month. You paid $1500 in bills and expenses, and even though you did plenty of work and invoiced your customers for $3,000 worth of services, your customers only actually paid you $200. You’re still waiting for the rest of your payments to come in. Your cash flow is negative: $-300 for the month.

If you don’t have any reserves, your rent check might bounce. If you have a line of credit already established, you might have relied on that to pay part of your bills. Maybe you forecasted your cash flow, and you knew that you were going to be short, that month, so you made a plan to be able to cover your expenses.

One month of negative cash flow won’t necessarily tank your business. But when you start to see a trend, and you don’t do anything to reverse it (or when you’re unpleasantly surprised because you haven’t been tracking your cash flow), that’s when your business is at risk. 

New businesses and startups often have negative cash flow when they’re first getting started. They have lots of bills to pay while they’re getting up and running and there aren’t a lot of sales yet. As revenue from sales starts to come in, hopefully, cash starts to flow into the business instead of just flowing out. This is why new businesses often need investment and loans to get started—they need cash in the bank to cover all of the negative cash flow that happens during the early days of the business.

Negative cash flow can also happen when a business chooses to invest in a new opportunity. The business could be betting that investing in a new opportunity now will pay off in the future. That investment could cause negative cash flow for some time, so it’s important to keep a close eye on cash and have a solid cash flow forecast in place so you know if your business is on track to stay in the black.

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Editor’s note: This article was originally published in 2015. It was updated in 2019.

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I Just Started My Small Business—Do I Need Payroll Software?

do i need payroll software

Payday is typically a moment people look forward to. But for many small businesses and startups that are just getting started, it’s a huge source of stress and frustration.

Why? Because payday means payroll—and payroll is complicated and takes time. Twenty percent of small business owners reported spending more than six hours a month handling payroll taxes. And some said they spend more than 10 hours a month, or the equivalent of three work weeks a year, just dealing with payroll.

Luckily, automating payroll makes things a whole lot easier—especially when you’re a new business owner. Here are four reasons why you might want to consider getting payroll software right as you’re first setting up shop.

1. You want to accurately calculate your pay, whether it’s a salary or owner’s draw

You’d think that paying yourself would be as easy as writing a check and depositing it (or, even better, simply direct-depositing money into your account). But there are actually different ways to pay yourself, depending on factors like your entity type, business plan, and years in operation.

As you’re thinking about how you want to pay yourself for the first time, here are the main types of owner payments you should know about:

Salary

A salary is a set, recurring payment to your employee(s)—which can also be you. If you own an S or C corporation and are involved in the day-to-day business operations, you’ll want to give yourself a salary.

S and C corp owners need to make sure they’re paying themselves a reasonable compensation as an employee. Of course, “reasonable” is objective, but it generally means you should pay yourself what you’d make if you had the same role at a different company.

When you start paying yourself a salary, payroll taxes kick in—and a payroll service will help you make sure you’re taking the correct amount out.

Owner’s draw

An owner’s draw is for LLCs, sole proprietorships, and partnerships. It’s exactly what it sounds like: a way for owners to withdraw money from their business for their own personal use.

This payment method differs from a salary in a few ways:

  • It’s more flexible. You can pay yourself however much you want (as long as your business has the money), whenever you want. This makes it a great option if your cash flow is inconsistent and, for example, you need to keep more money in the business during the slow season.
  • You’re not taxed right away. Owner draws aren’t taxed at the time they’re taken out. But keep in mind that you do have to pay taxes on them when you file your individual return.

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2. You don’t want to deal with calculating and paying payroll taxes on your own

When people gripe about taxes, they tend to think about the financial aspect of it. However, for small business owners, figuring out all the tax responsibilities is often the worst part. Fortunately, many payroll services can make life easier by taking out the correct amount of taxes and filing them automatically.

According to the National Small Business Association (NSBA) 2018 Small Business Taxation Survey, payroll taxes were easily the second-most burdensome taxboth in terms of administration and cost.

