Do you work as a taxi driver and safely transport fellow humans from A to B? You can be proud of that, because with you in the car, your passengers can relax and quickly get to their destinations.
But then the paperwork comes, which let’s be honest, is not the most enjoyable part of your day. In this article, I'll explain how to correctly and efficiently manage invoices and accounting for your taxi business.
How to invoice for a taxi
The good news is that invoicing for taxi rides can be simple if you use invoicing software!
If your customer asks for an invoice, you can create, customise, and send the invoice in just a few taps on your phone (or computer).
If you have multiple drivers, each driver can have the same app on their smartphone and issue invoices and receipts all while sitting in their taxi. All data is synchronised in real-time so you can see the invoices created by other drivers instantly.
An invoice must include certain information such as the customer and taxi details, an invoice number, an invoice date, and the details of the sale. With invoicing software, like Debitoor, the system ensures that all of the legal bits are automatically included.
The driver will just need to enter the customer’s details and the ride details and email it to the customer. If they also want a payment receipt, this can be issued in a matter of seconds from the Debitoor app.
Expenses as a taxi driver
Taxi drivers are bound to incur some expenses, the most common being fuel costs. With Debitoor, it’s easy to record these expenses using the mobile app. You can either enter it manually or take a picture of the receipt for automatic entry using OCR technology.
If you are VAT registered, it would be beneficial to record all expenses so you can reclaim VAT. These may include:
- Repairs
- Road tax
- License and registration fees
- Insurance
- Parking fees
- Business phone usage
With invoicing software, you can easily see how much you are earning versus how much you are spending with your taxi company.
VAT for taxi drivers
Some taxi companies will need to register for VAT in the UK if their turnover is above the £85,000 VAT threshold. If you are below the threshold, you can voluntarily register for VAT, but you are not required to do so.
Once you are VAT registered, you will need to start charging VAT on certain aspects of your sales.
VAT can be charged at the standard 20% rate for the taxi fares, and any extra charges such as baggage and waiting times. Tips, however, are not in the scope of VAT as they are not considered a payment for an actual service, but as a gift.
For expenses related to your taxi company, you can reclaim the VAT as long as the expenses are for business purposes. If you are a self-employed taxi driver and use your car for both personal and business use, then you can only claim the business portion.
VAT Return for taxi drivers
If you are VAT registered, you will also need to submit a quarterly VAT Return to HMRC, which will outline how much vat you owe, or how much VAT will be reimbursed to you based on your transaction history from the quarter.
With Debitoor invoicing software, every time you send an invoice, enter a payment, or record an expense, your VAT report will automatically update. You can also submit your VAT Return to HMRC directly through Debitoor!
That means that at the end of the quarter, you can simply review your VAT Report on Debitoor, and submit it to HMRC in just a few clicks.
Tax return for taxi drivers
If you are self-employed, or in a partnership as a taxi driver, you will need to register for Self Assessment with HMRC. This calculates the amount of income tax you owe to the government.
You can sign up on the UK Government website and submit your tax return for free at the end of the tax year.
If you run a limited company, you will need to submit a company tax return to Companies House. You can submit this via the HMRC website which will calculate how much corporation tax you owe.
With Debitoor, you will also have access to your important accounting reports such as the balance sheet and profit & loss statement to help you fill in the details of your tax return.
Taxi invoice template
With invoicing software, you can customise your templates to make them unique to your business. With Debitoor, you can choose from a variety of pre-made templates, add logos and images, and change the font and colours.
Creating customised invoices will set you apart from your competitors, and make it easier for customers to recognise your business.
Here is a customised taxi invoice created with Debitoor invoicing software:
Want to start creating customised and professional taxi invoices? Give it a shot with our 7-day trial. No credit card required, and no need to cancel.
