The Complete Guide to Contractor Invoicing in Canada: What You Need to Know

Getting paid on time is one of the most important parts of running a contracting business. But invoicing isn't just about sending a bill—there are legal requirements, best practices, and details that can either speed up payment or slow it down.

This guide covers everything contractors need to know about invoicing, including what legally needs to be on an invoice in Canada, what gets paid faster, and how to set up an invoicing system that works.

Do Contractors Actually Need to Invoice?

The short answer: Yes, you should always invoice.

Here's why:

1. It's Legally Required in Canada – Even a one-person operation operating as a sole proprietor should invoice for tax purposes. If you're incorporated or operate a partnership, it's definitely required under Canadian law.

2. Tax Deductions – Canada Revenue Agency (CRA) wants to see detailed records of income and expenses. Invoices are proof of income. Without them, you lose credibility if audited.

3. Payment Proof – An invoice creates a paper trail for both you and your client. If a dispute arises, you have proof of what was agreed to.

4. Business Professionalism – Clients who see professional invoices pay faster and take you more seriously than contractors who just ask for cash.

5. Financial Management – You can't track cash flow, profit margins, or business health without invoices. They're your actual business records.

Even if a client pays you cash or e-transfer on the spot, you should still create an invoice for your records.

What Should a Contractor Invoice Include?

A solid contractor invoice needs these core elements:

Essential Information

• Your Business Name – Make sure it matches your official business registration (sole proprietor, corporation, partnership name)
• Your Address – Full mailing address
• Phone Number & Email – So clients can reach you with questions
• Invoice Number – Sequential (Invoice #001, #002, etc.) for record-keeping
• Invoice Date – When you're sending it
• Due Date – When payment is due (e.g., Net 15, Net 30, Due on Receipt)

Client Information

• Client's Full Name – Individual name or company name
• Client's Address – Where the work was performed or where to bill
• Client's Contact Info – Phone and/or email (optional but helpful)

Service Details

• Detailed Description of Work – Don't just put "labor." Say "Interior wall painting - living room, 400 sq ft, 2 coats, includes prep and trim" or "Install 24 linear feet of vinyl siding with flashing"
• Quantity & Unit Price – Break down the cost so it's clear what they're paying for
• Total Amount Due – Clear total at the bottom
• HST/GST (if applicable) – Add tax only if you're registered (or if the contract requires it)

Payment Terms & Instructions

• Payment Terms – "Due upon receipt" or "Net 30" (payment due in 30 days)
• How to Pay – Bank account for e-transfer, mailing address for check, credit card info if you accept it
• Late Payment Terms – Optional but recommended: "2% interest on unpaid invoices after 30 days" (be clear about this upfront in contracts)

Professional Touches

• Your Logo – Builds brand recognition
• Your License/Certification Numbers – Builds trust and may be legally required in your province
• Reference to Contract or Job Number – Links this invoice to the original quote or job
• Notes Section – For extra details like "First of 3 draw payments" or "Final invoice - retainage released"

What NOT to Forget

• An invoice number – Never send an invoice without one. It's how you track them.
• Your tax ID – If you're HST/GST registered, include your registration number
• A professional appearance – Messy or handwritten invoices hurt your credibility

Legal Requirements for Contractor Invoices in Canada

In Canada, invoicing requirements vary slightly by province, but here are the federal requirements:

CRA (Canada Revenue Agency) Requirements

If you're HST/GST registered, your invoice must include:

• Your legal business name
• Your HST/GST registration number
• Invoice date and number
• Description of goods or services provided
• Amount charged
• HST/GST amount (shown separately)
• Due date or payment terms

If you're not HST/GST registered, you still need professional invoices, but you won't show HST/GST.

Provincial & Trade-Specific Requirements

Some provinces have additional rules:

• Ontario – If you're in construction, you may need to follow Prompt Payment Act requirements (clear payment terms, holdback rules)
• British Columbia – Payment terms and holdback information must be clear
• Alberta – Similar prompt payment requirements for construction contracts
• Quebec – Invoices must be in French or English (or both)

Always check your provincial regulations because construction law varies significantly by province.

License & Permit Info

In most provinces, you must display:

• Your license number (electrical, plumbing, roofing, etc., depending on trade)
• Your business registration number (if incorporated)
• Your HST/GST registration number (if registered)

This isn't just a good idea—it's often legally required to prove you're a legit contractor.

How to Invoice as a Contractor: Step-by-Step

Option 1: Use Invoicing Software (Recommended)

The easiest way is to use invoicing software like:

• Dave – Purpose-built for contractors, includes templates, automatic numbering, and payment tracking
• Wave – Free invoicing software
• FreshBooks – Popular small business accounting tool
• QuickBooks – Full accounting capabilities. More specific to accountants, not contractors

Benefits:

• Automatic invoice numbering
• Professional templates
• Track which invoices are paid
• Attach receipts and photos
• Send directly from your phone
• Automatic reminders for late payments

Option 2: Use an Invoice Template

Download a contractor invoice template from:

• Dave's Free Invoice & Estimate Templates – Professional contractor templates for Google Sheets and Excel
• Microsoft Word or Google Docs
• Canva (free design templates)
• Your accounting software

How to use it:

1. Fill in your business info once (name, address, license, HST number)
2. Add client details
3. List services with descriptions and costs
4. Add taxes if applicable
5. Set payment terms
6. Print or email to client

Option 3: Accounting Software

If you use QuickBooks, FreshBooks, or Wave, invoicing is built in and automatically syncs with your accounting records.