Why are payroll taxes such a headache? Let us count (some of) the ways:

  • There are a bunch of agencies/authorities businesses need to pay
  • Each of these agencies has different filing deadlines
  • Payroll taxes need to be paid within a specific amount of time after your employees are paid
  • There are ongoing changes to state, federal, and local regulations
  • If you take an owner’s draw, your audit risk goes up

And that’s not to mention further complexities if you have employees in other states or if you need to pay bonuses or overtime.

Yes, payroll taxes still apply even if you’re the only employee

Unfortunately, you’re not off the hook if you’re the only employee. The IRS doesn’t make special exemptions for “solopreneurs” or sole proprietors. Once you start paying yourself a regular salary, you’ll need to deduct the correct amount and send payments to the IRS (and usually a state tax authority) at least every quarter.

If you’re paying yourself through an owner’s draw, remember that you’ll pay taxes on the amount through your individual tax return.

3. You want to stay compliant as you bring on contractors (and eventually employees!)

Hiring people to help your business can make your life both harder and easier. On one hand, extra help can give you more time to work on your business. On the other, there are a ton of rules you need to follow when bringing on contractors and employees.

A payroll service can help out in a couple of ways:

  • Sending new hire reports. When you hire a new employee, many states require you to send them information like your new hire’s name, address, Social Security number, and date of hire within 20 days (or sooner). Fortunately, many payroll software companies can automatically send new hire reports to the state for you.
  • Collecting new hire paperwork. Forget file cabinets or desktop folders. Not only can some payroll software help your new hires complete mandated federal forms, such as I-9s, W-4s, W-2s, and 1099s, but it can also keep all those forms organized for easy access.

4. You don’t want to make payroll mistakes

Some mistakes, like typos on your site, are embarrassing but manageable. Other mistakes, like messing up payroll, have real-life implications.

In the 2017 fiscal year, the IRS levied over $5 billion in penalties for mistakes businesses made with their employment taxes. Plus, some payroll mistakes could even trigger a tax audit.

Instead of spending hours poring over numbers and forms, consider letting payroll software help you avoid mistakes like:

  • Not staying current on payroll rules and regulations. One of the biggest advantages of using payroll software is that it helps you stay on top of changing state and federal requirements (like the 2017 tax reform, for instance). This means you can worry less about being penalized for not complying with the law.
  • Not paying employees correctly. When you have employees, you need to make sure you’re paying them often enough and giving them the correct amount (which includes amounts for any accrued sick time or vacation, depending on where you are located). Otherwise, your employee(s) can sue and you could even lose your business license. Payroll software can help protect your business from wage complaints by automatically paying your employees and keeping records of each payment.
  • Not keeping the right reports on file. As mentioned above, in addition to needing to fill out various forms whenever you hire someone new or run payroll, or to help figure out how much you owe in taxes, you’ll also need to keep them on hand for a certain amount of time. By using a centralized service, like payroll software, to fill out forms, you can keep them organized for whenever you need them.

What to look for in a good small business payroll service

Different payroll providers offer different things, but in general, many can help you with the following:

  • Calculating and filing payroll taxes
  • Filling out forms for new hires
  • Determining payroll deductions
  • Paying employees (including yourself!)
  • Withholding taxes
  • Filing end-of-year taxes
  • Helping you avoid the most common payroll-related mistakes
  • Sending you alerts when you have tax deadlines to meet
  • Preparing W-2s and 1099s
  • General management of your employee records

When looking for a payroll provider, keep in mind that there are many options out there. You no longer have to go with a pricey payroll service that’s meant for businesses with hundreds of employees. Today there are a number of providers that are geared toward small businessestheir main goal is to make payroll easier at a price point that won’t bankrupt your business.

However, time is money, and payroll software can help you save valuable hours you need to grow your company. But more importantly, it can bring back the joy you used to feel whenever payday came around.

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6 Simple Tricks to Avoid Late Paying Customers

get customers to pay on time

This article is part of our Business Startup Guide—a curated list of our articles that will get you up and running in no time!

More than 30 percent of small and medium-sized businesses surveyed by Sage say late payments are impacting staff pay, company investments, and supplier relationships. When businesses have trouble getting their customers to pay invoices on time, it can really affect a business’s cash flow, and even their ability to survive.

