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An invoice for some work I did awhile back seems to be missing and I can't find it, yet I want to make sure I am declaring that amount in my tax statements. If I get audited, what's the best way to show this work I've done? (Client has not responded to my requests for their copy of it either)

I'm located in Canada.

  • I've suggested an edit that adds the country to the question and tags. It really should have it, since taxes are a concern and taxes and regulations vary by jurisdiction. – Chris W. Rea Jun 5 '13 at 13:23
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With a good administration, this shouldn't be a problem. There are a few ways to save your invoices, and they're best used in combination with each other.

  • Use an administration system with the data - not the files, but the data. Just plaintext what you've done. This allows you to easily generate a new invoice any time you need it.
  • Save the generated invoices. For when you lose the data, and to send it to your client.
  • Back up both the database and the file, backing up is good.
  • Print the invoice and store it in a map somewhere.

Losing invoices is something that shouldn't happen with nowadays technology, and since everyone knows that, you won't be taken seriously if you do lose one, so don't lose them!

That being said, what if your house (and all the houses where you have your backups) burn down? The best thing to do is what you already did: contact the client you send the invoice to. Calling works better than mailing.

There might also be a chance that you can find your invoice in your mail program, if you sent it digitally, or in the trash can of your computer.

If you really can't get the original invoice back, see if you still have the offer if you made one and show that to your tax services.

Otherwise, you might have a problem. Try telling the tax services you lost it, contacted the client but that he didn't reply yet, and offer them the contact information of your client if they want to check.

  • I disagree with the assessment "you're doomed". This isn't the end of the world. Stuff happens, and tax authorities will be happy to see more revenue declared. If it were a missing receipt for a major expense, they would be more likely to challenge a deduction. – Chris W. Rea Jun 4 '13 at 14:46
  • @ChrisW.Rea yes, that was too hard expressed. – user19 Jun 4 '13 at 14:48
  • Indeed, you are doomed so much you might end up in the Domesdaeg Book. Interesting how the nexus between "doom" in the sense of final judgement and taxes seems to be so long-standing ;-) – Chris Travers Jun 5 '13 at 7:33
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If you're like most freelancers, and have a handful of clients or less, then you likely have a pretty keen sense of who has paid you vs. what is still outstanding. Receivables are a source of much anxiety for the self-employed.

So, assuming you got paid for the work, then all of your recent bank deposits – except for one! – should match up with a recent invoice. That unmatched bank deposit should correspond to the missing invoice.

Your bank statement (or a print screen) showing the specific deposit that went into your account is already proof that you received the revenue. As long as you declare this revenue on your taxes, you should be in the clear. On a paper copy of the statement, circle the deposit, add a note, and file it with your other invoice copies. FWIW, any decent tax accountant should want to reconcile your invoices with your bank deposits, anyway, in order to discover potentially missed revenue.

You could also reverse-engineer a new invoice based on that amount, using the invoice template you originally used. Mark the "new" copy of the invoice as a "duplicate - original lost". Write a brief note explaining the problem. I would expect that as long as the amount and client billed are correct (and you said you already know who the client is), and the invoice date is within reason (i.e. within the same reporting period as originally invoiced, not necessarily the same period as when you received the revenue), then there's nothing sinister in doing this.

The kinds of paperwork that the tax authorities really want you to have originals for are your expenses, because you will deduct expenses from your taxable income and reduce your tax liability. Usually a tax authority won't challenge your paperwork when you declare additional revenue, because that increases your tax liability.

Run this by your tax accountant if you're still concerned.

(p.s. my answer is based on my own experience here in Canada – and I notice you're here, too.)

I certainly understand income implies sales taxes. If the OP knows the amount received, and that amount included the GST/HST, then in reverse-engineering the invoice as I suggested, he'd calculate the amount of GST/HST included in the total and account for it when remitting his GST/HST filing. FWIW, Canada (I and the OP are located here) isn't as high on ceremony. (Yet, one tracked & numbered form I've come across here that is issued by our government for use by business is the Record of Employment (ROE) -- the special treatment is because it can be used to claim unemployment benefits.)