Pro tip: If you use QuickBooks for accounting but want contractor-specific invoicing features, Dave integrates directly with QuickBooks. You can create invoices in Dave (with all the contractor-friendly features) and they automatically sync to QuickBooks for your accounting. Learn more about Dave's QuickBooks integration.

Best Practices for Getting Paid Faster

1. Invoice Immediately

Don't wait a week after the job is done. Invoice the same day or the next day while you're fresh in the client's mind.

2. Be Specific About the Work

Bad: "Labor - $500"
Good: "Install 48 linear feet of vinyl siding with trim, flashing, and caulking - $500"

Clients are more likely to question vague invoices. Detailed invoices get paid faster.

3. Set Clear Payment Terms

"Due upon receipt" or "Net 15" are much clearer than vague terms. Be consistent so clients know when you expect payment.

4. Offer Multiple Payment Methods

• E-transfer
• Credit/debit card
• Check
• Online payment portal (if using software)

The easier you make it to pay, the faster you get paid.

5. Break Down Multi-Phase Projects

For large jobs, invoice in stages:

• Draw 1 – Upon contract signing (25%)
• Draw 2 – 50% complete (50%)
• Draw 3 – Job complete (25%)

This gets money flowing earlier and reduces risk if a job stalls.

6. Include Your Logo & Professional Details

A professional-looking invoice signals that you run a real business. Clients pay professional businesses faster than they pay informal contractors.

7. Send Invoices by Email (Not Just Handed Over)

A printed invoice is easy to lose. An email invoice:

• Creates a timestamp
• Is searchable in the client's inbox
• Can include payment instructions
• Leaves a paper trail

8. Follow Up on Late Payments

If an invoice isn't paid by the due date:

• Send a friendly reminder after 7 days
• Follow up again at 14 days
• Be professional, not aggressive

What If a Client Disputes an Invoice?

Having detailed invoices protects you:

1. Your description of work is clear – "Paint master bedroom with 2 coats of Benjamin Moore Aura White, includes prep and trim work" is defensible.

2. You have itemized costs – If they question the price, you can show materials, labor rates, and overhead.

3. You have a signed contract – Attach it to the invoice so there's no confusion about scope.

4. You have photos – If your invoicing software lets you attach before/after photos, do it. It proves you completed the work.

Pro tip: For major jobs, have clients sign off on the scope of work before you invoice. This prevents "I didn't think it included that" arguments.

Common Invoicing Mistakes Contractors Make

1. Using the same number for every invoice – Use sequential numbering for tax purposes and tracking.

2. Forgetting to include HST/GST – If you're registered, always separate out the tax. If you're not registered, be clear about that.

3. Vague descriptions – "Work performed" doesn't cut it. Be specific about what you did.

4. Not tracking invoice status – Is it paid? Past due? Unknown? Use software to track this.

5. Handwritten or unprofessional invoices – Looks unprofessional and gets paid slower.

6. Forgetting your license number – In many trades, this is legally required.

7. Not keeping copies – Always keep a copy for tax purposes and records.

8. Mixing personal and business income – Don't invoice through a personal e-transfer account. Use your business account so it's trackable for CRA.

Setting Up Your Invoicing System

Minimum Setup

1. Get invoicing software or template
2. Set up sequential numbering
3. Create a standard format with your logo
4. Keep copies (digital and/or printed) for 6 years for tax purposes

Better Setup

1. Use purpose-built contractor software (like Dave)
2. Create invoice templates for different job types
3. Attach photos and contracts to invoices
4. Track payment status automatically
5. Set up automatic reminders for late payments

Best Setup

1. Integrated accounting system (QuickBooks, FreshBooks, or Dave)
2. Automatic invoice numbering
3. Automatic tax calculation
4. Link to your contracts and estimates
5. Payment gateway integrated (clients can pay directly)
6. Automatic syncing with your business accounting
7. Digital storage for 6+ years

Quick Invoicing Checklist

Before you send an invoice, make sure it has:

• Your business name and address
• Your phone and email
• Your HST/GST number (if registered)
• Your license number (if required)
• Invoice number (sequential)
• Invoice date
• Client name and address
• Detailed description of work performed
• Quantities and unit prices
• Subtotal
• HST/GST (if applicable)
• Total amount due
• Payment terms and due date
• Payment instructions (how to pay)
• Your logo (optional but professional)
• Reference to contract or job number (if applicable)

Key Takeaways

1. Yes, you need to invoice – It's a legal and professional requirement in Canada, even for small jobs.

2. Follow Canada's legal requirements – Include your business name, contact info, HST/GST registration number (if applicable), and invoice number.

3. Be specific about the work – Vague invoices get disputed. Detailed invoices get paid faster.

4. Use software – Invoicing software saves time and makes you look professional.

5. Set clear payment terms – "Due upon receipt" or "Net 15" eliminates confusion.

6. Invoice immediately – The sooner you send it, the sooner you get paid.

7. Keep records for 6 years – CRA expects to see all invoices for tax purposes.

Ready to Streamline Your Invoicing?

If you're still using paper invoices or sending vague bills, it's time to level up. Dave was built for contractors to invoice faster, get paid sooner, and stay organized.

Try Dave for Free – Create professional invoices, track payments, and manage your whole business in one place.