If your business is growing and you’ve made a ton of sales, it might look on paper like everything is great. But until those customers surrender their cash and pay their invoices, you can’t use that revenue to pay your own bills.

But what can you do to encourage your customers to pay up faster?  Start with these six simple tricks.

1. Be careful: Know your customers

Net terms are not for everyone. Plain and simple.

There are some customers who you can trust to pay you and some you cannot. Your job is to become an expert in figuring out which is which. In most industries, you as the business owner can choose whether you require payment at the time of service or delivery, or if it’s better business to issue an invoice and wait.

Do your due diligence. Find out as much about a customer as you can before extending credit. Pull their business credit report to see how they’ve financially performed in the past. Have each customer apply for credit and make your credit application specific enough that you can do quality research on them. Ask for trade references so you can get a sense of their past payment behaviors.

2. Be clear: Spell out your terms

Identify your standard payment terms (30 days? 45 days?) and spell out your late payment consequences. Leave no room for questions, and eliminate the possibility of any “he-said, she-saids.” If you offer different terms to different customers, make sure you’re not saying one thing to one customer, and putting something else on your website, for example.

Word your invoice as clearly and simply as possible. Use a professional looking invoice template. Don’t overwhelm your customer with a ton of information—be concise and to the point. Put your customer’s name on the invoice, not just their company’s name, if you’re selling B2B. Don’t use internal jargon or vague descriptions whenever possible so it’s abundantly clear what you’re invoicing for.

You want your customer to get the invoice, understand what it’s for, and be able to tell who authorized the work or product purchase as quickly as possible. Avoid general phrases like “due in three weeks” and put an exact due date on your invoice. The easier you make it for your customer to cut you a check, the more likely you’ll be paid quickly.

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3. Be polite

Did you know by simply adding a “please” or “thank you” to your invoice, you can increase your chances of getting paid by five percent? Being polite can go a long way.

Be friendly and warm in your invoices. Remember, the customer hasn’t paid late yet. By being cordial, customers will have a more positive response to your communication and you have a better chance at being atop their payment priority list.

4. Make it easy for customers to pay

The easier it is for people to do something, the more likely they will do it. It’s time to embrace quicker payments methods for your customers. First, invoice faster. Don’t send paper invoices, don’t fax invoices if you can help. Save the paper and the lag time and email them.

Take checks, accept credit cards, and PayPal. Make online payments available, and make sure they’re mobile optimized options so customers can pay right from their smartphones. Putting a link to a payment processing form in an invoice is a great way to speed up payments. The trade-off there will be credit card or processing fees, but weigh the options and decide if it’s a good trade-off for your business.

Put your contact information right on your invoice. Make it easier for your customers to contact you if they have a question about a bill. How many times do your customers not quite understand something and set aside your invoices until they have time to track down your phone number?

5. Be flexible

There are times when customers hit difficult financial spots. We’ve all been there.

You’ve been cautious when extending credit, but you didn’t see this coming (and neither did they). Sometimes it’s O.K. to work with customers whose cash is momentarily tight. You just have to be the judge in deciding if this is habitual or situational.

Don’t indulge the habit, but help out those who’ve hit a rough patch. Look at offering these customers installment plans. Although you won’t receive your entire sum up front, it will allow you to start receiving cash and will help guarantee that you will, in the end, receive what you’re owed.

When you work with a customer to develop a plan that meets their needs financially and still gets cash flowing into your system, you’re saving yourself. Installment plans, in fact, are at times the difference between you getting paid or not getting paid at all. Option number 1 is always the best, even if you have to be flexible with the terms.

6. Be consistent

The thing to remember when extending payment terms is the human element. We are busy people who easily get sidetracked and easily forget. It’s not unheard of for a customer to receive an invoice, place it to the side, and unintentionally allow it to get lost under a pile of papers.

Do them a favor and remind them. If it is a week before payment is due and you still haven’t received anything, don’t hesitate to send them a friendly reminder email or letter. Keeping yourself on their radar will only help increase your chances of getting paid.

