Reviewed by Scott Warner, CFO · · 2026 rates

Calculate myInvoice Total

Hours, flat fee, expenses, discounts, and tax — everything you need to calculate an invoice total correctly the first time.

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Invoice total

amount due from client

Hours worked20 hrs

Hourly rate$75.00/hr

Reimbursable expenses$0

Discount0%

Sales tax (if applicable)0%

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Invoice breakdown

Labor (20 hrs × $75)—

Reimbursable expenses—

Subtotal—

Discount—

Amount after discount—

Sales tax—

Invoice total (amount due) —

Labor subtotal

—

Effective hourly rate

—

Amount due

—

CFO Tip

CFO

Add "Net 15" or "Net 30" terms to every invoice and include a late fee clause (1.5%/month is standard). Most clients pay on time when terms are clearly stated. And always invoice immediately when work is complete — the longer you wait, the slower you get paid.

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What every professional invoice should include

A properly structured invoice is both a billing document and a legal record. At minimum it needs: your business name and contact information, the client's name and address, a unique invoice number, the invoice date, a clear description of services or goods, individual line item amounts, the total due, payment terms, and your accepted payment methods. Missing any of these can delay payment or create disputes down the line.

Payment terms and how to structure them

Net 30 is the standard for B2B invoicing — payment due within 30 days of the invoice date. Net 15 is common for smaller clients or those with a history of late payment. Some freelancers and agencies use due-on-receipt for smaller projects. Early payment discounts like "2/10 net 30" — 2% off if paid within 10 days — can meaningfully improve cash flow and are worth offering to clients who pay late.

Late fees and how to enforce them

Including a late fee clause on your invoice — typically 1.5% per month on overdue balances — creates a legitimate financial incentive for timely payment and gives you recourse if you need to escalate. The key is consistency: you must apply the policy uniformly. Letting some clients slide and charging others damages the relationship and the enforceability of the clause.

Invoice numbering systems and record keeping

A sequential invoice numbering system (INV-0001, INV-0002, etc.) keeps your records clean and makes it easy to identify gaps or disputes. Some businesses use date-based numbering (2026-0527-01) to make the invoice period immediately visible. Whatever system you choose, consistency matters — your accounting software, bank records, and client communications should all reference the same invoice numbers.

Tax implications for freelancers and businesses

Invoices are the primary documentation for revenue on your tax return. For freelancers and self-employed individuals, every invoice you issue is gross income reportable on Schedule C. Keeping organized records of paid vs unpaid invoices matters at tax time — you report income when it's received (cash basis) or when it's earned (accrual basis) depending on your accounting method. Most small businesses use cash basis, meaning you record income when the client pays.

When to require a deposit or retainer

For projects over $2,000, requiring a 25% to 50% deposit upfront is standard practice and protects you against non-payment. Retainer arrangements — where a client pays a fixed monthly amount for ongoing access to your services — provide predictable revenue and simplify invoicing. Document retainer terms clearly in a contract before work begins so the invoice is a formality, not a negotiation.

Frequently asked questions

What should I include on a professional invoice?+

Every invoice should include: your business name and contact information, client name and address, invoice number, invoice date, payment due date, itemized description of services or products, quantity and rate, subtotal, any applicable taxes, discounts, and the total amount due. Clear payment terms (Net 15 or Net 30) and accepted payment methods should also be stated prominently.

What are standard payment terms for freelancers?+

Net 15 (payment due within 15 days) or Net 30 (within 30 days) are the most common freelance payment terms. Some freelancers use Net 7 for smaller amounts or repeat clients. For larger projects, it's common to require a 25-50% deposit upfront with the balance due on completion. Including a late fee clause of 1.5% per month is standard practice and encourages timely payment.

Should I charge sales tax on my freelance services?+

Most states do not tax services, but some do — particularly for specific service types. States like New Mexico, Hawaii, and South Dakota tax most services. Even in states that generally exempt services, certain categories like digital services, photography, or graphic design may be taxable. Check your specific state's sales tax rules or consult a tax professional to determine your obligations.

How do I handle expenses on a client invoice?+

Reimbursable expenses should be listed separately from your service fees, ideally with receipts attached. Mark them clearly as reimbursable expenses and add the actual costs (not marked up, unless your agreement specifies otherwise). Some freelancers add a small administrative markup (5-10%) on pass-through expenses — this is acceptable if disclosed in your contract upfront.

What is the best way to get invoices paid faster?+

Invoice immediately when work is complete — delays in invoicing directly cause delays in payment. Use online invoicing tools that allow one-click payment. Follow up on Day 1 of being late with a friendly reminder. Offer a small early payment discount (2/10 Net 30 — 2% discount if paid within 10 days). For large projects, invoice in milestones rather than waiting until the end. The single biggest factor in getting paid on time is making it easy to pay.