  • I disagree that this is rarely a problem. The problem with the missing invoice may be an issue for a VAT or sales tax audit. – Chris Travers Jun 5 '13 at 3:06
  • Yes, I understand, and in which case you tell the auditor: "I lost the invoice, but you'll see here I noted the approximate date, the client, and the amount, which is confirmed by my bank records." It's no big deal. Tax auditors are looking to discover undeclared revenue and unpaid taxes. As long as you include the amount in your tax calculations and pay what tax you owe, you ought to be in the clear. Like I said, they would be more concerned and likely to disallow a tax deduction if you'd lost a receipt for an expense! – Chris W. Rea Jun 5 '13 at 12:48
  • It really depends on country though. In Greece last time I checked if the auditor wanted to know, you had to track which piece of tax-office-issued paper a given invoice was printed on, and audits often take months. It's not income that gets you in trouble but sales which might be subject to sales tax (and at what rate, etc). Income implies sales, and thats the problem. – Chris Travers Jun 5 '13 at 12:54
  • I certainly understand income implies sales taxes. If the OP knows the amount received, and that amount included the GST/HST, then in reverse-engineering the invoice as I suggested, he'd calculate the amount of GST/HST included in the total and account for it when remitting his GST/HST filing. FWIW, Canada (I and the OP are located here) isn't as high on ceremony. (Yet, one tracked & numbered form I've come across here that is issued by our government for use by business is the Record of Employment (ROE) -- the special treatment is because it can be used to claim unemployment benefits.) – Chris W. Rea Jun 5 '13 at 13:16
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Disclaimer: the locale for the question was not defined, and my answer is mostly based on realities of Poland.

If you have issued an invoice, and sent it to the client, it should already have been in your bookkeeping account!

But bad things happen, and the most important now is not to panic, but act quick! You should restore your invoice as soon as possible, with exact the same data that you have sent to client. You should ask your client to fax you the copy of the invoice you have sent to him/her.

What could happen in case you got audited? Well, the worst scenario would be, if the tax authorities would control your client and would cross-check you to proof if the invoice was really issued. If they would find that you have not that invoice, and it is not in your bookkeeping records, they could prosecute you for attempted tax fraud. The punishments depend on tax system and local laws, but in worst case you could go to prison!

Please not also, that you can be punished not only for tax fraud, but also for negligent bookkeeping, and if you don't record invoices after issuing it, it is considered negligent bookkeeping.

Please note that my answer is based on realities of Poland, other tax systems may be more liberal in such cases, but they may also be stricter.

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First, this can be a problem in certain cases, such as where there is a question about relevant sales taxes (VAT, etc) charged and held. So you should take this seriously. Secondly some countries are very strict about this. Depending on where you are, you may need to justify to the tax authorities that this was lost. In general you should come up with as much information as you can, record it somewhere, and figure that if you are being audited, you can call your customer then. The more info you can come up with the better off you are. Yes, talk to a tax accountant for more info on what to do.

In general you aren't going to have to justify declared income (Auditors are usually looking for signs you haven't declared it all) but you might have to justify declared sales (Auditors may be looking for signs you have pocketed sales tax). These amount to the same thing really, just in a slightly different context.

The second thing is the amount charged and for what. The more documentation you can put together on this, the better. Any correspondence with the customer, etc. If you have this info plus the bank statement, you may be able to really back up that the missing invoice is for how much you say, and that your version of the sales tax/vat story is the correct one.

Again this is fairly locally dependent. Last time I did work for a client in Greece, they had to track which pieces of paper were used to print which invoices, and sales tax law (pre-HST) in Ontario Canada was the stuff of which stand up comedy routines could be made. In general if you are audited, you have to worry mostly abut sales tax reporting. If that is not applicable you are safe. If it is applicable you should prepare yourself as best you can and maybe talk briefly with a tax accountant.

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