Looking for a free invoice template? Here are a few to help you get started.

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Resilience: The Antidote to Burnout for Entrepreneurs

entrepreneur burnout

You finally started your own business. Don’t let burnout snatch it away from you! Passion will get you far, but it does not prevent burnout.

Burnout is estimated to cost the U.S. economy $300 billion annually, and entrepreneurs and small business owners contribute their fair share.

I have been an entrepreneur for more than 25 years and I clearly remember the unexpected stressors I had to deal with that I never expected when I first began my business.

Burnout can creep up on entrepreneurs

For me and many others, the stress of starting a business stems from working long hours in order to accommodate every client and not turn away money. Sometimes it’s also a result of taking on projects outside our areas of expertise that take many hours of research and development to complete.

But the biggest stressor for me was that in the initial startup phase. Money was tight, so I did not reach out and get the help I needed. Isolation can creep up on us. Entrepreneurs tend to think they are just doing their jobs, and they don’t notice that they’ve cut off their lifelines to other people. We often limit our connection with others when we need it most.

I coach many self-employed clients who come in barely holding on due to extreme stress, Herculean demands, and overall exhaustion. With those symptoms, they are headed toward burnout.

What does burnout look like?

What is burnout? The American Psychological Association’s David Ballard, PsyD, describes job burnout as “an extended period of time where someone experiences exhaustion and a lack of interest in things, resulting in a decline in their job performance.”

The warning signs include exhaustion, difficulty focusing on the work, and a lack of motivation. Burnout can be caused by a variety of factors, ranging from working long hours regularly, being connected 24/7, and the frustration that comes when you don’t have the income you want and need to keep your business moving in the right direction. Entrepreneurs in the startup mode sometimes find that they need to wear many hats and “do more with less.”

Resilience is the key to overcoming stress

The antidote to burnout is resilience. Resilience is not about being able to power through the challenges and keep going. It’s about developing the skills to adapt, recover, and recharge ourselves so we can be productive and satisfied in our careers and lives.

During the first 10 years of my coaching business, I provided career counseling and assisted professionals in transition—many of these individuals had been let go from their jobs. Some of my clients were thrown off by this transition and began to second-guess their competence, even though they’d had very successful careers.

By comparison, the individuals who had to learn skills to boost their resilience were able to navigate much more effectively through their career transition process. From this work, I identified five common strategies that these resilient people possessed as part of their career toolbox. These later became my Benatti Resiliency Model, and I use it with all my coaching clients.

5 strategies to boost resilience

The Benatti Resiliency Model includes well-being, self-awareness, your brand (strengths), the ways you’re connected to others, and innovation, or making space for trying new things.

1. Well-being: Take care of yourself

Well-being focuses on self-care: your physical, emotional, and spiritual health. It includes sleep, exercise, nutrition, and knowing your stressors and creating a plan to deal with them.

Well-being resiliency booster: Make Sunday fun day. Plan something fun every Sunday, and also plan what you will do the following weekend. The anticipation will power you through the workweek. Don’t wait until you have free time to do something fun—you may never have free time.

2. Self-awareness: Check in with your purpose

In the self-awareness strategy, I ask clients to explore their purpose because that defines the direction in which they want their careers and lives to move. A mindset “checkup” helps people move forward by emphasizing the control they have over their reactions to circumstances. Knowing the natural gifts and challenges of your personality type is key to functioning well in the workplace.

Self-awareness resiliency booster: Do you take on more work than you can realistically handle because you’re afraid only you can do it “right”? Give yourself a reality check and realize that there may be more than one right way of accomplishing a task, even if it isn’t your way.

3. Brand: Focus on your strengths

A brand isn’t just about differentiating yourself in the marketplace; knowing your own personal brand helps you be more visible and proactive in your career.

You need to ask yourself, “What do I want to be known for?” Knowing your personal brand will help you focus your attention, so you only take on projects that complement your strengths and energize you, rather than creating more stress.

