Invoice calculator

How to calculate an invoice

To calculate an invoice, multiply each line by its quantity, add the lines together for the subtotal, take off any discount, apply tax to what is left, then subtract any deposit already paid. What remains is the balance due. The figures above update as you type, and nothing is sent anywhere.

Invoice formula: subtotal = sum of (quantity × rate)
total = (subtotal − discount) × (1 + tax rate) + fees
balance due = total − deposit + any late charge

1. Add up the lines. Each line is quantity times rate. Add every line together and that is your subtotal, before anything is taken off or added on.
2. Take off the discount. Apply it to the subtotal, not to the total. A ten percent discount on a $1,000 subtotal leaves $900 to be taxed.
3. Apply the tax. Tax goes on the discounted figure, because tax is owed on what the client actually pays. Taxing first and discounting afterwards overcharges them and leaves your return wrong.
4. Add fees, subtract the deposit. Delivery, materials handling or a call-out fee go on after tax if they are not taxable in your state. Anything already paid comes off last, and what is left is the balance due.

Worked example

Two lines: eight hours at $95 and parts at $240. The subtotal is $1,000. A five percent discount takes it to $950. Tax at 8.25 percent adds $78.38, giving $1,028.38. A $300 deposit was already paid, so the balance due is $728.38. Change any figure above and the same arithmetic runs on your numbers.

Where people get it wrong

• Taxing before the discount, which overstates the tax and the total.
• Taking the deposit off the subtotal instead of the total, which leaves the tax short.
• Charging a late fee that was never in the written terms, which is hard to enforce.
• Rounding each line separately, so the invoice total disagrees with the sum of the lines.

Tax at other rates, and other kinds of invoice

The tax field takes any rate, so the same calculator works for a GST or VAT invoice. To take tax back out of a tax-inclusive price first, use the sales tax calculator, the VAT calculator or the GST calculator. For work billed by the hour, the hourly invoice calculator adds overtime; for a fixed-price job billed in stages, the project invoice calculator handles percentage complete and retainage; and the contractor invoice calculator adds materials markup, equipment and permits.

Once the numbers are right

This page gives you the figures. The invoice generator turns them into the document you send, with your logo, the client details and a PDF they can pay from. If the invoice is already late, the late fee calculator works out what the delay is owed and writes the chasing note. Pricing the job rather than billing it is the cost estimator.

Invoice calculation questions

How do you calculate an invoice?

Multiply each line by its quantity to get the line amount, add the lines together for the subtotal, take off any discount, then apply tax to what is left. Add delivery or fees, subtract any deposit already paid, and what remains is the balance due. The order matters: a discount applied after tax gives a different figure from a discount applied before it, and most tax authorities expect tax on the discounted amount.

Does tax go on before or after the discount?

After. Discount the subtotal first, then calculate tax on the discounted figure, because tax is owed on what the customer actually pays. Applying tax to the full amount and then discounting overcharges the customer and leaves your return wrong.

How do I calculate a deposit on an invoice?

Take the percentage of the total including tax, not of the subtotal, unless your terms say otherwise. Show the deposit as a separate line and show the balance due beneath it, so the client can see exactly what is left to pay rather than working it out themselves.

How do I work out a late fee on an unpaid invoice?

Two ways are common. A flat fee is a fixed amount once the invoice passes its due date. Interest is a percentage of the outstanding balance, usually stated per month, and it accrues for as long as the invoice is unpaid. Whichever you use has to be written into the terms before the work starts, or it is difficult to enforce.

Is this an invoice payment calculator?

Yes. It works out what is still owed after a deposit or a part payment, so an invoice payment calculator and an invoice total calculator are the same tool here: enter what has been paid and it returns the balance due.

How do I calculate GST or VAT on an invoice?

Put the GST or VAT rate in the tax field. It is applied to the subtotal after any discount, exactly like sales tax. If your prices already include the tax, take it out first with the VAT or GST calculator, then enter the net figures here.

How do I prorate an invoice?

Divide the full charge by the days in the billing period and multiply by the days actually used. A $900 monthly fee for 10 days of a 30 day month is $300. Enter that as the line amount and the rest of the invoice works as normal.

How do I work out the due date on an invoice?

Add the payment terms to the invoice date: Net 30 means 30 days after the invoice date. The invoice due date calculator counts it for any terms, including business days.

What is the difference between this and the invoice generator?

This page works out the numbers. The invoice generator produces the document you send: your logo, the client details, the line items, payment terms and a PDF the client can pay from. If you already know your figures, go straight to the generator.

Is the invoice calculator free?

Yes, and there is no signup. It runs in your browser, so nothing you type is sent anywhere. A free account is only needed if you want to save documents to a dashboard.