Example
Two lines, $1,200 labor and $600 materials, give a subtotal of $1,800. A $100 discount leaves $1,700, sales tax at 8.25% adds $140.25, and the total due is $1,840.25.
Also called the net total or the pre-tax total.
What it means in practice
The subtotal is the anchor for everything below it. Tax is calculated on it, a discount comes off it, and any deposit already paid is subtracted after it.
Show the steps rather than one figure. A client who can follow subtotal, discount, tax and balance due has nothing left to query.
Where it shows up on the paperwork
Directly under the line items, above discount, tax and the total. Everything below it is calculated from it, which is why it appears on its own line rather than being folded into the total.
What goes wrong
- Showing only a total, so a client who queries the tax has to rebuild the invoice to check it.
- Applying the discount after tax, which produces a different number from applying it before.
- Rounding at each line and again at the subtotal, so the arithmetic on the page does not add up.
Common questions
Is the subtotal before or after the discount?
Before. A discount comes off the subtotal, and tax is then worked out on what is left, because in almost every case the client pays tax on what they are actually charged. Show the order on the invoice so it can be checked.
Subtotal vs balance due: what is the difference?
The subtotal is the work before tax, discount or deposit. The balance due is what is actually owed after all three. On an invoice with a deposit they are never the same figure.
Does the subtotal include tax?
No. The subtotal is the lines before tax and usually before discount. Tax is then calculated on the discounted subtotal.
Subtotal vs total: what is the difference?
The subtotal is the lines added up before discount and tax. The total is what the invoice comes to after the discount is taken off and tax is added. With no discount and no tax they are the same figure.
What does subtotal mean on a receipt?
The same as on an invoice: the price of the items before sales tax. The tax line under it and the total after it show what was actually paid.