Brand resiliency booster: Do you use your strengths in your career and your personal life, or are you constantly trying to do everything for everyone? Think about how can you incorporate them to energize you, focus your attention, and prevent burnout. Doing a simple SWOT analysis on yourself can help—take an honest look at your strengths, weaknesses, opportunities, and threats.

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4. Connection: Avoid isolation

Connection is about cultivating relationships. Strong relationships are a predictor of life and career satisfaction, so don’t try to go at it alone, even if you’re running your business by yourself.

Connection resiliency booster: Schedule time with friends and colleagues who support and energize you, and limit your time with toxic people. When meeting with colleagues, notice whether they drain your energy or give you energy. With friends, notice whether you feel renewed and refreshed or dragged down and negative after spending time with them.

5. Innovation: Try something new

Incorporating space and time for innovation in your career and personal life keeps you recharged. This can include introducing new interests or competencies.

Innovation resiliency booster: Creativity and play are important for innovation and recharge. What are you doing this week that is creative or playful? What are you learning? What are you curious about?

The single question that can prevent burnout

The easiest way to prevent burnout is to begin with this basic question: “What do I need to feel more energized, better taken care of, more focused, and more inspired?” Write down some ideas and commit to one small step for your recharge, beginning tomorrow.

Do you need to take more breaks during the day, get more rest, exercise, get together with friends or colleagues, or maybe take life less seriously and have more fun? Whatever it is, start boosting your resilience now and you will see how it will spark not only your professional success, but your personal success too.

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Beth Kennedy
Beth Kennedy

Beth Benatti Kennedy, MS, LMFT, is the author of Career Recharge: Five Strategies to Boost Resilience and Beat Burnout. She brings more than twenty years of experience to her role as a leadership and executive coach, resiliency-training expert, and speaker. With an extensive background in career development, she coaches high-potential individuals on how to use their influence strategically, collaborate effectively, and focus on innovation.

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Want to Start a Business? Hone Your Sales Skills

sales skills entrepreneurs need to master

A lot of people call themselves entrepreneurs—but in reality, they’re not. They’re idea machines, or “wantrepreneurs.”

They want to make something of themselves, but they don’t have the skills or the hustle to make things happen. Without that, a wantrepreneur’s ideas aren’t worth anything.

If you really want to succeed as an entrepreneur, you need to start learning the ins and outs of business. You need to put your nose to the grindstone and build your skills. Need a place to start? Look somewhere you might not have considered: the sales department.

Cutting your teeth in sales

In HubSpot’s 2018 State of Inbound report, which surveyed more than 6,200 companies in 99 countries, 75 percent of respondents said their top priority was closing more deals. It isn’t enough to sell the idea of your company and get people to invest in it. Entrepreneurship means turning those first deals into a sustainable and scalable process.

Can you consistently generate more sales each month without overspending? Can you add awesome new employees to the roster? Can you train them at minimal cost and in minimal time? Can you predict your sales conversion rates, revenue, and overhead every month? If you can answer “yes” to those questions, congratulations! Your model is scalable.

Finding that perfect formula isn’t easy, though. No salesperson jumps into her first sale fully prepared for the unknown, and no entrepreneur gets a business off the ground knowing all there is to know about success. It takes time and experimentation, and the sales field is a testing ground to build the patience you need for both.

That’s especially true for business-to-business deals, which take much longer to cultivate than business-to-consumer sales. Of course, selling to consumers takes patience, too, but the cycle can take minutes to close. Closing a deal with another business can take weeks or even months.

If your small business or startup operates in the B2B space, then you’ll need the skills—and patience—to spend months working toward a deal without giving up. And you’ll need to be able to pick yourself up and keep going when some sales inevitably fizzle out.

Building sales—and entrepreneurial—skills

For a sustainable and scalable sales/business model to work, it has to be repeatable. Otherwise, you won’t be able to recreate whatever success launched your business in the first place.

Like any great salesperson, great entrepreneurs repeat their successes by mastering these five skills:

1. Communicating (selling) your vision

Here’s a tip from sales 101: You don’t just sell a thing—you sell a vision.

Paint specific details about how the product or service will improve the customer’s life, and that vision drives the sale. As a small business or startup founder, you’re also selling the idea of your business to those whose help you’ll need.

