Many travellers dream of opening their own hostel (myself included) but it’s not a simple task! Finding an ideal location, furnishing and decorating, and getting the word out can take a long time. The last thing you want to think about is invoicing software and bookkeeping, but that’s where I come in to help.
I have travelled extensively and stayed in hostels in over 40 countries. I have always dreamed about opening my own hostel & bar, and have worked in hostels around the globe. Once your hostel is all set up, it’s important to get a head start on software that will help you organise your company’s finances.
As a hostel owner, your main task is to keep your guests comfortable and happy, so you probably don’t have time to create personalised invoices for each guest. Invoicing software can make your life easier by helping you send invoices, record expenses, and keep track of your accounting reports.
Create and send customised hostel invoices
Hostel invoices have different legal requirements than other industries. There are certain details that must be included on all invoices such as your company name and contact details, the invoice date, the products being purchased, VAT (if applicable) and the total amount owed.
Hostel invoices must also include the dates of stay, the name and contact details of the guest, and the preferred payment method.
It is best to have a detailed description of the type of room and what is included in the cost of the room. This will ensure that you have no discrepancies or disputes from your guest.
An example of a detailed description is “1 bed in a 10-bed mixed dorm with en-suite. WiFi, linen, towel, and hair dryer included in the price. Checkout at 11 am.”
In the UK, hostels are obliged by the “The Immigration (Hotel Records) Order 1972” to record the guest’s passport or identity document number, and their nationality. For privacy reasons, these details should be recorded in case the authorities contact you regarding a specific guest, but should never be put on an invoice.
With invoicing software, you can create customised invoices to send to your guests. The software ensures that you have all of the required details on the invoice. You can add a logo, pictures, and different colours to make it unique and professional. You can even add a discount for long term guests!
Here is an example of a customised hostel invoice:
Send hostel invoices in different languages
In a hostel, you will find people from all over the world! Although there’s always bound to be at least one Australian, I’m sure you will have guests from several non English speaking countries too.
By creating an invoice in the language of your guest, you lessen the chance of misunderstanding, make the guest feel more at home, and come across as more professional.
Debitoor allows you to easily send translated invoices in Basque, Catalan, Danish, Dutch, English, Faroese, Finnish, French, German, Icelandic, Italian, Norwegian, Polish, Russian, Slovakian, Spanish and Swedish to suit many of your guests.
Debitoor has made sure that everything is translated to make sense to that country. For instance, VAT will be translated to TVA for a French customer, which is their local equivalent.
You will still create the invoice in English (or whichever language you are most comfortable with), and then you simply choose the translated language from a drop-down menu, and when you view or send the invoice, it will be in that language.
Make a product list using invoicing software
Invoicing software can help you create a detailed product list so you can quickly issue invoices to your guests. When you add an item to the product list, you can add a picture, a name, a detailed description, price, VAT amount, and cost to your business.
Hostels should create products for each individual room type, amenity, and product they sell to ensure everything is listed and documented appropriately to save you hassle in the future.
Here is an example of a hostel product list you can create with Debitoor invoicing software:
Reservation websites vs. invoicing software for hostels
Most hostels have a profile on popular booking websites like Hostelworld or Booking.com. These services list your hostel, advertise it on google and search engines, and confirm bookings for your property. They are a great tool to get more bookings, but also charge a hefty commission and do not send invoices.
Reservation sites do not send invoices to guests as they are just the middlemen, and the agreement is between the guest and your hostel. They do send booking confirmations, but they are not the same as invoices.
Reservation sites help you keep track of your bookings and guests whereas invoicing software helps you keep track of your payments, invoices, expenses, and overall finances.
If you use booking sites to book your hostel, you will have to send an invoice to the customer either in paper form or through email. It would be beneficial to your hostel to use both reservation sites and invoicing software.
VAT for hostels
Many new UK hostels are unsure of if they need to register for VAT. Put simply, if you believe your VAT taxable turnover will exceed £85,000 within the next 30 days, or within 30 days during a 12 month period, then you must register for VAT by the end of that 30 day period.
The VAT taxable turnover is the total amount of sales brought in from your business that is not exempt from VAT. Most services and goods sold by a hostel are charged at the full VAT rate.
In the UK, VAT is charged at a standard rate for sleeping accommodation including hostels. Therefore, you charge the standard 20% VAT for any hostel bookings and this will go toward your VAT taxable turnover.
However, if you have a long staying guest, who’s booking is longer than 28 days, part of the booking may be relieved from VAT under the ‘reduced value rule’ for sleeping accommodation in the UK. This means that if a guest stays for a continuous period longer than 28 days, then VAT should not be charged from the 29th day onwards.
This rule only applies for the accommodation part of the booking and does not include extras such as meals. If a guest stays 2 weeks every month, then you must charge full VAT as the booking is not continuous for over 28 days.
If you have a cafe, restaurant, or bar in the hostel, you must always charge standard VAT on everything sold for dining/consuming in the establishment or in communal areas for guests. Therefore, these sales will go toward your VAT taxable turnover.
If your guest pays a deposit, such as 10% of the rate upfront to secure the booking, VAT is charged at the standard rate.
If you sell any other products at your hostel, such as earplugs, bottles of water, shampoo, chocolate bars, or towels, these are normally charged at the full VAT rate. Certain items supplied from a vending machine are eligible for a reduced VAT rate.
There are certain grocery items and food supplies that are subject to zero VAT, but these items are not generally sold by a hostel. You can find more information about which products are eligible for the standard, reduced, or zero VAT rate from the UK government website.
If your hostel is VAT registered, you may be able to reclaim some VAT from products and services purchased for your business. You can find which products are eligible from the HMRC website.
How can invoicing software help my hostel?
Invoicing Software like Debitoor is an all-in-one software that can record expenses, create product lists, send invoices to guests, record payments, and keep accounting reports up to date.
In the hostel business, you are likely to have many expenses such as furniture, rent, insurance, supply orders, and employee wages. These can easily be recorded in the software in a few clicks.
If you purchase something for the hostel, you can use OCR technology which reads text from pictures to take a picture of a receipt and let the software fill in all of the details.
With one of the larger Debitoor plans, you can take advantage of automatic bank reconciliation where you can link a bank account, and then invoices and expenses will automatically be matched. You can also connect eligible card readers to easily accept payments from guests which will be matched to invoices.
You can also invite your accountant to have access to your account to help you with your records and taxes. Your invoicing software will automatically update your accounting reports such as the balance sheet and VAT report as you conduct your business.
All in all, invoicing software will make your hostel finances quick and easy. Feel free to give it a try with a 7-day free trial.