Before you paint that picture for customers, you’ll have to cast the vision of a prosperous company to investors. And employees need to envision a future with an employer who cares about their own personal success. Loved ones who support you also need to see the comfortable, more enjoyable life you picture for them as they spend nights and weekends without you.

Whether you’re pitching to angel investors and venture capitalists, or you just need to share your vision and roadmap with employees and others in your network, put together a pitch deck based on your Lean Business Plan. You’ll benefit from having spent the time to put all your thoughts on paper, and you’ll have something tangible to share with others.

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2. Finding answers under rocks

“If you build it, they will come.” Right? Well, it’s possible, but it doesn’t actually hold true for the vast majority of entrepreneurs.

Success often means disruption; no one flocks to a new business for no reason. Incubators want to see a discovery process, which takes asking questions to find out what market gap your product or service can fill.

Salespeople constantly fight the negative image consumers often have of sales, and listening is their most powerful weapon. They ask questions and gather answers before pitching a product so they can tailor their approach. Entrepreneurs have to fight market forces that could drown out their ideas, and their most powerful weapon is finding a market’s weakness with the right questions.

3. Solving other people’s problems

The right questions can help you find out what consumers want to see in certain markets, but it’s another skill entirely to convince anyone that your brand is the answer. Competition is always tough, so use your vision-casting skills to emphasize how your product or service solves their problems in ways your competitors can’t.

Good salespeople take a consultative approach when customers get finicky about buying on the spot. They find out more about customers’ lives to identify places where their product or service can shine most. Entrepreneurs do the same to promote their brands in a way that paints them as the solution that every consumer needs.

If you’re not entirely sure how your product or service stacks up against the competition, get started on some competitive research—putting together a basic competitive matrix can help.

4. Getting over the fear of asking

Entrepreneurs, especially those just starting out, can get nervous. But nervousness is different from fear, and no successful businessperson is fearful. Even with sweaty palms and shaky knees, you still need to hold a solid smile, make eye contact, and project confidence during your sales.

Entrepreneurs have to have the same resolve when it comes to the ask. Whether pitching to investors or promoting the company to everyday consumers, an entrepreneur can’t be timid. Fear never closes a sale. Remember that you’re not just asking for something; you’re living up to your end of a deal, and receiving what’s yours is necessary to close it.

If you’re not confident in your public speaking or pitching skills, check out your local Toastmasters chapter and start practicing those skills.

5. Managing time when you don’t want to

Last but not least: time management.

This might be the single most important lesson that sales and entrepreneurship share. And I don’t just mean writing down tasks in a calendar; I mean forcing yourself to do those things you’ve put in your calendar, regardless of the way you feel in the moment. In sales and startup culture alike, no matter how tired you are, you have to grind out those sales calls or emails during the next hour if you want to eat.

Skip enough tasks and you won’t eat for the next month, either. As a salesperson, you’d lose your value to the company. As an entrepreneur, you’d lose your company. The real winners are the entrepreneurs who pursue their passion every chance they get. Their weekends and vacations from day jobs are spent building up their own companies instead of relaxing.

Sales is a grueling field, and those who come out on top do so with a wealth of skills that translate into success nearly anywhere else. For entrepreneurs who haven’t tested their mettle in the field yet, these five sales skills are the most important to develop and cultivate.

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Mike Monroe
Mike Monroe

Mike Monroe is a Christian, husband, dad, marketer and wannabe athlete. In 2000, Mike joined Vector Marketing, where he learned to stick out from the crowd and developed as a professional.



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Free Invoice Templates to Help You Get Paid Faster

free invoice templates

Whether you’re a freelancer or running your own small business or startup, you’ve got to get paid—preferably on time.

A surprising number of businesses that are bringing in good revenue struggle to keep their business afloat because they struggle with cash flow—having the cash in hand to cover expenses.

It’s an accounts receivable problem. Many times, this struggle isn’t because they haven’t done enough business, it’s because they just haven’t been paid yet for products or services already delivered.

That’s where a simple, professional looking invoice can make a big difference. You want your invoice to make it easy for your customers to understand what you’re billing for, how much they owe, and when payment is due. Invoicing can take some time, but there are some ways you can make it quicker and simpler.

Start with a quality, free invoice template—there are a number of different invoice types. Here are a few we recommend.

1. An Excel invoice template (and a good Google Sheets option)

If you’d prefer an Excel template, this option from Vertex 42 is tried and true. It’s a fast, small download and a straightforward template with two style options.

Personally, I think the online templates are just as good as a download like this and, given the number of options now available online, it isn’t really necessary to use Excel. However, if you’re a die-hard Excel user, this is a good one to try.

A Google Sheets template can also be a good option if you don’t have Excel but like the Google doc, spreadsheet-based approach.

free Excel invoice

2. QuickBooks web-based invoice generator

This is one of the most customizable free professional invoice templates we’ve seen online. You can use this tool right away, without needing a credit card or a login. Create as many invoices as you need (there’s no limit), and print or download them as PDF files.

You can add your logo if you like, and there’s a choice of three customizable design layouts. You can also choose from a range of fonts, font sizes, and colors.

You can print or enter your email address to download, and you’ll also have the option to also have some free accounting resource guides sent to you.

QuickBooks invoicing

3. Paydirt’s PayPal compatible invoice template

In addition to their pay-to-use invoice and time-tracking app, Paydirt offers a free invoice template. One of the things that makes this template unique is that you can connect it to your PayPal account, giving your clients an easier, more immediate way to pay you.

The template itself isn’t anything special, but if connecting your invoice directly to a PayPal account is a top priority, this is the way to go. They also have a great blog with tons of tips for freelancers, so you should at least check this site out.

Paydirt invoicing

4. Xero’s fillable PDF template

Xero offers a downloadable fillable PDF template that you can save and reuse. It’s not fancy, but it’s clean and efficient, and you can save the template itself to your computer, which is convenient.

If you’re emailing invoices to your clients, it’s never a bad idea to send them in PDF form, so they can’t be edited. Sending Word docs or even Google docs with opening editing access can just make things more complicated if the client (even unintentionally) edits the invoice and then gets confused about what they owe and when.

Xero invoicing

5. Freshbooks’ web-based invoice template

This invoice template is definitely no-frills. If simple is your thing, it’s a good one to test drive. It does allow you to customize various aspects of the template, though, including the option to upload a business logo.

Because it’s a web-based invoice generator, you won’t be able to save your changes, so it’s probably most useful if you’re not generating invoices very often—retyping your own business information will get old.

Freshbooks invoice 

Should you use a paid invoice tool?

If you’re freelancing or in the early days of your small business or startup, you can probably get by with using free templates for a while, sending your invoices as email attachments, or even handing them to your customers in person. At some point, as your customers increase and managing your cash flow gets a little more complicated, you’ll probably start thinking about using an accounting tool like Quickbooks or Xero.

You might start using a service like Paypal to receive payments online. Those services all offer integrated online invoicing tools, which can save you time and effort, and many include an online “pay now” option, which can reduce the amount of time you wait to get paid.

Get your free business plan quote today!

Tips for getting the most out of your invoice templates

For a refresher on how to invoice and what should be included, check out our starter guide.

Every invoice should include these line items:

  • The date
  • Your name (and your business name)
  • Your business address and contact information
  • Your customer’s name and address
  • Description of items or services purchased, including prices and inventory numbers,
  • Terms of payment (when payment is due)
  • What types of payment you accept

Keep your invoices simple and clean, and remember, they’re essentially marketing material. They don’t have to be professionally designed, but don’t clutter them up with jargon that your customer won’t understand about your service or product, or use hard to read fonts or colors when you customize your invoice.

Make sure there’s no doubt that they understand what you’re billing for and a due date for when you expect cash in hand. And don’t wait too long to send it to your customer—you want your product or service to be fresh in their mind when their bill arrives.

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Angelique O'Rourke
Angelique O’Rourke

Artistic + intellectual pursuits. Social justice. Actress. Model. Musician. Eugene // Portland.

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